Good morning, everyone, and welcome to the 36th Annual General Meeting of Ridley Corporation Limited. My name's Mick McMahon. I'm pleased to address this meeting as your Chair. I declare the meeting open and confirm we have a quorum. I'm delighted to be able to extend a warm welcome to our shareholders today, and thank you for joining us, either in person here in Melbourne or by webcast. For those of you here in the room, in the event of an emergency, please follow the emergency exit signs and the instructions of the venue staff. In addition to being webcast, this meeting is being recorded for the purposes of taking minutes. For those in the room, we ask that you ensure any devices are on silent or are turned off. I'd like to take the opportunity to introduce our board to you.
Managing Director, Quinton Hildebrand, independent non-executive directors, Rhys Jones and Melanie Laing, who is presenting for election at this meeting, Julie Raffe, and our U.S. non-executive director, Ejnar Knudsen, who is an apology today. As announced earlier this year, Patria Mann and Robert van Barneveld recently retired from our board following a long-standing contribution, and I extend my sincere thanks to both board members who leave the company well-positioned and in great shape for the future. As mentioned, you see a new face on the board table today as we welcome Melanie Laing, who joined us in September of this year, and who will take up the role, Chair of our Remuneration and Nomination Committee, following our AGM today. I also welcome Richard Betts, our CFO, Company Secretary, Kirsty Clarke, as well as KPMG partner, Julie Cleary, representing our external audit reports.
The minutes of the last AGM, held on 24th of November, 2022, have been signed by myself as Chair at that meeting. Our Company Secretary, Kirsty, has a copy of the minutes available for inspection by any member. Copies of the notice of meeting have been made available to all members and can be found in the investors section of the company's website. So covering off on some procedural matters, we will begin the meeting with a short presentation and then go to the formal proceedings, which this year will comprise of six items to be decided by poll in accordance with Ridley's constitution. The results of the poll will be released shortly after the meeting on the ASX announcements platform and on the Ridley website.
For virtual meeting, participants voting on the resolutions is now open, and you can vote at any time until I declare the voting closed. You can also change your vote at any time throughout the proceedings. I will give you a clear prompt later in the meeting to warn of the close in voting. For those attending virtually, if you are eligible to vote, once voting opens, press the Vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options for each resolution. There is no need to hit the Submit or Enter button, as the vote is automatically recorded. You will receive a vote confirmation notification on your screen, and as mentioned, you can change your vote up until the time I declare voting closed.
Please note that only shareholders, proxy holders or authorized shareholder representatives may vote, and any directed proxies given to you by a shareholder will automatically be cast as directed when the poll is closed. For those joining us in person, you have been issued with voting cards on registration. When the poll is closed, our share registrar, Computershare, will collect your voting cards. After introducing each item, I will take questions from those in the room first, then from those participating online. For those in the room, please first raise your red or yellow shareholder admission card so I can see you, and please say your name before asking a question. Online attendees can submit questions at any time. To ask a question, select the Q&A icon and the topic your question relates to, and type your question into the text box.
Once you have finished typing, please hit the Send button. While you can submit questions from now on, I will not address them until the relevant time in the meeting. Your questions may be moderated or, if we receive multiple questions on one topic, amalgamated together. We'll also address any questions received prior to this meeting relevant to our business or general questions prior to the close of the meeting. Online attendees can ask a verbal question by following the instructions written below the broadcast. If you have any difficulties voting or submitting questions, please refer to the user guide located on the right-hand side of the webcast screen or refer to instructions within our notice of meeting. If you experience technical difficulties during the meeting, we will assess the next steps, and we'll update you via a posted message on the webcast.
In the unlikely event of a complete technology failure, our share registrar, Computershare, will contact shareholders via email, if you've provided one, for advice of any adjournment. We may also provide an update to the ASX. For the formalities of the meeting, each resolution and the valid proxy details in respect of that resolution will appear on the screen. As chairman, I intend to vote any proxies in my favor in support of all motions put, including any undirected proxies in relation to items two, five, and six, which relate to remuneration issues. So I'll now hand over to our Chief Executive Officer and Managing Director, Quinton Hildebrand, to provide a brief business update.
Thank you, Mick, and good morning. We do appreciate you, those who are in attendance at our meeting today. As Mick has indicated, I'll provide a brief summary on the performance of the business in FY 2023, outline the high-level strategy, present Ridley's sustainability framework, and provide a trading update for the first four months of FY 2024. In FY 2023, Ridley continued to leverage its integrated scale and capability to deliver high quality, cost-effective nutrition products to our customers. This included supplying the dairy, poultry, pig, aquaculture, sheep, and beef bulk feed sectors, the equine, canine, and home layer markets, and the packaged product sector. We're providing protein meals and animal fats from our ingredient recovery facilities to stock feed, pet food, and biofuel industries. We did this while successfully overcoming post-pandemic supply chain challenges, the impacts of regional flooding, and navigating inflationary pressures.
The first priority of Ridley's board and management is the safety of our employees, suppliers, and customers. We continue to focus on engaging our employees in behavioral safety initiatives to improve our performance in this area. The business operated the same portfolio of assets as the prior year, having the combination of increased throughput as we grew with our customers and secured additional business, and the ongoing implementation of efficiency initiatives, which delivered earnings growth. Both reporting segments grew in FY 2023, delivering a group EBITDA from ongoing operations of AUD 88.5 million, delivering our fourth successive year of double-digit percent increases in underlying group EBITDA. The business applies a rigorous approach to deploying capital in accordance with the board's stated capital allocation framework. An efficient operating cash conversion was delivered in FY 2023.
A total of AUD 11.3 million was committed to maintenance CapEx, including expenditure on sustainability initiatives, and a further AUD 23 million was spent on growth CapEx projects. This included four debottlenecking projects, the ongoing delivery of Project Boost, and various other capability-enhancing projects that support future earnings growth. During FY 2023, an on-market buyback was undertaken, in which AUD 7 million was expensed to acquire 3.66 million shares. In addition, the board determined dividends for the period totaling AUD 25.5 million or AUD 8.25 per share, fully franked. This was up from AUD 17.3 million in FY 2022. Strength of the balance sheet was maintained, with the leverage ratio at 0.33 x at the year-end, well below the 1-2 x guidance in our capital allocation framework.
This provides resilience through macroeconomic uncertainty and offers a platform from which the business can take advantage of opportunities that present themselves for investment. The business is building capability and pursuing growth opportunities in each of the reporting segments. Within the packaged and ingredient segment, the ingredient recovery business continued to climb the wall of value in FY 2023 by segregating homogeneous raw materials from suppliers to produce bespoke protein meals and oils for targeted customers. During this period, the business was successful in extending contracts with suppliers to underpin the ongoing capital expenditure to produce higher value products, predominantly for the pet food and aqua feed sectors. We also initiated a number of projects to reduce carbon intensity of our supply chain, which not only lowers the cost, but makes our tallows and oils more valuable for the renewable diesel sector.
In relation to packaged products, we continue to build on our brands in the rural market whilst using our own raw materials, operational scale, and nutritional capability to supply companion, dog, and aqua feed. The commissioning of the new Narangba packing line last week will further automate this facility, optimizing the plant and reducing cost. The NovaqPro operations delivered their first profit in FY 2023, and we continue to see a steady pathway to developing targeted international markets on the back of the successful uptake of NovaqPro in Australia. The strategy for the bulk stock feed segment is to increase market share through supporting the growth of our customers and acquiring new customers. This is achieved through providing quality products, differentiated service, and sharing the economic benefits of Ridley's scale.
To support this strategy, during the year, we debottlenecked projects at four of our feed mills, which have increased installed capacity by 10%. We believe this will provide us with two years' sales growth runway on the current assumptions. In addition, two further debottlenecking projects were approved, which will increase capacity by a further 5% when complete at the end of FY 2024. Over the past two years, we have developed the Ridley Sustainability Pathway. This commenced with surveys of our customers and a scan of international best practice in our sector. Through this process, our four pillars of smarter ingredients, optimized production, effective solutions, and meaningful partnerships were established. Within these pillars, 14 key deliverables have been identified, which can make a significant contribution to the sustainability of the supply chains in which we operate.
During FY 2023, we established the baselines for these 14 key deliverables, and in our 2023 annual report, we published our 2030 commitments. We believe that in delivering against these commitments, we'll improve the sustainability of our supply chains, while also providing a competitive advantage for Ridley. I'll now provide a trading update for the first four months of FY 2024. The bulk stock feed segment has experienced volume and margin increases enabled by the debottlenecking projects and some demand for dry season feeding. The packaged and ingredients segment has experienced improved performance in packaged products and supplement sales. However, the ingredient recovery business was impacted by lower tallow prices against the previous corresponding period.
The improved performance of the bulk stock feed segment has more than offset the lower performance in packaged and ingredient segment, delivering year-on-year growth for the group in the first four months of FY 2024. With a well-defined growth plan, strong balance sheet, and disciplined approach to capital management, Ridley is well positioned to execute on opportunities to create shareholder value. Being the market leader in the animal nutrition sector, Ridley enjoys scale benefits and has the capacity to employ specialists and adopt technology, which should allow us to continue differentiating our offering and margins. As supply chains evolve to meet sustainability expectations, Ridley's capability and products can deliver profitable solutions to our customers. Our geographical spread, multi-species offering, customer mix, and disciplined risk management provide earnings resilience through weather, disease, and market cycles.
We forecast for protein consumed by humans and pets and feedstock for renewable diesel, all expected to increase. This is likely to underpin demand for Ridley's products in the future. In closing, I'd like to thank the Chair and the Board for their mentorship and direction during the past year. I'd like to thank the leadership team for their commitment to the challenge to improve our performance year after year, and to all employees here at Ridley for going above and beyond to deliver these successful outcomes for the business. I'd like to acknowledge the customers we serve and the suppliers who support us, recognizing that our long-term success is inextricably linked with the performance of our entire supply chain. And finally, to the shareholders of Ridley, thank you for your support.
Thank you, Quinton. We'll move to the formal business of the meeting. The first item of business is the consideration of Ridley's financial reports for the year ended 30 June 2023, which are available on our website. There is no requirement for shareholders to vote on, approve, or adopt these reports. However, shareholders may ask questions concerning the financial statements of the company. The company's auditors are present to answer any questions relating to the conduct of the audit. I invite shareholders to ask any questions regarding this item of business, and, Kirsty will advise of any questions received online. Are there any questions in the room? Yeah.
Edmund Carew. Could I please ask, given you've got so many products, is there any correlation at all between livestock destocking or restocking and the company's revenue?
Thank you. [audio distortion] . So, I think if we're just start with the second part of that, livestock destocking, you know, generally due to dry conditions and graziers needing to offload and reduce their stocking levels, has two impacts in different parts of our business. It... On the ruminant feeding side, we do supplementary feed beef cattle during dry conditions. Our exposure is sort of 5% of our total volumes, and we have advised previously that in the second year of drought, you could have a AUD +5 million EBITDA impact through that. The other impact is through the destocking, there is more processing through the abattoirs, and as a result, our rendering business usually receives some more raw material products. That...
What we find normally, there is a benefit in terms of the volume that we get and economies of scale in processing that volume. That's often offset by the fact that there'll be more protein meals available, and therefore, the price offsets that to a large degree. The other impact, which will be different going forward, will be the tallows that are produced from that raw material, which are exported into biofuels won't be correlated with the domestic increase in supply, so that might be an upside for us going forward.
Thanks, Quinton. I think over here. Next, sir.
Good morning. Peter Aird from the Australian Shareholders Association. Today, I hold proxies for 40 shareholders and over 1.3 million shares. In your directors' joint review and in the CEO's comment this morning, you comment, "The first priority of Ridley's board and management is the safety of our employees." But your key safety measures both worsened by over 50% in the last year, against 2022. Will you start reporting historical safety measures, and what changes are you making in management's approach to safety, and what impact did the worsening performance have on executive incentives?
I'll take a general. I'll answer some of the more general points and ask Mick to comment on the specifics around improving safety. But safety is critical to the business across all of our locations. I think we would have commented before that we have work to do in Ridley to improve the culture and the practices around safety. We're not immune from... Well, that's a challenge for the agricultural sector as a whole, would be my observation. And the first thing we want to see as a board is improved reporting. We want to see everything reported. We want to see everything recorded, so we want to see those statistics coming through. We don't want to see them worsening necessarily, and we definitely don't want to see serious incidents.
But, improved reporting is not necessarily a negative, but we acknowledge we have plenty of work to do to improve safety. Do you want to comment, Quinton, on what we are doing to improve?
So it is a major focus and, from the board through the entire organization. And I think being authentic in the way in which we manage that is really important. And so to Mick's point, making sure that there's accurate reporting and, you know, all employees feel confident to report whatever the incident is without any fear of any impact on them personally. So that's a key philosophy, and I think we've been very successful in achieving that. The efforts that are going in on reduction on manual handling, because that's a key driver for that, automation, the replacement of some of the feed additives processes that have manual handling. So we're spending a fair bit of capital in that.
Other work processes, leadership training, so those are the areas that we're really focused on.
I think the final point of your question was how does that flow through to incentives? So a 30% component of the STI is made up of personal targets, non-financial targets, shall we say, but which a large component is in respect to safety and to the extent to which the business performed. And you can see the financial results flowing through to incentive outcomes. To the extent to which they're not 100%, that's largely to do with safety performance, and the board will always reserve its discretion in respect of any serious, but any very serious, failure in respect to safety.
Yes, I have comments, if you don't mind.
I was pleased to see the appointment of Ms. Laing to the board, increasing your board diversity and providing human resource skills, which will help you meet your diversity and inclusion objectives. However, you still lack a comprehensive board skills matrix that would allow shareholders to assess the directors' skills against those required in the business. So you have a table there that's fairly limited. The other comment I'd like to make is that I'd like to compliment you on the progress you've made on sustainability reporting, the publication of your commitments, and I look forward to reporting of progress and further developments against these commitments in the future.
Yeah. Thanks, Peter. We'll pick up your comment there on the board skills matrix. As you say, we did publish something. We'll have a look at whether that is sufficient, or we should be doing more. Thank you. Are there any other questions in the room? Sorry. Yes.
Edmund Carew.
Could I just ask: I know it's not suitable for every application, but does the company use intercapital or interstate rail transport, given that we've got companies such as Qube, Lindsay Transport Australia, Aurizon, Pacific National, and SCT vying for your custom? Have you considered that as part of your goals towards ESG, given that there's a lot more competition on this national standard gauge rail network?
You want Quinton?
We have limited use of rail, given that the large volumes in our business are supplied within a radius of the feed mill. But from time to time, the packaged product that may move interstate would go on rail, but it's not significant. But I take on board your comment around increasing competition and that being an opportunity.
Thank you. Are there other questions in the room? Kirsty, are there questions online?
We have no questions online.
Thank you. We'll now move on to the following resolutions. I ask members to consider and adopt the Remuneration Report as set out on pages 31 to 40 of the 2023 Ridley Annual Report. The Corporations Act requires the REM Report to be put to the vote. Please note that the vote on this item is advisory only and does not bind the directors or the company. The Remuneration Report sets out the policy for the remuneration of the directors, the CEO, and other designated senior executives, and details how their remuneration is structured. It also contains remuneration details for the directors and senior executives for the year ended 30 June. Noting that each director has a personal interest in their own remuneration from the company, as set out in the Rem Report, the directors recommend that shareholders vote in favor of adopting the Remuneration Report.
No votes may be cast on this resolution by key management personnel, details of whose remuneration are included in the report and their closely related parties. As Chair, I will be voting as proxy only, and only where I own the title to the shares. The resolution and a summary of the proxies are displayed on the screen. Are there any shareholders in the room who'd like to ask a question or make a question or make a comment about the Remuneration Report? Yes, Peter.
Thank you. I'm a little surprised that you have found it necessary to award Mr. Hildebrand a AUD 1 million bonus after a year in which he only achieved 85% of his STI opportunity and where EBIT growth has fallen significantly. Would you comment further on the award, and do you believe that this will result in his much, his much long-term commitment to the Ridley Corporation?
Thank you for your question. Yes. Well, the directors believe that the arrangements that we've put in place for our CEO are in the best interest of the company. We operate in a competitive marketplace and against a limited set of competitors in the agricultural space. Suffice to say that, assisted by the performance of Ridley over the last few years, then we would expect Quinton to be in demand in respect of running other competitive companies. We believe strongly as a board, that it was in the company's interest to secure Quinton's services, and associated with that was a remuneration package with a number of elements, one of which you've commented on there.
A key component of that was extending the CEO's notice period from six months to 12, which gives us time in the event of the CEO leaving, to manage a transition carefully and in the best interest of the company and all its stakeholders. We do believe that that's a point-in-time decision for where the company is at. Although the team have made great progress on implementing the strategy and delivering improved performance over three to four years, there's still a lot of work to do in Ridley.
You know, we've commented on safety, for instance, but there's a lot of work to do to improve quality, to continue to upgrade the standard of our operations, to deliver better outcomes for customers, and to build the sort of performance culture which I think we can see being built and being delivered on along the way. So at a different point in time, the board may have made a different decision, but we moved to secure the CEO. It links to the further performance rights which will be voted on later in the meeting. You know, shareholders should, I think, take some comfort from those performance rights only vest in the event that the performance of the company continues. If shareholders benefit, then the CEO will benefit in that respect.
But fundamentally, the board believed it was in the best interest of the company to secure our CEO and not risk the implementation of our strategy and the point in time, the point in time where we are now. You shouldn't necessarily conclude we would do the same thing in the future. We would expect to be in a different position in the event that this issue arose again. Thank you. Are there other questions? Yes.
Yes. One part is remuneration, [audio distortion].
The same? Yeah.
[audio distortion] So there's sort of two parts to the question: One is remuneration, one is in the M&A space. So the last few years, we've heard that M&A opportunities are being assessed, but none's really come through. So I'd be interested in the comment as to whether the, I suppose, the gap in valuation is coming back or if there's been significant things looked at that have been knocked away. And then on the remuneration side, we've seen with other agribusiness companies, notably Elders a few years ago, made a major acquisition, and their REM Report led to their senior people taking a haircut because of that implementation.
I'm interested in the gap in valuation with M&A and whether there's been any large one done, and whether there's gonna be maybe a hiatus if there's a large acquisition done on the REM side, if the ROI does come back.
Thank you. Thank you. Well, first of all, in respect to the M&A, Quinton mentioned the capital management framework, which we work to. Which if you look at the long, longer-term history of Ridley, you know, I think capital management has probably been, or capital discipline has probably been a challenge in the past, and you expect this board to be very focused on, on capital discipline. That means that, no company wants to overpay for an acquisition, and we don't need to make an acquisition necessarily, but we are alive to opportunities. I do think valuation with rising interest rates, as Quinton referred to, having a strong balance sheet gives us options, and I do think valuations are probably coming back to where, you know, they may be more attractive.
But we want to do that, and the fact that we haven't moved ahead on any acquisitions, there's probably two or three comments to make there. First of all, because we've been focused on essentially an operational excellence strategy of improving what we've got. One thing learned from nearly 40 years of running businesses is before you go and buy some things, you want to be really good at what you're doing. So we're making sure we're really good at what we're doing, and then, be very disciplined about any acquisitions. So you would expect that we'll be very disciplined. In respect of its link to REM, I don't think our REM policies would need to change in respect to M&A.
That's partly a discipline, because we wouldn't want to see our returns go backwards, in the event of any acquisition. Or if it did in the short term, it would be with a very strong view that we would expect those returns to improve in the medium to long. We don't think there will be any link.
Just one small thing. Were there any major acquisitions looked at and knocked back in the recent time or not?
Well, as you would imagine, we don't, we don't necessarily comment on what we do or, or, or don't do. But you would expect that, sitting here with a strong balance sheet and with the operational performance, albeit, as we've commented, we feel we're only partway through that journey, that we'll, we'll be alive to opportunities. So again, you can expect us to be disciplined in that respect. Thank you. Any other questions in the room? Do you see any questions online?
No questions on the room.
Thank you. I move the adoption of the Remuneration Report. Thanks. I'll now ask Julie Raffe, the Chair of our Audit and Risk Committee, to move the resolution for Item three. Thank you.
Thank you, Mick. Item three: the re-election of Mick McMahon as a director. Mick McMahon retires by rotation in accordance with the company's constitution, and being eligible, has offered himself for re-election. Appointed in August 2020, Mick is the Chair of Ridley Corporation Limited's board. Mick is a former Managing Director and CEO of Inghams, led Inghams through its initial public offering process, and was Executive Chairman of Inghams prior to the IPO. Mick has over 37 years' experience in senior executive, CEO, director, and chairman roles for both public and private companies. The resolution and a summary of the proxies are displayed on the screen. Are there any questions in the room? Thank you. Kirsty, are there any questions online?
There are no questions online.
Thank you. I will hand back to Mick, the Chairman and resident.
Thanks, Julie. We'll now move to item four, the election of Melanie Laing as a director. Melanie was appointed by the board on the first of September 2023, and presents herself for election, bringing a depth of board and executive experience as a people and culture leader. Melanie is a Non-Executive Director and People, Remuneration, and Sustainability Committee Chair for digital education provider Keypath Education International, which is ASX-listed and U.S. domiciled, and has recently been appointed a non-executive director and chair of the REM and People Committee for AUB Group Limited. Melanie has held global and regional leadership roles at the Commonwealth Bank of Australia, Origin Energy, and Unisys Corporation, and is a fellow of the Australian Institute of Company Directors and the Australian Human Resources Institute. Melanie is a member of Chief Executive Women and a certified chair with the Advisory Board Center.
Melanie was formerly a director with ASX-listed Inflection Inc, acquired by Checkr in 2022. The resolution and a summary of the proxies are displayed on the screen. Are there any questions on this item from the shareholders in the room? Kirsty, do we have questions online?
We do. We have one question from Mr. Stephen Mayne : "Could new director Melanie Laing and the chair comment on the recruitment process that led to her appointment to the board? Was a headhunter involved? Did the full board interview Melanie, and did they interview any other candidates? Did Melanie know of any directors before engaging with the recruitment process?
Thank you. Probably more appropriate for me to comment on the recruitment process, but we undertook a recruitment process which was managed by Claire, our general manager of people internally. It involved a long list of over 40 candidates, at least... The subcommittee met with six or seven of those candidates. Two candidates were taken forward for the final steps in the process, and all directors met with our preferred candidate, which was Melanie. I think you would appreciate that Melanie has a great mix of experience and capability to bring to the Ridley board. As far as I'm aware, Melanie knew Julie before she came on the board, but had no relationships with existing directors. Thank you. Are there any other questions online?
No more questions online.
Any more questions, Peter, in the room?
Just that, you've had two directors retire. Are you expecting to make a further appointment?
We did, as I referred to, had two long-term directors retire. At the last year's AGM, we referred to a renewal process which will be ongoing. We have a... I don't think we need a large board. It goes back to what I've said before, do we have the right skills and experience mix? So we have room to appoint another director to the board, and if the right candidate was to arise, we will probably do so. But we're not in a hurry to do so. It'll be a case of finding skills and experience.
Thank you.
Thank you. We now move to item five, Ridley Corporation Long Term Incentive Plan, as part of the company's REM policy of providing long-term rewards linked to shareholder returns. ASX Listing Rule 10.14 requires shareholder approval for the issue of new securities to a director under an employee incentive scheme. Quinton Hildebrand is a director of the company. Subject to the receipt of shareholder approval under this resolution, the board has resolved to offer the Managing Director 669,683 bonus rights. These rights will convert into fully paid ordinary Ridley shares, subject to the achievement of all relevant performance criteria over a three-year period from the first of July, 2023, to the 30th of June, 2026. A detailed summary of the terms and conditions of the proposed offer is provided in the notice of meeting.
The resolution and the summary of the proxies are displayed on the screen. Are there any questions on this item from shareholders in the room? Thank you. Are there any questions online?
No questions online, Mick.
Thank you. I will now move to item six. Ridley Corporation Limited Special Purpose Retention Incentive Plan provides for a performance-based rights component of the special retention arrangement for the CEO and Managing Director, announced in May 2023, and facilitates a one-off three-year retention incentive. ASX Listing Rule 10.14 requires shareholder approval to be obtained prior to the issue of any equity securities to certain persons, including directors. If approval is granted under ASX Listing Rule 10.14, approval is not required under ASX Listing Rule 7.1. Subject to the receipt of shareholder approval under this resolution, the board has resolved to offer the Managing Director 1.5 million special rights.
These rights are at risk and will convert in fully paid ordinary Ridley shares, subject to the achievement of all relevant performance criteria over a three-year period from July 1, 2023, to June 3, 2026. A detailed summary of the terms and conditions of the proposed offer is provided in the notice of meeting. The resolution and the summary of the proxies are displayed on the screen. Any questions on this item from shareholders in the room? Yes, Peter.
I was a little surprised that your retention incentive allows the vesting of rights at the completion of the three-year period. I note that the requirement within the financial sector now involves vesting of rights over a three-year period, so that the measurement after the measurement of the performance measures so that the benefit is not released for a total of seven years. Surely this is a better retention plan?
Yes. No, we appreciate your comment. Obviously, we were, as I referred to earlier, responding to a set of circumstances where we believed that this was the appropriate response. The pros and cons of different REM structures can be debated, but you also don't want a REM structure which provides a disincentive. So finding that balance is what we were looking for. So I'll probably simply finish by saying that we believe we acted in the best interest of the company in the circumstances we faced. Thank you. Kirsty, are there any questions online?
No questions online.
Thank you. I would now like to advise that the voting on all resolutions will close in approximately one minute. Please fill in and sign your voting cards and submit vote online to ensure your vote is counted. Here, our share representatives will start collecting voting cards physically in the room after the voting has closed. The voting for all of today's resolutions will be released to the ASX and also made available on the Ridley website at the conclusion of the meeting. I now declare the physical and online voting closed. Please provide your signed voting cards to Computershare. Business of the meeting is now completed, and the meeting closed. However, we would like to provide an opportunity for you to ask any general questions that you may have. Are there any general questions in the room?
Quick, Edmund Carew. Could the CEO please give us a bit more color and movement on your wonderful prawn strategy for the-
Thanks for the question, Edmund. So, NovaqPro is the feed ingredient that has been developed. It was discovered and initiated by CSIRO, and Ridley's had the licensing rights and developed it quite significantly. Our production facility is in Thailand, and over the last three years, our production team have increased the yield three times, threefold in that period, which is producing more product at a lower price. Over the last three years, we have progressively been selling NovaqPro in prawn diets to our Australian customers, and pleased to say that over three years it's gone from one customer to all of our domestic prawn customers are now receiving NovaqPro-containing feed.
And the initiatives are now to develop international sales for NovaqPro, which are in the form of finished feed, which we're supplying into international markets. So we've commenced that. We've had some small international sales, and we'll continue to target on some of the major prawn-producing countries, where we're looking for licenses to be able to import prawns into those countries.
Thanks, Quinton. Are there any other general questions in the room before we go online? Yes, sir.
Just, in relation to the NovaqPro, has that, that feed source for prawn been tested with crayfish?
We've done a number of trials with different crustaceans. As far as I'm aware, not extensively to the point where we've got a definitive crayfish response requirement. However, abalone is a species where we have done further trials, and we're in the finalization of some pretty extensive trials there, and there are some commercial sales happening. But crayfish will be on a future investigation.
Thank you. Yes.
Simon Conn from Investors Mutual. Quinton, when do you think it's appropriate to start splitting out the earnings from the packaged division? Because obviously those, those earnings come with much more consistency and a higher multiple than we, we would have on the market.
Simon, are you referring to packaged, as in our packaged animal feed business?
Yeah, your retail business, effectively, or your aspiration to be in retail spaces. Yeah, Cobber and the like.
So, you know, the reporting that we, you know, the segments are considered by the board annually to make sure that it's appropriate. I think there's a balance between, you know, providing shareholders with sufficient information to be able to assess the performance of the company relative to our commercial position. You know, being a listed company, in what is largely an unlisted competitive environment, we already are the benchmark of everybody who is our competitor. So, there's a trade-off there, which we try to balance, but that's an ongoing thing to keep looking at.
Edmund Carew.
Yeah. Could I just ask the CEO, with the prawn strategy, are biosecurity tariffs or quotas likely to be a problem when you're trying to import to export to other countries in regions like Asia?
And the answer is yes. Biosecurity is a critical component in that. So at this stage, the product is produced in Thailand, and it comes in under Australian aquaculture requirements. And as a result, we have to achieve a whole range of criteria, including temperature to manage the product before importation. On export out of Australia, you know, Australia is known for good biosecurity controls, and so to a large degree, that doesn't become the main hurdle for us accessing other Asian markets.
Thank you. Are there other questions in the room?
Yes. Are you seeing any benefits from fish meal shortages globally?
So, you're spot on. The Peruvian quotas are restricted in this time, and so we've seen an increase in the fish meal pricing. You know, to the extent to which, you know, we've got product, obviously, we take the short-term lift on that, but the replacement value, we will be having to pay higher prices. Within our arrangements with customers, it is a pass-through on the replacement cost. You know, from a Ridley point of view, accessing the product is probably our primary responsibility, and secondly, trying to get it as competitive as possible so as not to increase the cost on the supply chain. But I don't think we will materially benefit as Ridley in that movement.
Thanks, Quinton. Questions? Do you see any questions online?
We do have a number of questions online. This is Stephen Mayne . "In September 2015, Ridley announced that the Victorian Government had provided an AUD 800,000 grant in order to build the investment case for Ridley's then proposed AUD 20 million feed mill facility on the outskirts of Geelong. Eight years later, how has the investment progressed, and have we received any other support from any other level of government? Has the Victorian Government provided any grant funding to any of our competitors in the feed mill industry?
So the Lara feed mill, which you'll see on the freeway on the right-hand side as you drive to Geelong, is a successful investment that was undertaken eight years ago. The performance today is it's operating 24/6, so high utilization. So by all accounts, a highly successful investment. As far as other investments, other government support to Ridley investments, at the time of construction of the Westbury facility in Tasmania, back in 2018, 2019, there was a Tasmanian Government grant, and part of that was repaid when Ridley sold that asset. Since then, Ridley hasn't received any government funding. As far as the Victorian Government providing support to any of our competitors in feed milling, I'm not aware of any other feed milling...
any new feed mills in Victoria, and I'm not aware of any government support to any of our competitors.
Thanks, Quinton.
We have another question from Mr. Stephen Mayne : "Wilson Asset Management had a large investment in Ridley, which recently fell back below the 5% substantial holder threshold. Have they totally sold out, and what is the history of Wilson Asset Management investing in Ridley? Were they active investors participating in discussions over issues such as chair and board succession or REM practices? Also, do you know how many shareholders voted by proxy on this item?
Thank you. First of all, Wilson, in respect of the shareholder that Stephen Mayne is asking about, we have treated them as every other investor. We appreciate their support. They've sold down for their own reasons over time, but continue to invest in the company and support the company. We had no different discussions with them over any issue, let alone chair or board succession or remuneration. Thank you.
Another question from Mr. Stephen Mayne : "There was a 19.5% vote against Mr. Rhys Jones at last year's AGM. What was the issue? And thank you for disclosing today's proxy's position to the ASX along with the formal addresses. Was there an 18% protest vote against this proposed retention grant to the CEO? Which of the proxy advisors recommended against, and what arguments did they make?
So in respect of the first question, the vote from last year, a proxy advisor considered, Rhys to be over-boarded in that he was, and is a CEO of a publicly listed company and also the director on a third board, and at least one of the proxy advisors from memory recommended against, on that basis, and hence the 18% vote. Subsequently, Rhys has come off that board. I don't think that would be considered an issue, and certainly, the board considers Rhys to be a very valuable director, and his experience has been a tremendous help to Ridley over the last few years.
In respect of proxy recommendations, we don't necessarily follow the proxy recommendations too closely, but I'm aware that there would have been at least two proxy reports where there were recommendations against. One recommended against the REM Report, and two recommended against the issuing of the performance rights or at least one of them did. So we took that on board, but our approach is to engage more directly with our shareholders and to ensure that, as I've said earlier, that the board believes in it moves to act in the interest of the company, and I think that's supported by shareholders, as you have seen.
... We have one last question online from Mr. Stephen Mayne . Despite written requests, the company refused to publish an archive of last year's AGM webcast. Our annual report, Ridley's annual report claims that we have more than 6,000 shareholders, yet less than 3% of them are participating live in today's AGM. It's standard practice for ASX 300 companies to publish an AGM webcast, and as a company with a AUD 740 million market capitalization, will we get with the program this year and end the practice of excluding thousands of shareholders from accessing a full copy of the AGM debate? Do you have any suggestions on how shareholders can find out what was debated at last year's AGM?
Well, I think the first thing to say is that the purpose of an AGM is that people turn up, and that's clearly how you find out. If you can't turn up, obviously, we have provided a release to the ASX this morning. It doesn't necessarily provide the, you know, every word spoken at the AGM. So we'll take that on board, and we'll consider it for next year. But first rule of life is turn up. Thank you. Are there any other questions?
There are no further questions.
Any further questions in the room? Okay. Thank you, everyone, for your participation.
Can I just compliment the male members of the board on their lack of ties? Seems to be a fashion this year.
We do try to at least look like we know what farming our customers do. Thank you. I will now. On that note, I will now close the Ridley 2023 annual general meeting, and thank you everyone very much.