Where's Craig?
Oh, here he comes.
All right. Welcome, everyone. It's a day to have a seat. There are still seats up the front. All those at the back who aren't sitting. We're going to be here for three or four hours, so be comfortable. It's so humbling to see so many people here. Incredible. Just I think there's 163 shareholders registered, plus staff, plus friends. I'm not sure if you're here to listen to us or for the lunch or for the free bottle of olive oil when you leave. Regardless, we're very pleased to see you all here. I'm Rob McGavin, the Non-Executive Chair and co-founder of Cobram Estate Olives Limited. I would like to have a call out to all of our wonderful staff who have made today possible. Building this room. Next door is where we're having lunch. Today will be reasonably straightforward.
You'll hear from myself first, then our Co-CEOs, Leandro and Sam. We'll then do the formal part of the meeting and questions. We'll then do a tour of all of these facilities so you can see it. We'll have lunch, and then you can all leave. We do, as normal, have people joining online and on the phone, so we welcome them as well. I'd also like to introduce our directors. Our two Co-CEOs are both—they could be Co-Managing Directors. In fact, they're both directors of the company. They're longstanding employees. Leandro's something like 24 years, and Sam's something like 15. 16, sorry. He just corrected me. Every year's important. Sam is the, I suppose, the finance, commercial side of the Co-CEOs. They were both in Australia, but the U.S. has become so important that Leandro has kindly upped his family and Lauda is here. Please say hello.
Who's Leandro's wife? Kindly, for the sake of all of us, Leandro has unselfishly moved from a very beautiful apartment in Geelong overlooking the water to quite a small apartment in downtown Davis to run the U.S. business. We're just so appreciative. Leandro is sort of our technical cum olive expert, and you'll hear from both of them. Our Non-Executive Directors on this side, we have Craig Ball, who's actually been with us since day dot as an investor. On our advisory board initially, and then joined the board when we corporatised in 2005. Craig's from Adelaide, and he chairs our Remuneration and Nominations Committee. We have Toni Brendish, who's from Sydney, who's been on the board since 2021. Had a lot of—2020—around then, 2022. She's being re-elected today, so there'll be lots of things said about Toni, and you'll hear from her. She lives in Sydney.
We have David Wills, who's from Melbourne, ex-head of private clients, PwC. He's not being re-elected today, so I'll have to tell you about him. He lives in Melbourne and is a great asset to our board. Dr. Joanna McMillan, who joined our board in around 2021 as well, comes from Sydney, and Joanna is on our Safety and Sustainability Committee. I should have mentioned that Toni chairs our Safety and Sustainability Committee. She also is on our Remuneration and Nominations Committee and on our Audit and Risk. David chairs our Audit and Risk, and Joanna is on our Safety and Sustainability Committee. Also welcome Hasaka Martin, who is our Company Secretary, who attends board meetings and is full of knowledge, all things governance. I'd also like to welcome Anika Dutoit from Deloitte, who's our audit partner, and Andre Larsen. Is Andre here from CBA? Maybe he didn't— Yep.
He's here.
Anyway, don't move now. Also, Shane Bellardi, who is from DLA Piper, has been a longtime partner who's looked after Cobram Estate, and it's been a great relationship. We also have our share registry here representing us, who will oversee the vote. If you have any questions, please feel free to see them. They're scattered around. A little thing about participating in the meeting: if you have a yellow card, it means you are a shareholder and you've chosen to vote using a paper voting card. If you have a blue card, you're a non-voting shareholder, and both yellow and blue are entitled to ask questions and make comments at the meeting. If you have a red card, you're a visitor. If you have a green card, you're from the media.
Although I don't think you're formally meant to ask questions or make comments, I'm sure that'll be fine if you have some burning ones or if you want to say something very nice about management. For all our shareholders who have already voted, thank you very, very much. The poll is open now, and you can vote at any time. For those online, to vote, you need to click on "Get a Voting Card" and then follow the instructions. Of course, you can ring the registry if you have any issues. We'll remind you of all that later because voting is why you're all here. It's 27 years since Paul and I started this tiny little humble business, as it was then. It's been a really long journey of many ups and many downs. One thing we have, I suppose, had is incredible shareholder support from day one.
Those shareholders make up a big percentage of our existing shareholder base that invested in 1999, 2000, and 2001. There have been a few capital raisings along the way, but we're just so proud and humbled that we've been able to build this Australian company over the last 27 years to be in the ASX 300 now. Hopefully, we stay for a while or we move up. We've been able to do that from scratch without raising very much money. Those who have been with us on this journey have done extremely well, and they so deserve it because patient capital is very hard to find. Growing olives, you need to be patient. The old saying, "You grow a vineyard for your children and an olive grove for your grandchildren." It is starting to speed up, I hope.
It is so nice now to see the platform that we have and the competitive advantages we have, both in Australia and in the U.S.. 2025 was a pretty successful year, both in terms of record EBITDA profit and cash flow. I won't go through and tell you all of those numbers because you'll hear that from Sam, and he's got some pretty charts, so it's a lot less boring than me articulating it. I would like to just remind shareholders that operating cash flow is a really important way to understand our business and our business performance because non-cash adjustments in accounting profits based on how much oil's in the tank from your harvest in that year is very important. Of course, it doesn't tell the true story. Our customers don't just say, "Oh, you've had a harvest. We'll buy that tomorrow." Our customers buy every single day.
Operating cash flow sort of smooths out the on-years, the off-years, and how everything's happening. That's something to keep in mind because next year will be a smaller profit than this year and an off-year, although it won't be massively different, we're hoping. We are still subject to the accounting treatment of what's called biological assets, which in this case is the oil in tank at 30 June that's come from our groves. Interestingly, if we bought the oil from someone else, it needs to be valued at cost. From our groves, we have to, even though it'd be cheaper than buying from someone else, we have to value it at what we sell it for. That's why it's recognized in the year of harvest.
Looking at this year, and probably on everyone's mind a little bit, is that we've come through a period in the last few years, and there's been a bit of commentary around, and of course, it's been tailwinds, that there's been a global olive oil shortage due to droughts in Spain. There's been record olive oil prices due to that shortage. How would Cobram Estate Olives perform when things got back to normal? Pleased to say that things are reasonably back to normal. We're maybe not so pleased about that, but very pleased that we're performing well. The price is back to sort of more historic levels. The supply is also back to more historic levels. The discounting that you're seeing in supermarkets and the out-of-stocks and those sort of things are non-existent and back to more normal levels with some pretty heavy discounting.
Pleasingly, we're still seeing growth in Cobram Estate. Although we've sold something like 20% of our oil because we've been so short of oil over the last period. That continues now. 20% of our oil from our Australian harvest was sold before we even finished harvest, so before 30 June, which then again restrains sort of this year. We're expecting full-year sales to be flat with Cobram growing. The important bit about that is that Cobram's our flagship brand. It's by far our biggest brand, and it's more expensive. It's more profitable, obviously. Seeing Cobram grow just cements our confidence that consumers know they need to buy high-quality extra virgin olive oil to get good value. If they just want to buy something cheap, they'll get ripped off. We've been saying that for a long time, but it just supports that with the heavy discounting. Cobram's still in growth.
That's a great achievement. The last couple of years, as you would know if you've been for new shareholders, we've spent a lot of money, and it started in 2012 with replanting a variety called Binaya, which was 70% of the groves we purchased from Timber Corp and something like 30% of our own groves. We replaced every single one of those trees because we can have better-producing varieties which will have cheaper oil in the long term. It came at a big cost. Even in the last five years, we've spent AUD 250 million on two strategies. One is increasing supply in Australia with replanting those unfavorable varieties and planting new groves, all of which comes at a big short-term cost but long-term gain of lower cost of production and higher profits. Also, the U.S., which we're really excited about and we'll talk a little bit about today.
By the end of 2027, we hope to have 3,600 hectares planted. That's our own groves and our own balance sheet in California. California produces around 95% of America's total production because nearly everything's growing in California. However, California's only about 5% of the market there and growing quickly. It's sort of similar to how Australia was going back 30 years ago. An important part of our strategy over there is that 3,600 hectares in the medium to long term will supply another 9 million liters. That's on top of our existing third-party growers who we have contracted. We're working to contract more. They're a very important part of our strategy over there. We like to think, and we're confident, that our growing methods and the way we can have high-quality oil at a lower cost of production with a lot more volume than our competitors flows onto those growers.
We're extremely transparent with those growers with regards to how well olives will perform on where they would like to plant them because sometimes they're pulling out other crops. The most important thing, as we always say in our business, is production. You can do the best job on marketing. You can get 10 times the price in marketing if you're just incredible. Not that we do, but I'm not saying we don't do a good job. If you don't produce the olive oil, you get zero for it. If you get 20% more, that's great. If you didn't produce in the first place, you get nothing. Production is just way more important in our business as a driver of profit than anything else. I'm not saying the brands aren't important, but you can sell olive oil anywhere.
The price you get can vary half and double, but producing it is critical. If you go to the wrong climate, or you don't even know what you're doing, you'll just get less than half what we produce. You can imagine how high your costs are if that's what's happening. That's what we're doing in the States with increasing supply, both our own growers and growers, and working closely with them to ensure that they know the limitations on their grow if they're planting olives so that we can make them profitable. We all know in any industry, everyone needs to do well. The grower needs to do well. The miller needs to do well. The brand needs to do well. The retailer needs to do well. Ultimately, the consumer needs to do better than everyone with high-quality value proposition. Nothing's very different in the U.S. to Australia.
What works pleasingly, what works over there or what works here works over there. Every time we stray from that, we run into hurdles. It's the second biggest market in the world, the U.S.. People often say, "Why do you go to the U.S.?" There's less barriers to entry, even though there's a few more now than there was since Donald Trump came in. There's certainly a lot more ease of doing business, the sovereign risk. You're not in another country that doesn't speak the language that everyone else is there. We know how to grow olives. It's a very easy thing for us to do. I don't say that lightly. The risk is not high us being in the U.S.. It's just what works here works there. We've been there since 2014. Where you grow them, how you grow them, the varieties you grow, the climate's incredible.
Finding the sites is a little bit more tricky because of the microclimates in the U.S. because of the high mountains and other things. It is certainly producing the olive oil is not something that keeps me awake at night at all. It is such an exciting market that also doesn't keep me awake about how we'll sell it. A couple of things on what makes our business unique. There are so many things that we do and so much noise in every business. It is very easy to get completely bogged down in data and just not even see the real picture.
I think the Olive IQ that's been developed by Leandro and his team over the last 24 years with a lot of research, 30 peer-reviewed research papers that's been published, not only the other 100 or so that have been done internally that no one knows about, has given us this incredible advantage, which I don't think in any other agricultural industry, not even by a stretch. The key pillars are productivity, quality, sustainability, and low-cost production. This system allows us to produce the highest quality olive oil in the world, top 5%, with the lowest cost in the world, bottom 5% of cost. That is an oxymoron in most industries. Usually, if you're the highest quality, you're the highest cost. It is an incredible advantage.
We have 60% higher yields, 60% higher yields than the top 6% of individually producing groves anywhere in the world, and we have nine times the global average. With that comes some great benefits around water use and other things. I think there's a point around our third-party growers and how important it is if they partner with us, they can get access to the way that you can do things better to have higher quality and lower cost and more production. Over a three-year period, we managed to increase production per hectare in the U.S. with two of our key grower partners by more than 80%. That is just something you've got to sell versus you've got nothing to sell. Prices, secondary production, I'm not saying that price isn't important.
Because of this system, we use 37% less water, 61% less nitrogen, and 82% less phosphorus per liter of olive oil produced than the global average. Although we have inputs into our groves, when you divide it by the liters we produce, we're very water efficient and fertilizer efficient, which means sustainable. We're also a net carbon sink because we grow the olives, and that. Sequesters carbon and offsets all of our carbon emissions. The quality is also really important, not only because it drives the consumer experience and value through health and flavor, but also because it's very difficult to talk the talk and not walk the walk. Every olive oil brand in the world effectively has disappeared over time because they ripped consumers off, milked the brand. We just focus on quality, quality, quality. Olive IQ allows us to do that.
We're lucky to have such an incredible technical team. I also should mention Claudia, who manages this site and the laboratory, who supports Leandro greatly in that side of things. It starts at the growing, the milling, crushing every olive oil within four hours, and all the things that we do over the journey to learn how to have high-quality olive oil at a lower price. The science is just so clear that the health benefits are in the micro, in the freshness of the oil and the antioxidants in the oil. That's where our focus is. I think that's why, as we talk about it and as consumers learn more, we seem to do better. Every day, there's a lot of tailwinds in our business. Every day, there's another article around long-term chronic disease prevention, health, consuming high-quality extra virgin olive oil.
Sadly, every day, there's another article around about either adulterated olive oil or how highly refined seed oils are bad for your health. We do have some incredible tailwinds. It's not all just us being great. Our people, it goes without saying, there's just some incredible people here who have been here a long time. If they're not incredible, they don't stay very long. You can be assured that anyone here is incredible. I go on, it's dangerous territory to name a few individuals, but I really would like to name a couple who are key. Claudia, who runs this site and is Head of our Labs and Research and just a highly, just a fantastic leader and has a wonderful team under her who love her.
Ruth Sutherland, who manages all of our groves in Australia, lives at Boort, manages all of the plants, the processing plant, the groves, the staff across three sites. She has probably a AUD 40 million budget that she oversees there with hundreds of people. For those of you who have been to Boort and seen our open day or Boundary Bend, you'll know. Ruth's an incredible person, and it's so lovely to have her as part of the team. We have a couple of guys who have gone to the U.S.. One's Nico Urbin , who's Head of Sales and Marketing over there. He was here, uprooted again, his wife and small child to go to the States for our business. He's doing a really, really good job.
Connor Churchen, who was our operations type guy here, Paul Ruth had to leave him, had to let him go, but he was running a processing plant. He and his fiancée have moved to the States, again doing a fantastic job planting all these thousands of hectares of olives that he was involved with here in Australia and with processing. In the U.S., it's slightly different. Our operations here are very spread out, but in the U.S., everything's basically within 20 minutes. Our Spotling site is the same site as our processing site, is the same site as our head office and laboratory. It's probably—I won't say. That'd be disrespectful to Leandro because I'm sure it's not. Basically, on the way to work, Leandro's 12 minutes from the office where he lives, and he can look at our groves on the way in, our young trees. It's all very easy.
I know here, he would leave at 2:00 A.M. to be at the groves at daylight to look at the groves and do that because he had something else. I just think it's probably slightly easier from that point of view and definitely more central. We're only 15 minutes from Sacramento International Airport, and that's the capital of California. Big mistake. Although Argentina's going very well at the moment. Anabel Godino , who is our CFO, has just come back from maternity leave. Obviously, the finance function does a huge job at supporting the rest of the business, and it's a very important part. Brent Crosby, who is Head of Sales and Marketing, attends all our board meetings, Head of Sales and Marketing everywhere. Nico reports to him in the U.S.. Zoran reports to him here in Australia. Who have I forgotten? No, I didn't. Right. Sorry.
There's so many others, and that's a bit dangerous. I don't want you to think it's just us three. There's a whole team doing a great job, and we're really, really appreciative. Another thing that's probably different about our business that we really keep reminding ourselves of is that we just focus on olive oil. I always say it's really hard to be good at one thing, let alone two or three. Table olives or other crops that, of course, we could do it, but we feel that—we're critical of people who have read the first chapter of every book—and we would just like to think that we've almost written the book, and that's our focus and everything we do without dragging people in different directions. I think that's a big advantage. Having the loyal brands is incredibly important so that we're not price takers.
The other thing that I think's great with our business is that what we grow in Australia, we principally sell in Australia, and what we grow in California, we principally sell in the U.S.. That reduces a lot of variables from supply inputs, currency movements, logistics. We saw what happened in COVID, and it allows you to just be really engaged and know what's happening with your customer. We unapologetically focus on that because it's easier, but it's also the right thing to do. We've got a lot of tangible assets in Australia. We've produced 70% of Australia's olive oil. I think in the U.S., we're producing something like 35%, but that'll grow extremely rapidly over the next few years as a percentage. That's exciting. AUD 975 million roughly of tangible assets, excluding our brands.
Our earnings are one thing, but it's backed by farmland, which also makes you sleep a little bit better at night from an investment point of view. I've said a couple of things that I can't bear to miss the opportunity to articulate. One is that as a shareholder in Cobram, your friends often ask, "Why should I buy Cobram?" It really does come down to quality, and we pride ourselves on that. That's why we have Red Island, and that's why we do private label, and that's why we do all different other outlets because we want the best olive oil to always be in Cobram because that's where the consumer value is. Principally, extra virgin olive oil is the juice of fresh olives.
The fresher it is, as long as the olives were fresh when you crushed them, and you crush them within four to six hours, you'll have incredibly high-quality extra virgin olive oil, which drives all of the consumer benefits and value. It's those minor components being the antioxidants, as I said before, that really do—the science is reasonably clear on that's what gives the health benefits. So many people die in chronic disease. They're not dying from malnutrition and what's causing it and what's preventing it. I think that's. The step that more and more people—and that's the question more and more people are asking. The other thing that you might think it's strange that I say this, but the category is highly sort of adulterated. Always has been. There's mixed and blend, extra light and pure, or rotten olives that had to be refined and heat chemicals and solvents.
They get sold in Australia or other places at the same price as extra virgin, and there's sort of this misleading conduct. Then extra virgin, a lot of it is adulterated depending on how well the country tests. In fact, there's something like 70% of sales globally are extra virgin, as in label, but only something like 30%-35% of global production is extra virgin. You don't have to be Einstein to know that if you don't know and trust the brand you buy, you're going to get fleeced. We've been able to take advantage of that, I think, here over a long period of time. That's what's happening in the U.S. too. Just as people learn they've been fleeced, they don't feel very happy about it. As they learn that it's healthier to buy high-quality olive oil, it's better for your family.
The loyalty in Cobram speaks for itself when you look at the discounting in the market and to think that Cobram's still in growth of record year last year when there were so many out of stocks and all those things. Looking forward, obviously, we're in a business that relies on producing olive oil of Australian or Californian domicile, and there's no doubt that that takes a fair while. It seems to go quickly for us, but I'm sure as shareholders, sometimes it goes a bit slowly. The amount of olive trees that are continuing to produce and come on over time are just going to keep driving our revenue and profit and the size of our business. It just doesn't happen in two or three months.
Cobram is certainly an investment for those with a longer-term view and who are not looking to trade in and out on every second thing. I know there's a lot of those in the market, but we're certainly not one of those. We feel that just long-term value and wealth creation, it's a good place to be, but others can be the judge of that. A few updates since the 30th of June. We obviously raised AUD 178 million that everyone be aware of net of costs to accelerate our U.S. growth, which is pretty exciting. As someone said, "Well, that's really good because otherwise you would have sent Leandro to the U.S. with one hand tied behind his back." We had plans there. We're just accelerating them, and it's pretty exciting. We're about 12% or 15% of the way through our U.S. harvest at the moment.
Leandro's flying back in a couple of days ago, and all things seem to be on track there. We are flowering next week and maybe early the week after at our Australian groves. Leandro's been up to the groves. All things seem on track there. Hopefully, the weather behaves in the next couple of weeks. We declared a 4.5% dividend that's fully franked that'll be paid in late November. That's the Christmas present. We are very confident about the future of the company. We know that we have really good foundations, really good people, very good industry, quite a lot of tailwinds, and quite a lot of competitive advantages. One of those is not only just the Olive IQ and the ability to produce high quality, low cost, but it's also the sheer amount of investment needed and the timeframe you need to wait.
Because we've been planting for so long, we're starting to see the benefit of that, and our costs don't rise proportionally to our production increase because obviously the overheads remain reasonably similar. More olive production of oil means higher profits, all things being equal. Just a reminder again that we did just come off the back of an on-year, and we still expect that the EBITDA in 2026 will be lower than 2025, subject to all the normal variations. I would just again like to thank shareholders so much for their support and for coming today in great numbers. That brings me to the end of my address. I'll hand over to Leandro and Sam. When they're finished, we'll do the formal part, and then everyone can ask as many questions as you like.
Thanks very much, Rob, and great to see everyone. My name's Sam Beaton.
I'm going to give you an update on the financial results for the year to 30 June 2025, and I'll also give you a commercial update. I'll then hand to Leandro, and his area is more around the operations and also an update on our growth strategies. In terms of this year, it was a terrific year for the business. We reported record operating cash flow, record profit. We also continued to see strong demand for our high-quality locally produced extra virgin olive oil in both Australia and in the U.S.. In Australia, we reported double-digit sales growth. In the U.S., substantial branded growth. In Australia, we got through our growth CapEx program. We will now turn to more of a sustaining CapEx level in Australia, and most of the growth CapEx will be focused in the U.S.. From a numbers perspective, our EBITDA was AUD 116 million.
This was up from AUD 66 million last year. Our operating cash flow before interest and tax was AUD 83 million, which was up just under 30%. Pleasingly for us, this was driven by packaged goods sales growth, where in Australia, our branded sales growth grew by 16%. In the U.S., our branded sales growth more than doubled. We think about our business in two business segments, the Australian olive oil segment and the U.S. olive oil segment. Both of those areas improved from a profit perspective. In Australia, it increased from AUD 61 million on an EBITDA level up to AUD 110 million. This was driven by our increased crop and also our higher selling price, which contributed to a higher margin. In the U.S., our EBITDA increased to AUD 6.6 million.
This was driven by increased sales and margin, somewhat offset by investing more in people and marketing, really to set us up for future growth. From a cash flow perspective, our operating cash flow before interest and tax was up from AUD 64 million to AUD 83 million. After interest and tax, AUD 58.1 million. As a business, we continued to invest in capital projects. The majority of that growth CapEx, we invested AUD 81.5 million. Some of those larger projects, we finished the Boort processing mill expansion, and the majority of that CapEx went into the U.S. into investing in land and grove developments. During the year, we paid a dividend, which is AUD 12.1 million net of the dividend reinvestment plan. This chart shows our operating cash flow over the last five years, both on a pre-interest and tax and post-interest and tax level.
As you can see, it's grown from AUD 22 million five years ago up to AUD 83 million. The contributing factors to this are really quite simple. The maturing profile of our Australian groves, the higher net selling price, and the contribution from our U.S. business. Rob touched on this in his speech, but we've invested over AUD 250 million in the last five years in both Australia and in the U.S., the majority of this in growth CapEx. As a recap, in Australia, we've planted over 1,100 hectares. We've rebuilt our Boort mill, more than doubling the capacity there. We now have enough capacity in our mills in Australia to mill every tree that's planted at full maturity and also our third-party growers that have contracted with us on the longer term.
We also did a number of other small projects, including the automation project here at Lara, which you'll see today on your tour. From a CapEx point of view, as I said, we're through the growth CapEx phase in Australia. Moving forward, we will now return to sustaining CapEx levels, and we estimate that'll be between AUD 10 million and AUD 15 million per annum. In the U.S., we've planted 1,385 hectares as of today, and we've purchased a lot of land for future development. Leandro will talk a lot more around what we're doing from a grove development perspective in the U.S.. We're also undertaking a warehouse expansion in the U.S. as we speak and also increasing our bottling capacity. From a balance sheet perspective, our reported assets are gross assets of AUD 811 million, net assets of AUD 446 million.
A couple of key items to highlight are that our trees and irrigation infrastructure are recorded under our accounting policy at written down cost, not at fair value. If you included those items on our balance sheet at valuation, there'd be another AUD 166 million of value. Our brands also are recorded at what we paid for them originally, so just over AUD 6 million, not at valuation. You can't revalue a brand upwards under accounting standards. In relation to the deferred tax liability, the majority of that, of AUD 99 million, relates to a historical accounting write-up and would only ever be triggered for payment if we sold the assets outside of the group. These charts, on the left, the left two bars, 30 June 2025, and the right two bars, 30 June 2024, show our adjusted gross assets on the left, and then next to that, our borrowings.
When I say adjusted, we've adjusted for the valuation of the trees and the irrigation infrastructure. As you can see there, we've got around AUD 980 million of gross assets and a borrowing ratio or a net debt ratio of 27.1%. This was before our equity placement in September this year. Moving on to sales, this is sales at a group level. Sales have grown from over the last four years, AUD 138 million up to AUD 237 million. As you can see from here, more than a quarter of our sales are now in the U.S.. This is just Australia, so Australian packaged goods sales. These bars have sales over the last four years. The bottom part of the bar, the purple part, is branded sales, and then private label on top. As you can see, the branded sales this year grew by 16.6%, which was a terrific result.
We just released our new marketing campaign in Australia for Cobram Estate. You may have seen it. This is really focused on highlighting the freshness and quality of our olive oil. It was a health-led campaign and particularly highlighting the consumption of high-quality extra virgin olive oil and the link to heart health. Moving to the U.S., this is the same packaged goods sales over the last four years. The bottom bar is Cobram in purple and then private label on top. As you can see from here, our Cobram sales during the year more than doubled, 101% growth. We're now in more than 18,000 stores. We're the number nine brand at 30 June. We've just clicked over to the number eight brand as of the last couple of weeks. That business is really in an exciting position, and we're certainly excited by what's ahead.
Just recapping on the U.S. market. For those who are not aware, in terms of the size of the market and what's been happening over there in the last four years, this is grocery sales. The bottom part of the bars is olive oil, and the top is other edible oils such as seed oils and other vegetable oils. As you can see, the size of this market in supermarkets for olive oil is AUD 2.84 billion U.S., which is well over about AUD 4.4 billion Australian. That compares to the Australian market, which is only AUD 600 million. Now, if you look at the sales over the last four years, you can see compound growth of 16.6% per annum. This has been really driven by the health benefits, the flavor profile, the U.S.ge occasion, and the premiumisation of the olive oil segment.
Those trends combined with what we're doing and what we're seeing with Cobram give the board really terrific conviction to move forward with our U.S. strategy and, in fact, accelerate it. That was principally why we did the capital raising in September this year. As most of you will know, we raised AUD 178 million through a combination of an institutional placement and a share purchase plan. I'd like to thank all shareholders who participated and certainly welcome those new to the register. Leandro will talk more about usage of funds, but these funds will all be applied to growing our supply position or our olive grove position in California, U.S.. In terms of business update, the Australian sales, we're still on track to sell out of our 2025 crop by June 30, 2026. The U.S.
sales continue to be robust, slightly ahead of plan, but again, we will be limited by supply in this financial year. Net selling price across the whole group is slightly better than this time last year for the quarter to September 30. As Rob touched on, we have seen promotional programs or discounting in both countries return to more normal levels where it's heavy discounting from imported products. Pleasantly for us, we're still seeing strong demand for Cobram Estate branded product. In terms of the U.S. crop, we're not expecting that to be materially higher than last year. Leandro will touch on that again, reminding that in Australia, FY 2026 is an off year. We're only expecting it to be moderately lower, though, than 2025. Our reported profit will be lower in FY 2026. From a cost perspective, we're seeing costs relatively stable across the group, with the exception of temporary water.
Temporary water is trading around just above AUD 300 a megaliter. Historical average is just under AUD 200. AUD 100 per megaliter in our business translates to about a AUD 4 million incremental cost. Finally, the dividend. We formally announced the dividend this morning, AUD 0.045 per share. It will be fully franked. We will be offering a dividend reinvestment plan as we did last year. There will be a 2.5% discount to the calculated price. The record date is November 7, and we'll be paying it on November 28. Before I hand to Leandro, I'd just like to thank our amazing employees, our executive, our board, the support from our Chair, Rob. I'd like to thank all loyal shareholders. I'd also like a special thanks to Leandro for the support he's given me during the year. Thank you.
Good morning, all.
Thank you very much for coming and joining us here in person or those that are online as well. My name is Leandro Ravetti. I'm one of the Joint CEOs looking after the technical and operational side. As Rob said, it is my first year as a U.S.A. resident. I'm sure you can pick my American accent. Sorry, South American accent. Certainly, as Rob said, it wasn't an easy decision to move to the U.S., particularly because my wife and I were leaving behind a great network of friends that became family in this country that welcomed us with open arms 24 years ago. As soon as we hit the ground in California, pretty much running at full speed with all things that were going on. We became, or we felt that happiness that really comes with knowing that you made the right decision.
I think that from very early on in our careers, Rob mentored us senior executives, particularly those that are trusted with the highest salaries, to always be looking how we can actually and where we can actually add the most value to the company and the shareholders. Certainly, you're going to see all the things happening in the U.S., and it became very clear that there was nowhere else for me to be than in the U.S.. I was definitely very happy with that decision. It's a decision that couldn't have happened without the amazing team of executives that we have here in Australia, starting with Sam.
I said this many times before, and I think it is as valid today as it was five years ago when we started as joint CEOs, that there's no one better that I could think of to have as a partner doing what we do than him. Sam is not alone. On the operational side, Rob touched on this. We have Ruth Sutherland, our Head of Horticulture, that had been looking after our trees and mills for over 10 years, and Claudia Guillaume, looking after the oil from the moment that leaves the farms until it reaches your pantries, and been with us for more than 20 years. Really, them and their teams are doing a great job as well as Brent, that normally not including my speeches, but since moving to the U.S., became a very trusted mentor and advisor on all things related to sales.
Thank you very much. We'll move to the presentation. I won't really cover those figures in detail because I'll be talking through them with the presentation, but they just simply summarize the fact that from very, very humble beginnings, which many of you remember with plenty of ups and downs, more downs than ups for many years, we became one of, if not the largest fully vertically integrated olive oil company in the world, especially when we consider the geographical reach, the level of production, the total area planted, and the brand strength. Harvest, yes, it has started in the U.S. last week as we planned. Very early on, just under 15% of the crop done, but everything tracking according to our thoughts.
Those thoughts were that the crop wasn't going to be significantly different than last year, despite the production from our own groves growing as a percentage, and the difference was coming from some third-party growers not performing quite as we hoped. That limited supply until the rest of the younger trees come into production will continue to limit the sales in the U.S. In Australia, as we have announced a few months ago, harvest finished on time and as planned very early in July. I just wanted to share with you some statistics to give you more of a clear idea about the size of the operations and the scale of the logistical challenges of implementing that operation. To give you an idea, our harvesters last year had to struggle over nearly 11,500 kms of trees to complete the harvest.
That's almost twice the width of Australia or a quarter of the Earth's circumference. Definitely a fair bit of area to cover. The operations, both at our farms, went on for about 88 days, started at Wymen, the Wymen Grove, just north of Pandery Bend, a bit early in April, and finishing early in July at Boort with the last trees being picked. 24/7, seven days a week, day and night, non-stop. We see more images of the farm, the harvesters working, the fruit being delivered, and the oil being produced in the mill. That oil goes into stainless steel tanks. You're going to see some of those in our facilities here in Lara, where we put nitrogen, temperature control to preserve all the quality, all the freshness, all the good things that Rob mentioned about the oil.
In general terms, what we have done is we milled around 75,000 tons of our own fruit, produced a bit over 13 million liters of oil. On top of that, we milled another 1 million liters from long-term third-party growers at Boort. Then on top of that, we purchased another 1.3 million liters from other Australian millers, making up a total of oil available this year of 15.5 million liters. Some other nice photos of our great staff at the groves that help us to complete that challenging operation that is always harvest. From the crop outlook, Rob mentioned that being on the farms on Sunday, Saturday, Monday, and Tuesday, having a look at the flowers, pleasingly the good condition of the trees.
The good weather conditions throughout winter and early spring so far, and the maturing profile of our trees, especially the younger trees that we planted at Boort more recently, determined that it is going to be an off year, but a very good off year with the production only forecasted to be moderately lower than what it was in FY 2025. The rest of the operations are running smoothly, particularly the integration of the recently acquired Leda AG business, that harvesting manufacturing business in Mildura. We are already working very, very hard and quickly towards one of the main goals of that transaction, that is the development of a faster and more efficient harvester to help us with our growth both in Australia and in the U.S.. Sam talked a little bit about the cost. Largely stable water is a main variable cost.
You see the graphs showing the average water purchase price over the past few years. AUD 139 per megalitre was the weighted average of all the water for the last FY 2025. As I mentioned, every AUD 100 more per megalitre that we pay has an impact of approximately AUD 4 million to our business. Now we can cover the main things that are happening around our four growth pillars. The pillars are pretty simple. They have not changed. It's all about growing the supply of olive oil, mainly from our groves in Australia, but also increasingly from third-party growers. Continue to grow our U.S. business. I'm going to put a fair bit of emphasis on that area for obvious reasons now.
Continue to increase the net return per litre through making our olive oil sales more premium, but at the same time reducing our production costs and also capitalizing on our sustainable position and upcycling our olive oil byproduct. In terms of increasing the supply from our groves in Australia, I think it's important to highlight that still 30% of our trees in our own groves are still not mature. In other words, a different way of putting it is that our mature growing area will grow by 42% over the next five to six years. If we put on top of that the 2,000 hectares of long-term third-party growers that we got signed, that adult area will almost double in the next eight years. There's plenty of additional oil to grow and support our branded growth sales in Australia.
The last of the large capital projects in Australia was completed in this last financial year, which was the rolling of the additional equipment at our Boort mill. You see the photo there of the amazing facilities that we have now. That mill can mill up to 1,800 tons of olives per day, making it one of the largest olive oil mills in the world. Fortunately, no more additional growth CapEx is required in Australia, and we'll be transitioning entirely to sustaining CapEx from this current financial year. The situation of the olive oil supply in California is obviously very different than in Australia, with a significantly more immature tree profile. Only 15% of our trees in California are mature, and an amazing 65% of the trees that we currently have in the ground are yet to produce its first crop. They're either two or one-year-olds or just recently planted.
The interesting thing is, once we complete all the plantings that we are looking at doing over the next couple of calendar years, 2026, 2027, on the back of the capital raised and some of our own funding, the production, when all those areas reach maturity, will be nearly 20 times larger than the amount of oil produced as an average over the past two years. It's a significant growth in the supply from our own groves. This is a different way of looking at that. Once we complete the planting that we're doing right now, we would have just under 1,400 hectares of groves in the U.S. that we're managing, and we're looking at planting another 2,200 hectares over the next two years in the calendar year 2026 and the calendar year 2027 to bring the total area under our management to approximately 3,600 hectares of olive groves.
In a different way of doing it, it's almost the same size of any of our two groves, either Boort or Boundary Bend. These are some images of the trees that we planted in November last year. They are much bigger trees now. That's 180 hectares that we have planted, completing the phase two of our Spato South ranch and the phase three of our Dunning and Hills ranch. You also have photos of two absolutely stunning, beautiful properties that we purchased and we are developing right now, which are right next to or in very close proximity to our existing groves. In those areas, we are planting another 360 hectares right now. We started planting a couple of weeks ago and we'll be finishing in a couple of weeks' time. It's all really happening at the moment. You can see the people planting.
I took this photo a couple of days ago before jumping on a plane and coming to Australia. A few other images of irrigation being laid out and everything else. It's plenty, plenty of activity happening. It is in those properties that we'll be continuing to roll the next set of plantings early in spring in this coming calendar year. We are also, to keep up with the additional oil that we will be producing over the next five to eight years, expanding our warehouse, particularly for finished goods, in our Woodland facility. We are commissioning our new bottling line. This is going to take place in the early months of 2026, increasing the volume of production of our bottling line from 3,500 to over 16,000 bottles an hour.
That will give us a lot more capacity and a lot more efficiency, obviously having an impact in the reduction of bottling costs in the U.S.. I'm just playing now a video of the U.S. operations for you, just to have a better idea of what's happening. Great. Really nice. They are truly beautiful properties. If you ever have the opportunity to come over to California, please let me know. I'd love to show them around. They're actually definitely worth visiting. They're world-class properties in a great, great growing area. I really look forward to seeing those trees developing over the coming years. Before I leave California, and because what we say now is followed quite closely by the industry over there, I just wanted to touch on two important things. The first one is that olives are a great crop for California.
It's a great crop for the portfolio of crops being grown in California when it comes down to helping California to retain a sustainable position in terms of food production. Rob touched on the amazing market opportunities in America. There is a market that is nine times bigger than in Australia. The consumption is really strong. From the growing side, the comparisons are also incredible. Just to give you an idea, California has approximately 4 million hectares under irrigation, with 1.6 million of those hectares being permanent crops: almonds, pistachios, walnuts, olives, citrus, grapes. In comparison, Australia, if we looked at the Murray-Darling Basin irrigation system, has about 330,000 hectares under irrigation, and only 130,000 of those are permanent crops. It's less than 10 times smaller than the permanent agricultural irrigated land in California.
What shows us is plenty of potential to grow the growing side in California, and certainly, with olives being such an efficient. Crop from the point of view of particularly water use, it's set to play a very, very important role. Just to give you some other stats, in comparison, olives use about 80% less water than almonds, one of the big permanent crops in California, around 65% less water than pistachios or walnuts, and significantly less water, nearly 100% or more or less water than alfalfa or corn or rice, which are other annual crops that are done in that area. Definitely lots of opportunities there. To support that performance of olives, we are trying to do as a company our part too.
We are partnering with local agencies to put a lot of focus and emphasis on flood control, on aquifer recharge, and actually underground water monitoring to preserve the long-term health of that water supply in California. Olives are also quite tolerant to a number of salts that are naturally present in water in California. That's why for us, it's a lot easier to utilize the surface water available. Some real actions that have taken place, we invested quite heavily in state-of-the-art irrigation systems, but also in infrastructure to be able to interconnect a lot of farmland that we are purchasing that was not previously connected to the surface irrigation system.
To bring the surface irrigation system water to those properties, allowing us to significantly reduce, at least for most of the time until we got those rare years with some only limited water allocation from the surface system that we need to use the underground water. By stopping or significantly reducing the ongoing pumping of that aquifer water that was happening before, we developed these properties. Just to give you an idea, over the past three years, we have reduced the consumption or the utilization of over 5,000 acre-foot of water, or what is equivalent to about 6,600 megalitres of water over the last three years. A real improvement to maintain and sustain the health of that aquifer that is going to help us through some of the limited years where there's only partial water allocation.
The second point, it's around the vital role that the third-party growers will continue to play for us in California. Rob touched on this, and far from not be willing to engage, we think that the third-party growers will play a crucial role for us in the development of our business or the ongoing development of our business in the U.S.. The main reason is. When the Californian production only represents 3% of the American market, increasing the awareness of American oil is critical to boost the sales. We've seen this. We went through that process here in Australia when the hardest years were the first few years when the Australian consumer didn't know much about Australian olive oil. A bit of the same is happening in the U.S..
I think that the moment that the American-produced olive oil starts representing 10%, 15%, 20% of the marketplace, the visibility over the great quality of oil that California can produce will help us all in terms of sales. That's actually a pretty important part. On the other side, we feel and we strongly believe in partnering with those growers in aligning our interests. I feel that with us investing alongside them, we're actually showing how much we trust and how committed we are to the long-term success of the industry.
At the same time, by scaling up our production, it's helping us to implement what has been a successful experience with the partnering relationships here in Australia, where it's easier for us to establish long-term supply contracts where the pricing is aligned with brand value and where we can transfer our Olive IQ IP to help the growers boost their production. Just to use a real example of California, our production of our youngest, most mature grove, which is only six years old, has been last year nearly three times higher than the current California industry average. It's quite easy to see what Rob said. It's very difficult to get any return out of the oil that you don't produce, and if we can help growers to produce two and three times more oil than what they currently do, it will certainly help both them and us.
I wanted also to show you a couple of photos. On the top right-hand side, we can see the board. That was great to have them over in California last month, having a look at everything that we are doing and having a specific strategy session around the development of the business in the U.S.. Then also a photo of our entire team in the U.S.. As you can see, it's a very lean and very committed team. I definitely would like to thank them all for the current efforts and for the flexibility that always comes with a rapidly expanding and growing business. Rob touched on a couple of them. Connor Church, our COO, became a bit of a master in terms of land purchasing and development. Nico Irving, our Head of Sales and Marketing, certainly doubling the sales of our branded product in the U.S..
Doesn't happen on its own, so he played a very, very important part there. Our CFO, Alice Gowan, our HR Manager, Christina Killian, that with the rapidly expanding team is working overdrive. Even a recently created position of Industry Relations, Justin Smith, showing our commitment and the importance that we are now placing to the relationship with third-party growers. On the third pillar, in terms of improving the net return per liter, we as a company are continuously exploring every possible alternative where we see that technology can help us to unlock higher efficiencies and, because of that, lowering production costs. We've got plenty of projects going on. One of those, which was the implementation and commissioning of these automated guided vehicles that we see in this photo, and you're going to see them operating in the warehouse during the tour.
It's going to definitely help us with the increased amount of oil in Australia to continue to handle this product safer and at lower cost per liter. Lastly, I'll touch on the last of our growth pillars with sustainability. Certainly, sustainability, as you know, has been in our DNA for the past 25 years. Although since we listed, we took a bit more formal approach to it. We compiled our objectives into three key pillars: people, planet, and business. You can read all of that in our 2030 Sustainability Strategy. Just this year, we had a couple of significant events. One of them in particular was the establishment of sustainability-linked loans with CBA, aligning the interests of the loan with our interests from the sustainability pillars. We believe that that has been definitely a great achievement.
Similarly, a number of other certification and accreditations around this process and continue to invest a lot on consumer education, healthcare professional education around the sustainability and the health aspects of extra virgin olive oil. You can read more about those targets again in the sustainability report. It's actually quite comprehensive and very, very important. Obviously, for time reasons, I cannot cover them all. Probably one of the things that I really wanted to highlight is the fact that, again, for the second year since we are measuring it, we can confirm that our operations are net carbon sink, with the carbon being sequestered.
Both above ground and below ground in our operations, more than offsetting all the emissions around scope one, two, and even scope three, which is all the emissions that we are not doing, but our partners supplying bottles or transporting oil to the supermarkets are currently doing. We are better than all that, which is a great position to be in, considering that still in Australia and particularly in the U.S., we've got a significant amount of trees that are yet to mature and because of that, to sink even more carbon. Finally, I'll just wrap up with what is becoming a bit of a flagship about our sustainable responsible position with the environment.
It is the project and the advancement of the project to protect and enhance the habitat of the endangered malleefowl, our almost mascot for now, at the Boundary Bend site, in partnership with both the Victoria and the National Malleefowl Recovery Group. This is all from my presentation. I'll hand that back to Rob now for the more formal part of the meeting.
Thank you very much, Leandro. Did you notice that my presentation had no slides? The further we went through, there were more photos, more videos, more... I think they might be trying to send me a message. Next year, I might not even get an audience. I know you all came for the formal part of the meeting, so I will try and get through it as quickly as possible. The company secretary has confirmed the notice of meeting and explanatory memorandum dated 30 September 2025 was circulated to shareholders entitled to receive it within the notice period. The matters requiring consideration today are outlined in detail in the notice of meeting and explanatory notes. The notice will be taken as read. Before moving to the various resolutions to be considered today, I will briefly outline procedures for today's meeting. I'm sorry, I've got to do all this.
In accordance with the company's constitution, as set out in the notice of meeting, we have determined that voting on each of the resolutions will be conducted by a poll rather than a show of hands. The result of the polls will be declared and released to the ASX later today and also be published on the Cobram Estate website. As Chair of the meeting and detailed in the notice of meeting, I will vote where authorized all undirected proxies in favor of each resolution. As mentioned previously, for all those attending the meeting in person, you can cast your vote by filling out the paper voting card. If you have any other questions, please see a member of the MUFG corporate markets team at the registration desk.
Voting online for those shareholders participating in the meeting via the online voting platform: as mentioned, you can cast your vote using the electronic voting card that you have received when you validated registration. If you have any questions about casting your vote online, please refer to the online voting platform or call the number set out in the guide or on the screen in front of you. How to ask questions: if you have a yellow or blue card and wish to speak, please make your way to one of the two microphones on the side of the building. There will be questions after each resolution, and then we'll have general questions at the end. Don't panic. We're happy to stay all day. If you wish to submit a written question, select general business or a specific resolution, type in your question, and click submit.
Comments can also be submitted in the same way. For those participating in the online platform, you will be able to submit your questions by registering as a shareholder or proxy holder and selecting the ask a question tab. If you're asking via the web phone slide, if you wish to ask a verbal question via web phone, select go to web phone, enter your name, and click on the green phone button, and you'll be connected to the meeting. Press star one and ask a question at the time of your item of business. Please ensure you have muted the video on your computer device. For those participating online or via web phone, if you have any questions, please call MUFG Corporate Markets on 1-800-990-363. You'd think in this day and age it'd be easy to vote. I think they'll show a hand with all these technologies too.
Let's go to the financial statement reports. This is the first item of business, and it's for discussion purposes only and not a resolution. It relates to the 2025 financial statements and reports. However, the board and auditors will certainly take on board any feedback from shareholders. The 2025 annual report contains the company financial report, director's report, independent auditor's report for the year ending 30 June 2025. A copy of the 2025 annual report is available on the Cobram Estate website and was emailed to all shareholders to whom we have an email address or sent to those shareholders who requested. The financial statements have been approved by the directors and auditors. Noting my earlier comments, we'll take the financial statements and report as read.
To receive and consider and approve the financial report and related director's report and auditor's report for the year ending 30 June 2025, at this time, I'd like to invite any questions or comments to management of the company in the financial report or to ask the auditor any questions relating to the audit report or preparation of the auditor's report. Firstly, we'll take questions from the floor. Is there any questions from the floor with regards to the first item? It's pleasing. Is there any web phone questions, Hasaka? Any online?
No, there's no questions online.
Yeah, good. Okay. Let's go to the next item, which is an item to be voted on, which is the adoption of the remuneration report. The remuneration report detailing the company's approach is contained in the 2025 annual report, which is available on the website. We'll take that remuneration report as read. Further details about the resolution are also contained in the explanatory memorandum that accompanied the notice of meeting. The vote is advisory only and not binding on directors or the company. Details of the votes for this item are now on the screen. Noting that each of the directors has a personal interest in their own remuneration from the company, the board unanimously recommends that shareholders vote in favor of adopting the remuneration report. Are there any questions? We'll go from the floor first. Any online or?
There are no questions on web phone or online.
Excellent. As there's no further questions, can you please select for or against or abstain next to item two on your voting card? Thank you. Item 3A is re-election of Non-Executive Director Toni Brendish. Toni has more than 30 years' experience working in blue chip FMCG, healthcare, manufacturing, agriculture, and telecommunication companies in Asia, Australia, and New Zealand, including over 20 years in Chief Executive Officer or Managing Director roles. Toni is currently Non-Executive Director of ASX-listed natural fish oils manufacturer and ingredient business, Clover Corporation, and the independent Chair of Fresh Produce Group, one of Australia's largest vertically integrated produce suppliers. Toni commenced as a Non-Executive Director of Cobram Estate Olives Limited on the 23rd of January 2023. Toni is a member of the Audit and Risk Committee and Remuneration and Nominations Committee and is Chair of the Safety and Sustainability Committee.
I'd like to invite Toni to say a couple of words, please.
Good afternoon, everyone, and thank you for the opportunity to address you today. When I joined the Cobram Estate Olives Limited Board in January 2023, I was immediately impressed by the quality of this business, from our world-class olive groves to our premium products that compete on the global stage. Over the past three years, I've had the privilege of contributing to the strategic direction of the company, and I'm excited about the opportunity to continue this work. Throughout my executive career, I spent over 20 years leading businesses with revenues up to AUD 2 billion across Australia, Asia, and New Zealand. Most relevantly, I served as the CEO of Westland Milk Products, where I led a business with over 90% export focus across 43 countries.
I understand the complexities of agricultural businesses that must balance farming operations with manufacturing excellence and international market dynamics, challenges that are very similar to those that we face here at Cobram Estate Olives Limited. What I bring to the Board is hands-on experience in operations and supply chain and leading large teams. I'm also passionate about ESG and sustainability, areas that are becoming increasingly important to our customers and our social license to operate. Since joining the Board, I've been particularly focused on understanding the unique aspects of olive production and oil manufacturing. I've worked to bring my operational experience to bear on questions of efficiency, quality, and market positioning, and I believe there are significant opportunities ahead for us at Cobram Estate Olives Limited. I'm seeking re-election because I believe the work that we've started has significant momentum, and I'm committed to seeing it through.
The next few years will be critical as we navigate the market opportunities that you've heard today, some of the operational challenges, and the strategic growth options. I believe my experience positions me well to continue to contribute meaningfully to these decisions. To all the shareholders here today and online, I don't take your trust lightly. Board service is a responsibility I take seriously, and I commit to bringing the same rigorous thinking, commercial judgment, and dedication that I've applied through my career. Thank you for considering my re-election.
Well done. Thanks, Toni. The votes for Toni are on the screen, so I think you're reasonably safe. The directors, excluding Toni, unanimously recommend that shareholders vote in favor of Toni, and we thank you for your service. Are there any questions for Toni or for the board from the floor first? Very good. Anything, Hasaka, online or webcast?
There's no questions from the web, phone, or online.
Excellent. As there's no further questions, can you please vote for, against, or abstain next to item 3A on the voting card? Moving to item 3B, which is a re-election of Executive Director Leandro Ravetti. Leandro is a graduate with an agricultural engineering degree in Argentina and worked for the National Institute of Agriculture Technology and Olive Production Research from 1995 until he moved to Australia in 2001 and joined Cobram Estate Olives. Leandro has studied and worked as an invited researcher at the Olive Growing Research Institute in Italy and different government olive institutions in Andalusia, Spain, where he completed a postgraduate degree on olive growing and processing. Leandro was appointed Executive Director of Cobram Estate Olives in 2005. As part of his role, Leandro has overseen all technical aspects of olive growing and olive oil production, developing the Olive IQ growing system.
Leandro was appointed Joint CEO Technical Production of Cobram Estate Olives on the 20th of April 2021 and formally held the role of Technical Director. Leandro's just going to say a couple of words. I know you've heard from him a lot, but one more short time.
Thank you, Rob. No, definitely you heard from me a lot. I just wanted to simply thank you. It has been an honor and a privilege to be at the board of the company learning heaps over these past 20 years, and I will look forward to continue helping the growth of the company. Thank you.
Thank you, Leandro. The votes are on the screen. For those that are voting against, I think they should go and see a doctor, but they're entitled to vote however they want. The directors, excluding Leandro because he's abstaining, recommend that you do vote in favor of Leandro. It's very important to the company, very important to your wealth. I really don't understand that one bit. Are there any questions for Leandro or the board, online or webcast?
Are no questions online.
All right. Excellent. Could you please vote for or against or abstain next to 3B on your voting card? I think this is the last item, actually. Item 4, the ratification of prior issue of placement shares. This is effectively just cleaning up. There's absolutely nothing planned, but you can only issue 15% of a company's shares within a 12-month period without shareholder approval. We felt that it would be reasonably normal practice at the next AGM that's reset just in case. Certainly, there's no underlying intention or anything untoward. Of course, you can ask as many questions as you like with regards to that. Details of the resolution are contained in the explanatory memorandum that accompanied the notice of meeting.
On the 9th of September, the company announced that it had received binding commitments from new and existing institutional investors who were clients of Aitken Mount Capital Partners to subscribe for 54.6 million shares at an issue price of AUD 3.20 per share to raise approximately AUD 125 million. The resolution therefore seeks shareholders ratify for the purpose of Listing Rule 7.4 for the issue of 54,687,500 shares to the September placement participants. Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of shareholders over a 12-month period to 15% of the fully issued ordinary shares it has on issue at the start of that period. The September placement does not fit within any of the exceptions set out in Listing Rule 7.2, and it has not yet been approved by shareholders.
It effectively uses up part of the 15% limit in Listing Rule 7.2, reducing the company's capacity to issue further equity securities without shareholder approval under Listing Rule 7.2 for the 12-month period following the date of the issue. The company wishes to retain as much flexibility as possible to issue additional securities in accordance with having to obtain shareholder approval for such issues under Listing Rule 7.2. Accordingly, the company is seeking shareholder ratification pursuant to Listing Rule 7.4 for the issue. Details of the votes for this item can be seen on the screen, and the board unanimously recommends that shareholders vote in favor of this resolution. Are there any questions? We'll go from the floor first.
Yep.
Do you want to go to the speaker? Just line up with the speaker if you have any questions. Thank you.
Is that on? Yeah.
Yes.
Michael Barrett, my name. I've been a shareholder since you floated on the market. There's been a spectacular increase in share price. My first sort of question is, how did you come to strike the price after languishing fairly at around about AUD 2 or something like that? All of a sudden, it's gone to about AUD 3.20. How did you strike that price to float this capital raising?
There are two parts to that question or to answering it. One is that the share price went up just through market participants, obviously on the expectation of some, I believe, that we would be in the ASX 300. In saying that, we also had announced a record profit. Although you can talk about what profits will be in the future and not until you announce them, does the market often listen? The price was effectively, the price closed on that Friday at AUD 3.23. It's normal to give some discount, although this was quite a small discount.
Although we would have never in our wildest dreams considered raising money probably sub-AUD 3, we felt with the, and had been discussing for a short period, but not openly to anyone, just internally at the board, that with the opportunities in front of us with land availability in California and all the things we know, that this would be in the best interest of shareholders and that Aitken Mount were able to get it away at that price.
Okay, because my broker said to me that the company was overpriced. He said, "This is ridiculously, totally overpriced.
I hope he's wrong.
I've actually proved him wrong because there's been no retreat from that price.
Have you moved brokers?
No, he's still a good mate of mine.
We all have those sort of mates.
The second question I have, it might fit into an after question.
That's okay.
You've got the written down value on the books of the crop. Now, how do you value that for insurance? Or do you insure? That does have implications if there's a serious flood or a fire, or I know there's tornadoes in Victoria that I didn't know about the other day, or any natural disaster. That would seriously affect the business because you do rely on having a crop and good crops at that.
Yeah. I'll answer it in broad terms, but some of the detail might need to be answered by Sam. You're right. We do rely on Australian olive oil supply to support Cobram Estate and Red Island because they're 100% Australian. That comes with the pros and cons. The risks, we obviously do a risk register and update it. In the early days, it was many, many days of looking at what are our risks everywhere from where we store the oil to someone breaking in, the oil for being turned on, fire, all of those things. Some risks are insurable and some aren't. Our advantage to a certain extent is that we, our groves, we've got three groves in Australia. They're around two hours apart.
The fire, we put a huge amount of time and effort into fire reduction, burning, and fire engines, and not moving on those really hot days when that could be a risk. The likelihood of a fire having all three groves is, and there's a reasonable amount of flexibility within our supply of oil depending on exactly when that fire might happen because fire is a reasonable risk. More so, it may be a bulk grove than further north where we've got the river, the Murray River, to the north of us, which is where the prevailing winds come from that drive the fires to it mostly. Also, it's just a very sparse area where grass isn't very close together because it's a 12 in rainfall. We do insure, but we still do fire insurance, but every year they double the price and halve the amount they'll pay you.
We're just putting more and more work into fire breaks and doing stuff internally that reduces the fuel load to manage the fire risk. I don't lay awake at night thinking if fire burned all of our groves, you'd think, well, it might do part of one of our groves if we're unlucky. We do have something like AUD 25 million in insurance, is it?
Just to cover off on that, we do have insurance on our trees for fire in particular. In relation to the crop, we don't have insurance because it's very, very difficult to get, but if you can get it, it's just cost prohibitive. We obviously look at more of a risk management approach there. In the U.S., we do have crop insurance because it's largely subsidized by the government. It's very different over there.
In other words, you're carrying a lot of the insurance, what an insurance company would underwrite or would carry, you're carrying it yourselves, is it? Would that be fair enough?
Part of it.
You've dumbed it down a bit. You've been prepared to invest in capital with fire equipment and everything to reduce that risk. Is that what I'm hearing?
Yeah, in relation to the crop, in relation to the tree insurance coverage.
Yeah, the crop, the olives that are the core of the business.
Yeah.
Okay, now just a little bouquet. My Italian relatives have now switched to Cobram Estate.
Yiddi. Seagrass will go up.
That's right. The other thing is that your frankness is just fantastic, really. I'm thinking of selling my gold shares and buying more Cobram.
The broker's not going to be very happy. Thank you very much. Are there any other questions? Anything online or webcast?
No, no questions online or on the webpage.
Excellent. Please vote for or against or abstain on item four of your voting card. We'll now go to general questions. If you have any, feel free to line up at either speaker, and we'll try and work out who's best to answer them. We'll get back to you if we can't.
Rob David McKenzie. As a shareholder since about 2012, I think. Just interested in you talked about the planned expansion of olive production in the U.S. in terms of company-owned. I'm wondering over the next five to 10 years, what's the sort of profile you're aiming at in terms of, say, millions of liters of production from third-party contracted groves?
Yeah, look, it is a very good question. The answer is not so simple, but anyone who talks to us who wants to partner for a longer period and reasonably exclusively, we're happy to take on. Of course, we have to ensure that that fits into our capital program with regards to being able to process the fruit in a timely manner. Certainly, from a selling it point of view, we're not at all worried about that. It's such a big market. Now, the price is a different story, but as we said before, if you don't produce it, you get zero. If you do a great job at marketing, you get 20% more. It's around that production.
Probably the most important thing, and Leandro said there is a lot of potential over there, but there's no other crop that I'm aware of or mainstream crop where the best grower gets 60% more fruit than the top 6% of growers in the world. I mean, 20% is just massive above the average, let alone the sheer volume that we get above most others. I think our average in California is something like three times the average of California, even though they've planted all their olives since 2007. It's because it's not easy and because the site selection is quite difficult.
One of the things that we pride ourselves on is just being honest with growers to say, "If you plant on that site where you're already pulling out these vineyards, you have these limitations, so you'll get half as much oil at best." It can be a bit of a shock, but there's no use leading them into a form of sort of belief that they're going to somehow just produce 10% or 20% less, which is what you would expect in a lot of other crops if you're not in the most ideal area. I didn't quite answer the question, but almost unlimited because it's there, it's happening. Again, it takes a lot of money, takes a lot of time. It's not going to be like something that's ridiculous, does that make sense? These things just happen slowly.
They've got to get the trees, they've got to order the trees, they've got to find the land, they've got to do the work, they've got to put in the irrigation, they've got to spend all the money. We just keep assessing that as a board as we go. At the moment, there's no limits on if someone comes along and they've got a suitable site and we can see they'll be profitable. The last thing we want to do is help someone plant olives that we know will never be profitable unless they're getting paid twice as much as anyone could afford to pay, because they'll be disappointed and it'll be our problem.
We need the industry to be really successful where growers are making good money, not, "Oh, we've got to pull these out and plant something else because it didn't work," when the science is pretty clear where they're going to work or not in that growing area. It'll be that production side that risks the industry. It won't be the sales side, in my humble view.
Okay. Thank you for that. Can I ask a second question?
Yeah, go for it.
I noticed just in sort of skimming through the early parts of the financial report, this got a bit of a mention but hasn't been discussed today. What's the current status and plans in relation to seeing if there's any value to be gained out of the waste products from production?
Do you want to? I'll hand this over to Leandro.
Yeah, it's an area that has been growing. As we announced a couple of years ago, we shifted away from the previously designed idea of doing a branded sales around it. We are quite happy with the work done on the development of the different streams, but mainly on business to business. So far, we are working through selling the vast majority of our byproducts on a business to business basis. The thing is not being reported separately because we found it is a lot easier to integrate it now as part of a farm profit reporting, but it certainly has been profitable for the past three years. We expect that to continue to be so and slightly increasing year on year as the supply of byproduct continues to increase too.
Thank you for that.
All right, thanks. Hey, Mark.
Hi, Rob. Just firstly, I was just wondering if you might expand on the water purchasing strategy this year, particularly if it does get a bit warmer over the summer. To mitigate any sort of upside in that water prices around that. You possibly wouldn't trust the Bureau of Meteorology's website or anything related to that, but any thoughts around that and how you might mitigate that risk around a hot summer?
Thank you, Mark. It's around temporary water pricing and availability. Our strategy hasn't changed for 10 years through drought and flood because you don't know when it's going to rain and you can't work out what every speculator is going to do. As you say, the Bureau is often wrong. We just buy the water as we need it. We've found over the test of time that rather than trying to speculate, because the Bureau are still saying that there's a short La Nina, there's northwest flows of air, there's a positive dipole that we're going to get this rain, which it is raining now, but maybe not enough. The price, we can outcompete anyone on the price of water. We don't want to because we're giving away money, but there's no mainstream crop that can pay more for water than us because olives don't use a lot. They're resilient.
We're efficient. We've got a great business. A lot of the water goes to annual crops who really, they're at their ceiling even now. We've never had trouble getting the water. It's just what price you pay. We don't know how you really lock that in without looking silly at the end of the year. Of course, it doesn't mean that we mightn't buy water that takes us through till Christmas now because of January. If you just go into the market and try and push it because you want to fill it and others are still getting allocations and no one knows what's going to rain, we just found out in the long term, you're better off just buying it when you need it to a certain extent, and that is what it is.
Pretty good. Secondly, in terms of the U.S. market, just to comment on the pricing. Relative to what we're used to in Australia and looking at sort of the other brands like Olive Branch over there, but also looking at Spain, I think the industry is saying that Spain crops are going to be down 7%, and also tariffs on some of that European product. Is there some upside in terms of pricing in the U.S., or how do you think about that premium positioning?
No one wants to answer this one, I mean.
No, happy to. Yeah, I think just in terms of pricing, so there's really two local brands, or California brands, us and California Olive Branch. We sit below them in terms of pricing, but above the main European brands, which are probably 20%- 30% lower than us. There's been, as we said in the opening address, there's been a little bit more discounting from the imported products, similar to Australia. In terms of tariffs, it's really important to remember that only about 3% of what's consumed in the U.S. is produced in the U.S.. We have a real competitive cost advantage compared to all the importers, which makes up about 90% of consumption.
Is that European tariff flowing through, is it, or in terms of European pricing, I guess I was trying to get at?
Yeah, European. What the retailers have to pay for European products, they'd have to pay a tariff on it, which ultimately you'd expect to work through to pricing.
Yeah, very good. Thank you.
That tariff might change next week. Are there any other questions from the floor? Any questions from?
No questions online.
All right. That's absolutely terrific. Certainly, we're all around. We'll have a tour of the facilities and come back in here for lunch. There are toilets both at the front and the back. Please just come and see any of us to ask questions or give us your feedback. We're all ears. If you could, please vote if you haven't done so. The poll will close in five minutes from now. I'm just—how are we going to do it? Those with the purple hand are going to be led by Leandro, so I'm assuming you go first. Are you going to go out that door?
Yep.
Thank you very much, and we'll see you over lunch. Thank you so much. If you follow Leandro, if you have purple and then red, maybe Sam, if you just stand halfway along or something, Leandro can get cracking as soon as he can. Green hand nets are going to be with Stuart and Andrew Burgess. Oh, Claudia, sorry. Sam, if you stand in the middle and Claudia's up here roughly, all those with a purple hand net can just follow Leandro out the door.