We'll now begin, and there is a webcast recording this today. Welcome to the AGM of GrainCorp. I am Peter Richards, Chairman of the Board, and I thank you for joining us today. And I wholeheartedly thank you for all being here. It's now 10:00 A.M., the nominated time for the meeting, and I'm advised by Annerly that a quorum of shareholders is present, so I can now declare the meeting open. This morning, I'd also like to respectfully acknowledge the traditional custodians of the land on which we meet, namely the Gadigal people of the Eora Nation, past, present, and future, and recognize the strength and resilience of the Aboriginal and Torres Strait Islander people in this land. I'd now like to introduce my fellow board members. To my immediate left is Mr. Robert Spurway, and non-executive directors Kathy Grigg, Clive Stiff. Now, you might notice I've missed Peter.
Peter was in jury duty, but he's managed to join up with us today, so welcome, Peter.
Morning.
And then Nikki Anderson, and right at the other side is John Maher, so welcome to our fellow directors. And in front of me, our company secretary, Stephanie Belton, and Annerly Squires. And of course, we've also got Ian Morrison here next to our auditors joining us today, so welcome to all. Also in the room, it's always great to see our dedicated, committed, and talented executive team. We've also got our investor relations manager, Dan Jones, who has accompanied me on about 15 meetings with shareholders and proxy advisors over the past month. We've also got Eliza Penny from PricewaterhouseCoopers, the company's, sorry about that, Eliza, the external auditor. And of course, representatives from our share registry provider, MUFG, which is a bit of a surprise to me as well. They were previously known as Link, so welcome to them.
Okay, turning to the agenda for the meeting, I will deliver the chairman's address, and Robert will then present a detailed review of our FY24 achievements, as well as an update on the recent harvest, the winter harvest, and our earnings outlook for financial year 2025. We'll then proceed to consider the resolutions set out in the notice of meeting. I will outline the voting arrangements, a bit tedious but we have to do it, ahead of that section, and there will be an opportunity for shareholders to ask questions during the formal business items as they relate to the resolutions being considered. Okay, moving now to the chairman's address. First of all, always health and safety an area of utmost importance to GrainCorp, and of course to the board and myself.
We are steadfast in our commitment to zero harm, and FY24, we were pleased to report improvements in both our recordable injury frequency rate and our lost time injury frequency rate. Still too high, but on the trend downwards, which is great. While these improvements are encouraging, we recognize that the health and safety of our people requires ongoing organization-wide commitment, and it remains a critical focus for us. In terms of the FY24 highlights, GrainCorp's financial and operational performance demonstrated resilience and consistency as it faced some industry headwinds and an operating environment that was more challenging than in recent years. Against this backdrop, the board was delighted to see management deliver underlying earnings before interest, taxes, depreciation, and amortization of AUD 268 million and net profit after tax of AUD 77 million.
This was achieved by maintaining efficient operations across our network, and I should note that for the first time, the ECA had zero LTIs during the harvest, which was a fabulous achievement. Also focusing on the delivery of high-quality grower and customer service and successfully advancing several strategic initiatives. We also refreshed our strategy, positioning our business to capitalize on emerging opportunities. Our new core pillars, enhance, expand, and evolve, which Robert will expand upon, guide our efforts to create value and deliver strong returns for shareholders well into the future. Pleasingly, GrainCorp finished FY24 with a core cash position of AUD 337 million. This strong position allowed the board to declare a final dividend of AUD 0.24 per share, fully franked, bringing total ordinary and special dividends in the financial year to AUD 0.48 per share. This is in addition to returning AUD 27 million to investors through an on-market share buyback during the financial year.
Turning to sustainability, FY24 was an exceptional year. We made significant strides towards our vision of leading sustainable and innovative agriculture through another century of growth. As a board, we view the pursuit of sustainable initiatives not just as a responsibility, but as a tremendous opportunity for GrainCorp and the Australian agriculture industry more broadly. To seize these opportunities effectively, we prioritized the continued upskilling of the board on key ESG matters, making it a cornerstone of our efforts. We have also ensured that the necessary capabilities are in place across our sustainability, finance, risk, and strategy functions. These efforts position us well as we prepare for the comprehensive climate disclosure required under the Australian Sustainability Reporting Standards.
We achieved several sustainability milestones in the year, including submitting our emissions reductions target to the Science Based Targets initiative for validation, receiving endorsement of our Innovate Reconciliation Action Plan from Reconciliation Australia. We completed the modern slavery due diligence with suppliers in identified high-risk sectors and geographies, and we supported 174 community groups through our GrainCorp Community Fund, of which the board is incredibly proud. We've also launched an initiative called GrainConnect , which is a multi-year initiative which aims to develop an end-to-end low-carbon emissions supply chain for Australian grains and oilseeds. Robert will provide more information on this, but it's an initiative that, again, we're really looking forward to working with our growers on. Looking ahead now to FY25, I would like to discuss board renewals.
We always regularly review our composition to ensure we have the right mix of skills, experience, and attributes to meet the challenges ahead. Along with myself, Clive Stiff is also seeking re-election today in accordance with the three-year rotation cycle. Clive joined the board in October 2021 and was first elected by shareholders in February 2022. He is currently Chair of the Sustainability Committee and a member of the Audit and Risk Committee. Since joining GrainCorp, Clive has made and continues to make a significant contribution to the board and its committees, and we, as a board, unanimously endorse his re-election today. I'd also like to take a moment to acknowledge Nikki Anderson, who will retire from the board at the conclusion of this meeting.
During her term, Nikki has brought strong leadership as chair of our People, Remuneration, and Nominations Committee and has made valuable contributions to the board more generally, including as a member of the Safety, Health, and Environment Committee. I'm going to certainly miss our strolls along the Killcare Beach, Nikki. On behalf of my fellow directors, I'd like to thank Nikki and wish her every success in the future. Following Nikki's retirement, we do acknowledge the impact on gender diversity among the remaining board members. As a board, we firmly believe that inclusion and gender diversity are vital elements of effective governance and strong performance. We are committed to addressing this through our ongoing board renewal and succession planning processes, ensuring diversity remains a priority in shaping our future leadership. Looking ahead, I'm confident in the long-term fundamentals underpinning GrainCorp.
Our business, as I said, is in excellent financial position, supported by a robust strategy that will drive high-quality operational performance, improve earnings resilience, and continue creating value for shareholders. We're also pleased today to announce our intention to conduct an on-market share buyback of up to AUD 50 million, which builds on our strong track record of returning capital to shareholders. On behalf of the board, I want to extend my heartfelt appreciation to our people, many of whom are in the room today, for their hard work and for their unwavering commitment to delivering outstanding outcomes for growers and customers, and of course, to you as shareholders. I'd also like to acknowledge Robert and the senior management team for their leadership and dedication to executing on our strategy, and finally, to all of you GrainCorp shareholders, thank you for your continued trust and support.
Before handing over to Robert to give you more granular detail, we'd like to share a video on what I consider a really exciting initiative, GrainCorp Next. Thank you.
GrainCorp Next is a program to help demonstrate what an end-to-end low-emission supply chain looks like for food, starting with canola, where GrainCorp has a vertical integration. The idea is by year three, we'll be able to deliver low-emission canola oil at scale to the market, from handling through the supply chain, through crush, right through to the customer, the end user of the canola oil.
We as farmers, we innovate and we like to adapt. It's constantly evolving. Going forward into the future, we've got to be sustainable. So if we can do something now that helps in the future, that's just going to help with generations to come. We need help with direction that gives us a little bit more understanding of sustainability.
Today, we're here to measure and model emissions as part of the GrainCorp Next program. We're very happy and proud to be a part of GrainCorp Next. We hope that through interacting with the growers, we'll be able to educate. And then showing that increasing production efficiency and decreasing emissions go hand in hand.
Sustainability is extremely important for GrainCorp and its customers. We're extremely excited to have this trial undertaken at this site. GrainCorp Next program is allowing the site to trial this renewable diesel. We're currently trialing it in our front-end loaders and a couple of trucks that are coming through the site. We've also got solar panels that run our sample stand and weighbridge, which have been installed for the last two years. The solar system we have at the site is a 22 kilowatt system, and so far it's been extremely reliable and just fantastic for the site.
Over the last three months, I've been working on this really exciting opportunity at GrainCorp to test and trial renewable diesel in our equipment here on site in Elmore. This renewable diesel, it's a blended product with regular diesel. The renewable component is made up of approved waste streams like used cooking oils and tallows. So because this is a chemically identical product to regular diesel, we don't expect any impact on engine performance or engine efficiency. So the renewable diesel will be used to power our Volvo loaders on site as we move canola from here in Elmore to Numurkah.
The future for GrainCorp in Numurkah is exciting because we are looking at a 2030 strategy for sustainability. We're busy developing the pathway to what's going to be achievable targets for us as a site. The biggest area that we will be looking at is our Scope 1 emissions, which is our two six-megawatt boilers that provide thermal energy to the site, which is important in our canola crushing process. It's important we use a lot of data and data analytics to assess how we reduce Scope 1 emissions and looking at alternative equipment and technologies that we can use to reduce those emissions that the site emits. Sustainability is important to me personally. What we do in treating canola, we use energy, we impact the earth, and as part of my professional journey, I'd like to lessen that impact so that the future of our kids and grandkids are kept intact.
GrainCorp is progressing very rapidly in key areas of sustainability. We understand that our customers and investors are all really interested in ensuring that ingredients are sustainably sourced, that they are reducing emissions, that they are doing positive things for nature, and often using regenerative agriculture as a vehicle for delivering those outcomes. We know there's a long way to go. We know there'll be many bumps in the road ahead from here, but we're making great progress.
Thank you, Peter, and good morning, everyone. It's a pleasure to be with you here today, and isn't it great to see so many people from across GrainCorp present in that video? This morning, I'll share with you and review our operational and financial performance for financial year 2024. I'll share progress on our strategy and how we're delivering on it. Importantly, I'll provide an update on the 2024-2025 winter harvest and our earnings outlook for financial year 2025. Starting with safety, it was pleasing to report multi-year lows and injury frequency rates for financial year 2024, along with encouraging uplifts in hazard identification and reporting metrics, a key focus for financial year 2024, which exceeded internal targets. The continuous progress on health and safety outcomes remains a key priority for GrainCorp's senior leaders this year as we strive for zero harm across the business.
Turning now to some of the operational and financial highlights for financial year 2024, which saw GrainCorp deliver underlying EBITDA of AUD 268 million and an underlying net profit after tax of AUD 77 million. The result reflected lower grain production in Australia compared to recent years. On the East Coast, the 2023-2024 crop could be characterized as dry and challenging in the north of Australia, offset by good growing conditions in Victoria. These domestic factors coincided with strong production of grains and oilseeds globally, compressing margins. Both of our segments, agribusiness and nutrition and energy, responded effectively, demonstrating strong cost control without compromising on our high levels of grower and customer service. Within our agribusiness segment, our East Coast Australia network, which we call the ECA, handled 28 million tons of grain in financial year 2024, compared with the 37.4 million tons the prior year.
This is reflecting the decline in the winter production that we saw through the harvest of 2023-2024. Our international business recorded a reduction in grain sales volumes, largely reflecting the lower production in Western Australia. Our nutrition and energy segment increased crush volumes to 540,000 tons, offset by lower margins per tonne. And animal nutrition sales volumes of 517,000 tonnes were up from 405,000 tonnes the prior year, and that was bolstered by the acquisition of XF Australia. I'm pleased to report that the integration of the XF business is progressing well. Agri-energy sales volumes in financial year 2024 were 379,000 tons, with both tallow and used cooking oil recording year-on-year uplifts. Now turning to our strategy. Our refreshed strategy on this slide will look familiar to many of you and builds on the work that we've been doing now for several years.
The first pillar, Enhance, centers on leveraging our existing capabilities and driving utilization and value of our strategic assets. The second pillar, Expand, focuses on disciplined growth and adjacencies to diversify our earnings base across food, feed, and agri-energy, which we expect to drive earnings resilience over time. In short, higher quality earnings through the cycle to lift shareholder value. The final pillar, Evolve, refers to the tools and enablers that help us execute on our strategic initiatives, including technology, digital, and future capabilities. Our strategy is underpinned, of course, by our values. We stay safe, we do what's right, we care, and we deliver. In financial year 2024, we delivered what we said we would, and I'll share now with you some of the examples of the progress we've made. In terms of driving utilization of our assets, we crushed a record volume of oilseed at our processing sites.
This resulted from further implementation of advanced analytics tools, and we're deploying similar tools to improve efficiencies across our ECA network to further drive volumes and optimize labor and cost planning and other harvest activities. Our ports diversification strategy has now been underway for several years. By handling commodities such as wood chips, fertilizer, cement, sugar, sand, and more, we create additional earnings streams that are largely decoupled from the cyclical nature of grain production. At our financial year 2024 results, we shared additional detail that demonstrated the improved earnings contribution and margins we've realized over time in this space. The acquisition of Performance Feeds and Nutrition Services Australia expanded our animal nutrition offering and provided additional countercyclical earnings. That business continues to perform exceptionally well since acquisition, and we see opportunities for further investment and growth in our animal nutrition business.
During financial year 2024, the completion of the acquisition allowed us to increase our average earnings through the cycle by AUD 10 million to AUD 320 million. We remain confident in the opportunity for feedstock supply to the renewable fuel sector, and in July 2024, we entered a memorandum of understanding with Global Fund Manager IFM Investors and Australia's largest transport energy provider, Ampol. This was to explore the establishment of an Australian-based low-carbon liquid fuel supply chain. The feasibility study for an additional crush capacity is progressing well and includes consideration of the policies and conditions required to support investment of this nature. The initial timeline for the project, including the target to complete the feed phase in 2026, remains subject to the development and evolution of government policy to accelerate supply and demand of low-carbon liquid fuels.
We're also excited to continue investing in emerging and innovative technologies through our digital and agtech portfolio. This supports like-minded businesses which are focused on enhancing the long-term sustainable growth of Australian agriculture. During financial year 2024, we commenced the implementation of our Business Transformation Program. This will help us unlock efficiencies and drive returns across our integrated value chain. As we've previously stated, we expect the program will deliver annual benefits of AUD 20 million-AUD 30 million once completed. Sustainability is integral to our strategy and performance. At our processing sites, we recorded a 5% reduction in greenhouse gas emissions per tonne as we completed several initiatives targeting energy efficiency. Further improvements at these sites are a priority for financial year 2025 and beyond and are a key element of our cost reduction focus.
We've submitted our near-term for 2030 and long-term 2050 emissions reduction targets to the Science Based Targets initiative, or SBTi, as many of you may know it as. This is now with them for validation, and we'll provide an update to the market on our progress throughout the year. In October, we announced the launch of GrainCorp Next, as featured on the video and introduced by Peter. This is a multi-year initiative which aims to develop an end-to-end low-carbon emissions supply chain for Australian grains and oilseeds. We're really excited about the opportunities this generates for growers, and our aim is to position the Australian grains industry as a global leader in sustainable low-carbon agriculture. In 2024, GrainCorp was invited to and joined the Australian Jet Zero Council.
We're pleased to represent the feedstock sector, and we look forward to working constructively with industry and regulatory bodies to help develop a valuable new domestic market for growers and feedstock producers. Last year, we reported our gender pay gap through the Workplace Gender Equality Agency reporting, and we were delighted that GrainCorp was reported as having the narrowest gender pay gap of any ASX 200 business. We recognize the continuing success of our business is closely tied to the strength and vitality of rural and regional Australia, and it was great to see the completion of our 18th silo art project at Lake Boga in Victoria, a unique way that GrainCorp can give back to the regional communities, helping to draw tourists to the bush. I'm pleased to say we have more projects planned in financial year 2025.
Now moving to the current crop and the impact it has on financial year 2025. Like last year, the 2024-2025 East Coast crop can be characterized by a noticeable north-south split, albeit with a reversal of the conditions. We've seen excellent conditions in Queensland and northern New South Wales, but contrasted by a more challenging growing environment for farmers in Victoria and southern New South Wales. ABARES is predicting an ECA winter crop of 30 million tonnes for the 2024-2025 season, compared with the 10-year average of 21.8 million tonnes. As of this week, we've received 11.9 million tonnes into our network during the 2024-2025 harvest period, compared with 8.5 million tonnes in the prior year. Year-to-date export volumes are 2.7 million tonnes, up from the 1.7 million tonnes at the same time last year. We're forecasting full-year exports of between 6.5 and 7.5 million tonnes.
Growers, of course, will be pleased that recent rainfall in several regions has boosted soil moisture in many areas and will support summer crop prospects and, importantly, winter crop planting. I want to finish now with our financial guidance for financial year 2025. We expect to report underlying EBITDA of between AUD 270 and AUD 320 million and underlying net profit after tax of AUD 60 to AUD 95 million. This guidance range excludes costs associated with our business transformation program. We're experiencing strong global supply of grains and oilseeds, coupled with lower demand from key import regions. These two factors combined have contributed to a reduction in overall margins. We do expect to continue achieving strong oilseed crush volumes as we remain focused on optimising the performance of our processing facilities.
Average crush margins in financial year 2025 are expected to moderate from financial year 2024 levels following the below-average Victorian canola crop and the lower global oil and meal prices. Our bulk material programs remain a firm focus in line with our strategy to increase the utilization of our assets. GrainCorp is closely monitoring market developments and policy changes globally. Our strategic asset base and balance sheet strength positions us well to manage any potential risks and to capitalize on the opportunities in a shifting global trade landscape. As Peter advised earlier today, GrainCorp announced it intends to commence an on-market share buyback of up to AUD 50 million. The buyback reflects the strength of the balance sheet and delivers on our ongoing commitment to generate returns for shareholders through the cycle.
The capital discipline that GrainCorp has demonstrated over several years allows us to both return capital and to continue assessing earnings accretive organic and inorganic growth opportunities to improve GrainCorp's earnings resilience over time. In summary, your company holds highly valuable assets and a very strong balance sheet. We're well placed to execute on our long-term strategy, allowing us to continue providing high levels of grower and customer service while delivering through the cycle value to shareholders. I'd like to extend my sincere appreciation to the entire GrainCorp team for their contributions and to thank growers, customers, and shareholders for your ongoing support. Thank you.
Thanks, Robert. Excuse me. We'll now move to the formal items of business. The notice of meeting and explanatory notes were lodged with the ASX and posted to our website. I'll now take the notice of meeting as read.
As set out in this notice, there are four items of business today which are displayed on the screen. Item one is for consideration with no vote required. The other items are ordinary resolutions which require a shareholder vote. Shareholders, proxies, and corporate representatives who are registered to vote today should have received a yellow voting card. Shareholders, proxies, and corporate representatives that are not voting today should have received a blue non-voting card. Only those holding yellow voting cards are eligible to vote, and only those holding blue or yellow cards are eligible to speak. Anyone with a red card is not able to ask questions during the meeting or vote on the resolutions. I confirm that where undirected proxies have been given in favour of the Chair, those proxies will be voted in favour of all resolutions to the extent permitted.
Voting on all items of business will be conducted by a poll, and I now declare the poll open for each of the resolutions in the notice of meeting. Sumit Singh. He's here. Thank you. We'll conduct the poll as the returning officer on behalf of MUFG, and your voting cards will be collected at the conclusion of the formal business. If you need to leave early, please complete your card and present it to a member of the MUFG staff. As chairman of the meeting, I will ensure there are opportunities for separate deliberation concerning each of the items of business. To enable all the shareholders to participate, it is important that comments and questions are succinct and restricted to the subject matter of the business and the resolutions set out in the notice of meeting.
We have two roving mics in the room, and we come to questions during the meeting. Please raise your hand to ask a question, and during the meeting, we'll display and discuss each resolution. We'll also display the number of direct and proxy votes that were received on each resolution prior to the meeting, and votes cast during the meeting will be counted by our registry provider after the meeting closes. Results of the poll will be released as soon as available on the ASX and will also be displayed on our website. Moving now to item one, which concerns the consideration of the financial statements and reports of the directors and auditors for the financial year ended 30th of September 2024.
The reports are contained in the annual report, which was posted to our website on the 14th of November last year, and a hard copy was sent to those shareholders who specifically requested it. Shareholders have also had the opportunity to view the statements and reports on the company's website, and I'll now take those reports as read and formally lay them before the meeting. The purpose of this item is to provide an opportunity for shareholders to ask questions and make comments about the company's performance, operations, and management. Shareholders were also invited to submit questions in advance of today's meeting to our auditors on the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by GrainCorp relating to the preparation of the accounts, and the independence of the auditor in conducting the audit.
One question to the auditor was received, and a written response is available from our company secretary. Would anyone like to ask a question or express a view on the financial statements and reports or the presentation from Robert and myself? Yes, ma'am. You sound pretty good, but.
Thank you. And perhaps for the webcast, it helps. My name is Fiona Balzer, and I'm acting for the Australian Shareholders' Association. We have proxies from 36 shareholders for around 193,000 shares. I would like to convey our thanks to the auditor for the contribution to the report, including the key audit matters, which are goodwill impairment assessment and valuation of derivative financial instruments and commodity inventory held. I find that those key audit matters are well worth reading, and they give a greater understanding of the company.
My question to the auditor is, can you comment on the general trend in the discount rate and also what is the impact of that trend? Could you also highlight what sort of events would cause the auditors to revisit the discount rate, which will have an impact on those values? I'd like to introduce Eliza Penny on behalf of PwC. So thank you very much for the question. So as described in our opinion and our CAM that you've referred to, we do assess the discount rate that's used in the impairment model. So an impairment model is something that is pulled together by management and is used to assess the recoverability of goodwill. We utilize our PwC valuation experts to help us assess the reasonableness of the discount rate.
You can see in the note to the financial statements, note 3.4, a discount rate. There's a range of 11.2%-11.4% has been used in the impairment model. This is a rate that's calculated by management. The sorts of things that go into the discount rate are interest rates, the cost of debt of the company, and also the risk that's in the forecast cash flows in the impairment model. All of those things are considered to come up with the discount rate. When any of those items shift, such as interest rates, cost of debt, risks, that will cause management to revisit the discount rate. To give you an idea of how it moves, if a discount rate went up, the recoverable amount of the assets that are being tested go down.
The other thing to note, given it's a topical area around interest rates, is when we consider things like interest rates in a discount rate, it's longer-term trends that we look at. So a short-term movement, such as a reduction in an interest rate, doesn't automatically correlate to an immediate drop in the discount rate. But hopefully that sort of gives you some insight into how it will move. Thank you.
Appreciate it. Thanks, Fiona. A reminder that only holders of yellow or blue cards are entitled to ask questions. Okay, there is no requirement for a vote on item one, so I now move to the items of business, which require a formal resolution. Oh, sorry, I missed one. Sorry, sir.
Thank you, Mr. Chairman. My name is Roman. I'm a long-term shareholder, as you're aware of. I would like to thank you for the great job that you guys are doing. But I have a question. Our share price fell over 8% today. Would you like to comment on it?
And it's good to see you again. You've been here, I think, for the last five or six years that I've been up here, so thank you for your question. Look, it's very hard for me to comment specifically on share prices, other than to say that the board is extremely disappointed, but at the same time, we're working extremely hard to create value, which hopefully will be recognized as we move forward and as demonstrated by some of the strategic intent outlined by Robert in his address.
So sorry, sir.
We have another question over here.
Yes, thank you. Charlie Kingston from Key Capita l. Just following up, I suppose, on the share price, noting that the big sell-off today and the buyback that you have announced. But historically, when you bought back stock, you were paying, I think the last time in this year, it was between AUD 8 to AUD 9. In 2022, I think you paid over AUD 10 for stock, and today we're at AUD 6.80. So I think it would be great for you to be buying back stock.
I think that certainly makes sense. But I suppose my first question is just if there's any science around the price to which, because you stopped when it fell down to the low sevens recently. Obviously, you're going to go again, but how is that sort of science behind the buyback? Is there a price that you have in mind, or is it just an amount and then you're just going to buy indiscriminately? Or how is that price and decision determined, please?
Yeah, it's not indiscriminate. Obviously, we set up a protocol around the buyback. We have a procedure with which we follow. Buybacks are just one of a range of capital management levers that we can pull. I think for the last two years, two and a half years, we've had the ordinary dividend, which reflects the through-the-cycle earnings because of the extraordinary performance over the last couple of years. We've been added to that with a special dividend. And then in addition, because of the strength of the balance sheet, we've obviously considered share buybacks. And we determined, again, with the strength of our balance sheet, that in addition to the ordinary and special dividends, that a buyback was a sensible thing for the board to adopt. And as a result, we will be executing upon that when all the documentation's in place in the near term.
Okay, so no sort of indication as to how it's thought about. And I suppose my second question is more around how you benchmark a buyback relative to other opportunities. The AUD 500 million for the biofuel opportunity, I'm not sure. Please correct me if I'm wrong, that you have given any sort of return targets on that potential AUD 500 million spend. But clearly, there's a lot happening out in the world, and BP have been in the news recently and pulling back on some of their ambitions. And with the Donald getting elected, it seems like everyone's going back on their climate ambitions and DEI and everything. But maybe if you could provide some comment, does that change anything?
And how do you decide whether AUD 50 million buyback, clearly the stock at AUD 6.80 relative to, let's spend AUD 500 million plus on a new big plant? And if you could provide any sort of comment as to what returns that could deliver for shareholders, because it's a very different proposition buyback stock today with all the assets that we own, which presumably we all think is undervalued. And as you said, has delivered some very healthy dividends, which were great. But yeah, any comment around that potential CapEx and how you benchmark that against, say, a buyback or other options?
Yeah. Well, as I said, the buyback reflects just the current strength of the balance sheet. And I think today's a pretty sense of value that we'll proceed with that buyback. In terms of how we balance between dividends and buybacks, it's that the rules have been tightened up pretty much with respect to the use of franking credits. We do have a substantial balance of franking credits. I think it's sort of, what is it again?
Yeah, about AUD 180 million. So I think the value to domestic shareholders is evidenced in the ability to frank our dividends. But again, also the buyback's reflective of also the value that we see in the shares today. That's separate from how we view capital investments. We always are fairly rigorous in terms of the returns that we require. With BP in particular, BP is a global organization which has opportunities around the globe.
And so whether their decision in Kwinana, which I might add I started work at back in 1978, so I was very sad to see it close down, that's a decision that reflects, I suppose, the portfolio they have in opportunities, not just here, but offshore. But obviously, we do look at that. We also noted that they made a comment regarding the regulatory framework which supports investments in sustainable fuels. And I think there was a reference to a comment that we made also in the press recently that we also need a framework which gives certainty around the offtake and the levers that are needed to be pulled for us to make a decision on what is a significant investment that would be required from us in pursuing that opportunity. And Robert?
Yeah. I'll just make a few comments on that. Your question around that area, as I said, it's an opportunity we still see for the Australian agriculture sector, principally supplying feedstocks when that demand comes online from the fuel refiners. In terms of the return we're looking for, we've demonstrated over time real discipline around the way we invest shareholders' money, both returning it, but also in organic and inorganic opportunities to invest in the business. In the biofuel space and a large crush plant, it would come down to the risk versus reward. And we're delighted to have the memorandum of understanding in place with IFM Investors and Ampol, because that allows us to explore what risk versus reward or return we can take over time. And what I mean by that is we'd always be looking for a return well above WACC rate.
But the longer term, the relationship and the more underwritten the risk of that capital is by our partners, of course, the slightly lower reward we'd take. If we're taking more risk, we'd of course want to see more reward. So we haven't disclosed the exact numbers around that, but I think that gives you an indication of how we're looking at it and the long-term nature of stable earnings that we could expect to come from that. The second part of your question around what's happening globally, I'd like to point out that nothing's changed in terms of the mandates we see in place across Southeast Asia, Europe, and the U.K. for sustainable aviation fuel. Markets like Japan, Singapore, California even in the U.S. is very resilient in their view as to where this is.
Policy, while it's evolving in the U.S., still is supportive of biofuels for sustainable aviation fuel in particular. So we're certain that it's an inevitable growth area. Right at the moment, we're still exporting oilseed, used cooking oil, tallow, and other products. And I talked about the fact how that part of our business continues to grow. The key export markets are markets like Singapore and California. Oilseed goes to Europe and gets crushed and converted into biofuels there. So we think it's inevitable over time that with the right policy settings, there'll be the confidence from the fuel refiners to invest in Australia, and that'll create the opportunities for GrainCorp to build the feedstock plant, creates jobs, investment, and importantly, returns for GrainCorp and growers in that space. So hopefully that gives you a little color as to the way we're thinking about it.
We've said all along we're not going to be drawn on the exact timeframes, but we are focused on working with our partners, with the sector, and with government and our representation on the Jet Zero Council are just one way we're having a significant influence on the development of that policy and driving what we think's right, not just for GrainCorp, but for the ag sector generally.
Thank you. And then just finally, one of your larger shareholders, HMC, was quoted recently saying they think that the stock is clearly undervalued, which is why they're buying, but they also see, in order to crystallize that value, the potential for structural separation. And historically, we've done the UMG demerger, but I think back in, was it 2013 when we were bid for it, AUD 12 or AUD 20 or thereabouts, if you adjust for the demerger and a bunch of other things.
I think we're basically back to that sort of price post today's sell-off, but there's clearly been a lot of dividends in between, so that's been a great job by the board, but is there any merit or other sort of structural opportunities that you as a board are looking at to potentially create more value aside from the AUD 500 million biofuel opportunity? Or I know we've made some small ag tech investments, but anything of a more structural nature?
There's no doubt that they see value in the assets, and I think Robert also said highly valued assets that we have right through the, as my COO likes to say, the intrinsic value of grain, so from the paddock through the upcountry receivables through to the ports, so there's definitely great value in the supply chain that we own.
And look, even as late as last night, the board was throwing around ideas of how we create value going forward, and we're always open to ideas of how to maximize the value of the assets we've got, and we'll continue to do that. So we certainly think that they're undervalued. And if there's better ways of creating value off the back of that supply chain, then we'll certainly pursue it.
Thank you.
Yes, one more question over here. Thank you.
Thank you, Mr. Chairman. Clinton Squires, my wife and I are shareholders, of course. I'm interested in the business transformation program and particularly heartened by it, I guess, given the desire to be more integrated and to take on new ventures. I think that's really important work to do.
But could you give me some insights into how you're thinking about that in terms of how much of it is people, how much is process, and how much of it is IT sort of transformation and dealing with legacy SAP systems and the like, and to what extent some of those systems might represent a risk as you move through them?
I'll let Robert handle this, but in terms of people, processes, and systems and IT, it's all of that.
I was going to open with exactly the same response, Peter, and thanks for your support and recognition of the program. Look, we've taken a very measured approach to this. We recognize that we have some legacy systems that make it less efficient to pull data together and use that to drive our business.
We've seen the benefit of using data techniques and the tools to improve the throughput of our plants and our planning. So in answer to your question, this initiative takes the opportunity to address closing on end-of-life instance of SAP, but more broadly, it is a transformation of how we look at our business end-to-end. We've achieved significant benefits in that over the last couple of years. This brings the people, the processes, and the IT platforms up to speed on that. And we've shared, and as I touched on before, our expectation that that will deliver AUD 20-30 million in financial benefits once the program's completed. We have invested heavily in the upfront planning so that we understand the nature of the program and the risks involved. We've also broken it into two quite separate releases so we can manage the progress along the way. Thank you.
Thank you.
Any further questions? No, thank you very much for those. We appreciate the interest shown. Item two concerns the adoption of the remuneration report and the resolutions, I think, is displayed on the screen. The report is set out on pages 50-65 of our annual report and provides disclosures relating to director and executive remuneration. As stated in the notice, the vote on the remuneration report is advisory only and does not bind the directors of the company, but of course, we will always take note of the views of shareholders in relation to our remuneration policies. Last year, shareholders voted in favor of the remuneration report.
We remain committed as a board to ensuring that our approach to executive remuneration aligns with our business strategy and with the interests of our shareholders and that it's fair and competitive to enable us to attract talent that we need to manage our business effectively. The direct and proxy votes received in this item are now shown on the screen, and happy to invite questions in relation to our remuneration report. Fiona? No? You're just twitching? Okay. Okay. Okay. Thank you very much. The next item of business concerns is the re-election of directors. As item 3A relates to myself, I will shortly hand the meeting to Kathy Grigg. But before I do, I would certainly like to say a few words regarding my desire to continue as a non-executive director of GrainCorp.
I've been on the board now since 2015, I think it is, and I maintain my passion, humility, and pride in representing you on the board of this company. And as a result, I wish to again present myself for re-election. I might add this is the last time that I will be presenting myself for the board of GrainCorp. You may recall since December 2015, we've gone through a significant transformation in which we had a significant capital program which invested in our rail, sorry, our country network in oils and feeds. We had a significant corporate restructure in 2017-2018. We had a portfolio review in 2018-2019, and the result of that was the sale of the bulk liquid terminals and the demerger of UMG.
Of course, much of this was undertaken through three years of really quite severe drought, and this had a significant impact across our regional communities and, of course, GrainCorp and our employees. Post demerger, as the newly installed chair, and I came on board at the same time as Robert, I've worked with Robert and his team to execute our vision of leading sustainable, innovative agriculture through another century of growth. With the breaking of the drought, the company maximized our core infrastructure assets or worked towards maximizing it, and we continue to work hard on that goal and invested in growth platforms targeted at human and animal nutrition, agri-energy, which is work in progress, and of course, our digital and ag tech.
I might say that I do recognize the concern raised in recent proxy meetings regarding the number of listed chair roles that I hold, which has also impacted the vote that will shortly come up on the screen. Firstly, I just want to assure shareholders of my dedication and passion for GrainCorp and confirm that I shall continue to prioritize the GrainCorp board, its business, and to maintain any additional input and requirements that involve GrainCorp, including regional site visits and a regular tour I take every year, which I call the harvest tour. One year I called it the drought tour. So it's something that allows me to really get down to the grassroots and understand and get to meet the people that work for GrainCorp and the growers in which we're trying to satisfy.
In terms of my re-election, pleasingly, I do have the full support of my fellow directors. And in endorsing my re-election, my colleagues also considered the fact that I do have the longest corporate memory and knowledge and understanding of the GrainCorp over the past nine years. It's also considering the relative GrainCorp experience that we currently have on the board and also recognizing the succession planning that we are currently embarking upon. I've also discussed this with the 15 or so meetings that Dan and I held with proxy and shareholders over the last month and in balance received a pretty good understanding of the rationale of me seeking a final term as a director of GrainCorp. So as such, and with your support, I really look forward to continuing to serve on the board and driving value for all of us shareholders. So thank you very much.
And Kathy, I'll hand over to you.
Good morning, everyone, and thank you, Peter. As Peter mentioned, item three on the notice of the meeting concerns the re-election of Peter and Clive Stiff, who in accordance with the three-year rotation cycle under the ASX listing rules and the company's constitution are scheduled to retire at this AGM and, being eligible, offer themselves for re-election. These will be dealt with as separate resolutions. Item 3A concerns the re-election of Peter Richards, and the resolution is displayed on the screen. Peter joined the board in November 2015 and was appointed Chairman in March 2020. Peter brings to the board significant experience in a range of areas, including safety culture and systems, capital allocation, supply chain management, and strategy. In his capacity as Chairman, Peter provides strong leadership to the board and GrainCorp more generally.
The board has undertaken an evaluation of Peter's performance and fully supports his re-election. The board has also concluded that Peter is independent and has sufficient capacity to undertake the duties of non-executive director and chairman. Details of Peter's qualifications and experience are set out in the explanatory notes to the notice of meeting, and the direct and proxy votes received on this item are shown on the screen, so I now invite any questions or comments on the resolution. We have one over here. Thank you.
Thank you. As the chair, I would like to note that we had similar concerns to other proxy advisors as to workload, and with the against vote that we see, I know it takes a lot of maturity to stand up and have that vote. The day's gone by, it'd be 95%.
I believe that you have addressed our concerns in terms of the importance of the chair, current chair, continuing with the renewal process of the board and continuing what has been a dedicated effort for the company. I was just wondering if you could give me more information about your harvest tour. Is that something that you take the other directors on? Because one of the things we worry about with workload of generic, any director is the time to actually disconnect from the role and engage in that ground-level engagement. So do you take other directors along with you? Is it scheduled? Could you give us a bit more insight into that non-scheduled activity that you undertake?
Yeah, sure. Thanks, Fiona. No, I don't. I go alone. I don't go with Robert. I go with a general manager or a regional manager, and we spend four days on the road. This year, it was 16 sites up along the, I'd call it the southern New South Wales border, then turning over the border and coming down into Victoria. One thing that I learned very early on, particularly with my very early experience, was the fact that they had a Texas oil refinery incident, and one of the key learnings out of that was that there was a lack of visibility from the boardroom down into through the organization to try and determine whether, in fact, what we hear and see at the board level is actually transferred and understood in the field, and I get a great understanding of the impact that whatever we see at the board level is actually being delivered on the ground.
It allows me to interact with casuals and site managers. We participate in the early morning toolbox safety meetings. We do the stretching exercises, and it's just a great insight and value that's contributed back through me, which I then write a report and discuss with the board about what I'm seeing with the impact that our policies and procedures have throughout the organization. And as I said, I talk about passion. It's not a throwaway word. I have a real passion for this organization, and that just demonstrates, I suppose, some of that passion.
Thank you.
Thanks, Peter. Another question?
Thank you. Charlie Kingston again. Just around Peter, I think you just said that you've been here since 2015, 10 years or thereabouts on the board.
Just the amount of shares that you own, 10,000 shares, it seems a bit underwhelming if you've been here for 10 years and we're now buying back stock for the company. So clearly, you think it's undervalued, but I would have thought if noting it's far less than your annual salary, and I suppose it applies for a few other board members, the relativity of salary to shares owned seems a bit misaligned. But could you provide any comment as to why 10,000, I would have thought at least? Is there a minimum holding requirement to be at least within or at or above your annual salary since you've been here since 2015? And can we expect that when you're using the company money to buy back stock, you personally are going to start hoovering up stock personally?
I think the window's closed right now. But having said that, we don't have a policy with relation to ownership of shares on behalf of directors. Each has their own individual circumstances, which we respect. In terms of what's the right number for a director, I'm not sure. I think I bought those shares when I first joined, and all I've done is concentrate on working on behalf of the company. So it's something that I don't reflect on too much other than the fact that we're working hard on behalf of the company. Shareholding won't change that.
Okay. I'll just be reassuring if the directors did buy stock, I would think, over the 10-year period, but thank you.
Are there any further questions? No? Okay. Thank you. I'll hand back to Peter.
Thanks, Kathy. Right. Now moving on to item 3B, which concerns the election of Clive Stiff.
And when you see his votes for, I'm very envious. So well done, Clive. Clive joined the board in October 2021 and brings, as I said, significant experience in a range of areas, including digital supply chain, transformation, strategy, sustainability. A real inquiring mind, which has added great value to the board, including in his role as Chairman of the Sustainability Committee, and his qualifications and experience are set out in the Notice of Meeting. Clive, would you like to say a few words on behalf of your re-election?
Thank you, Peter, and good morning, ladies and gentlemen. It's been a privilege to serve as a non-executive director of GrainCorp over the last three years, and I'm honored to stand for re-election today.
GrainCorp is a company with deep roots in Australian agriculture with a critical role in global food supply chains, and I remain deeply committed to supporting its continued growth, resilience, and value creation for all stakeholders. During my tenure, I've drawn on my directorship experience to contribute to strategic direction and governance of GrainCorp. In addition to my role here, I'm currently a non-executive director on the boards of Cleanaway, an ASX-listed waste management and resource recovery company, and Rabobank Australia, which specializes in food and agribusiness banking. I also continue to act as an advisor to Quantium, a leading AI data science company, which keeps me at the forefront of technological advancements. I believe these roles have broadened my perspective and expertise, allowing me to bring valuable insights to our board.
Earlier in my career, I held CEO roles in the food and consumer goods industries, leading businesses in both Australia and internationally. This experience provides me with a strong understanding of supply chains, customer strategy, and large-scale transformations, all of which remain highly relevant to GrainCorp's ambition and evolving landscape. Looking ahead, I believe GrainCorp has significant opportunities to build on its strengths, enhancing its core operations, leveraging technology, sustainability initiatives, and market expertise to drive long-term growth. If re-elected, I'll continue to bring my governance experience, strategic mindset, and commercial insights to support the business and its leadership team. So thank you for your consideration, and I look forward to continuing to serve GrainCorp. Peter, back to you.
Any questions for myself or Clive on his re-election? Fiona?
Thank you. I was just wondering if, given this is the end of your first term, if you could give us any insight to anything that you had not expected to find, because the outside of a company appears one way, and often the inside is far more complex. And I would also like to know, having Peter having spoken of his harvest tour, what sort of informal engagement do you undertake as part of your role as a director of GrainCorp?
Thank you, Fiona. So I should say upfront that GrainCorp is a great business and has a really fantastic team running it.
So I'd say, as I look back on the first three years, it's not so much about unexpected things or surprises that I would have seen in the business, and probably just more about differences between the company I have worked for in the past and obviously potential opportunities that can be brought to bear in the GrainCorp business. And I maybe just cite a couple of examples and things that we've spoken about this morning already to a degree. But certainly, I am, as you said, from consumer goods originally, and therefore anything about customer experience is close to my heart, and I do believe that that's something that we've focused on a great deal these past few years with real investment into team and sites. We've talked about business transformation and process excellence.
That's obviously also something that's very significant in the world of consumer and consumer goods and food. Then finally, I'd articulate an example around sustainability, given I chair the committee, but also my keen interest in that space. I think GrainCorp Next is a real case in point of where sustainability is not just for the sake of sustainability, but is genuinely there to do well by doing good, and it's ultimately a growth initiative. Fiona, to answer the second part of your question, I think I'd probably be speaking on behalf of all my fellow directors when I say that we all keenly like to get out of the boardroom, out of the head office, and interact with our employee base and our customers on sites, not just in Australia, but also internationally.
So that's something that I think we would all, I'm not quite sure the aggregate number of days, but I'm sure we could take that on notice, but it's considerable.
Thank you .
It's interesting, Fiona, you made that observation back in my Dyno Nobel days. I remember we recruited a senior manager from a competitor company, and after six months, he provided insight that, gee, the outside-in view is a lot different from the inside-out view. So I've heard that before.
Thanks, Clive. Right.
Great question.
Oh, sorry, another one. Oh, sorry.
So Clive doesn't feel left out, but noting your Cleanaway experience and being head of sustainability, I think Cleanaway's got a big sort of CapEx potential spend on circularity and energy to waste and all these sustainability-type investments. But noting your position as head of sustainability, could you give us your thoughts?
Is there any sort of cross-learnings between, I don't know, Cleanaway, they're in waste products, we're doing something similar, maybe there's a conflict? And then just generally around, I think you've just said it's not just about doing good, it's about making money, but in your mind, are there any sort of tangible targets that you think about when, if we're going to spend AUD 500 million on biofuels, what does it have to generate for shareholders, please?
Well, thank you for that question. And obviously, I'm not going to comment on Cleanaway's business at this particular meeting, but it goes without saying that I, as I would imagine all directors, will always try and bring to bear their experience from one board to another, draw parallels and draw learnings. And it's one of the richnesses of running a portfolio of board roles, of course.
So certainly, indeed, the Cleanaway business like GrainCorp is very focused on its sustainability credentials, both around just being a good corporate citizen, as we've talked indeed this morning, but importantly, making sure it grows. So as that relates to the second part of your question, as we look at new investments, first and foremost, we're going to do them because they generate a good return. And if they don't generate a good enough return, then we'll work harder until they do, but it doesn't remove from the importance of doing those initiatives. That provides a little bit of a cursory perspective. Thank you.
Any further questions for myself or Clive? Okay. Thank you. Appreciated that feedback. Okay. As I said, the votes are on the screen, and we now move on to the final item of business, which relates to the grant of performance rights to our Managing Director.
The explanatory notes in the notice provide a summary of the performance hurdles, vesting mechanisms, and other conditions applicable to the FY25 long-term incentive rights. The board believes that the offer of these rights under the long-term plan is an important part of Robert's overall remuneration package, as it's designed to provide a long-term incentive to pursue the continued growth and success of GrainCorp, which in turn is directly aligned with the interests of shareholders. The proxy votes are now being shown on the screen, and happy to take any questions in relation to this. Yes, sir?
Who are the Spurway family is in the top 20 shareholders? And yeah. He's a substantial shareholder. Yeah, Spurway family is in the top 20 shareholders, and Mr. Spurway sold 267,000 in the year. So it looks like he's got more than enough shares. He's certainly already aligned. Thanks.
Thank you. It's an interesting position. In terms of the sale of shares, as we've said, we align his interests with shareholders, in which he has to hold these shares and has issued these shares for a period of time. That then creates significant tax liability, and from time to time, he needs to address that tax liability. So that's the only reason for any sale. If you didn't continue to reward both Robert and our senior team on a yearly basis, there is always the chance of flight. But I think it's something that we monitor regularly, and we'll take your feedback, but we're pretty comfortable with the position we've got with the reward and incentives we provide our management team. Yes.
Thank you. Just around the ROIC target, and please correct me if I'm wrong again, but it sounds like that gets reset depending on the cycle and what have you, but I think we have a $320 million EBITDA target throughout the cycle. So why can't we have an ROIC target throughout the cycle to which these rights and pay is benchmarked against? Seems a bit contradictory if we have one target through the cycle that you put out, but if you're getting paid on something that can get reset depending on variability, etc.
Yeah. Through the cycle is representative of, in a normal year, what this business could achieve under the way we leverage the assets today. And it's that sort of benchmark that we're trying to diligently lift up on a year-on-year basis. There was a situation I mentioned, the drought.
There was a situation for, I'm going to say, six, if not seven years, the LTI didn't pay out at all. And that is just not a system or a structure that is reflective of the extraordinary hard work that the management team needs to indulge in, even during the drought processes. So we looked at that and decided that it was a much more sensible basis that we do look at on an annual basis and reset the ROC target, but also reflect, evolve the returns that we expect on capital investments, etc. So it's worked quite well in terms of that flexibility. And as I said, it can vary according to the outlook that we have, that we see each year when the harvest comes around. Any further questions? No. Certainly appreciated the level of questions today. So thank you. Okay.
I think we're going to. We've seen the proxy votes. I'm now going to ask shareholders, proxy holders, and corporate representatives holding the yellow cards to complete the card if you have not already done so, and to finalize the poll. And MUFG is now roaming the room. If you can place those cards in the box. Everyone's cards collected? Okay. Thank you very much. So I can now declare the polls on the resolutions closed. And as I said, we'll release the results on the ASX platform and on our website later on today. This now completes the formal part, items of business, and I'd like to thank you all for attending today. And obviously, specifically, our shareholders, our customers, the executive team and staff, the company's advisors and auditors, and MUFG, and of course, certainly my fellow board members.
Thank you very much, and I declare the meeting closed.