Okay, thank you everyone. The time is now 10:02 A.M., and I would like to welcome everyone to the 9th Annual General Meeting of Rivco Australia Limited. A very warm welcome to those in the room with us today, and to those who are dialed into the live stream. My name is Brendan Rinaldi, Independent Chairman of Rivco Australia. To those familiar faces in the room, it is a pleasure to be with you again and host today's meeting on behalf of the board. This year, we have four of our directors up the front of the room. Chris Larsen was unfortunately not able to be here in person, so you can see him up on the screen. We're hoping he's up here at some point. So I think the tech people are working on it. Just a quick piece of housekeeping.
If you haven't already, could I please ask you to turn your mobile phones to silent? Thank you. To commence proceedings, I would firstly like to introduce my fellow board members, Dr. Vivienne Brand, here on my right, Mr. Stephen Duerden, Mr. Ed Peter, and our company secretary, Katelyn Adams, is on apologies, but we have Jake here in her absence. Chris Larsen will join shortly on the screen, so please bear with us there. We've got Lachlan Campbell and Lachlan Beech from our management team in the front row. You can read more about each of our board members in the company's latest annual report. I'd like to extend a sincere thank you to our board and management team for their dedication and hard work over the last 12 months.
Your collective efforts have been instrumental in delivering a number of key milestones for the company, which we'll speak about at today's meeting. I advise that in accordance with the company's constitution, a quorum is present. In accordance with the Corporations Act, I advise that the notice of annual general meeting was dispatched to all shareholders on the 18th of March 2026. Accordingly, I declare the meeting properly constituted and open. Turning to the formal proceedings of today's meeting, we'll be following a structure similar to last year. I'll begin with an update of the progress we've recently made over the past 12 months. I'll then cover off on the FY 2025 performance, the completion of the internalization, and then speak about our evolving capital management framework. Lachie Beech will speak to the portfolio performance, followed by Lachlan Campbell, who will talk to the outlook and wrap things up.
After that, we'll address the formal items of business before concluding with any shareholder questions. I kindly ask that you hold any questions until we reach the designated section of the meeting. Before we move on, when you registered for today's meeting, you should have been given either a blue, pink or white attendee card. If you have not received this card, please go to the registration desk outside the meeting room to get one. Only those holding blue or pink attendee cards are entitled to speak or ask questions at today's meeting. If you receive a blue card, this will be used for voting in the polls, which will be opened at the end of the meeting. Where a proxy vote has been given to the Chairman without voting instructions, the Chair intends to vote in favor of the resolution.
The Corporations Act and the company's constitution empowers the chair to call for a poll on a resolution put to a general meeting. Today, I call a poll on each of the resolutions to be considered at this meeting. As a quick update, early this morning, the company announced that Mr. Dirk Wiedmann has retired from the board, which was effective immediately. Dirk has made a meaningful contribution to the company for over nine years. He's played an important role in the significant transformation of internalizing the company and establishing its new corporate identity. The board extends its sincere thanks to Mr. Wiedmann for his dedicated service and lasting contribution to the company. In light of this recent development, which we also announced to the ASX this morning, the board has withdrawn resolution three from today's meeting.
Before I take you through the financial results, I would just like to speak to some of the significant items, and in particular, the transformation that has taken place within the company over the past 15 months, and why that transformation matters to you, our shareholders. Over this period, your board has engaged in a disciplined and deliberate process of listening to you, our shareholders. The feedback we received was clear, and it was consistent. You told us that external management structure was not fit for purpose for a company of our scale and ambition. You expressed concern that our gearing levels were elevated and created unnecessary risk to the portfolio. You called for greater independence at the board level, and you made it clear your expectation of a coherent, transparent pathway to sustainable long-term returns.
We heard you, we agreed with you, and we have acted with urgency and accountability. I want to be quite direct in saying to you that words and opinions carry little weight. What matters is the evidence, and I'm pleased to report that the evidence is unambiguous, and that the majority, and certainly the key commitments we made to you, have been met and in several cases exceeded. However, we firmly acknowledge that we still have a lot of work to do, and some aspects are continuing as a work in progress. The milestones I will now outline are not isolated improvements. Each one was a deliberate response to shareholder feedback, executed with discipline and verified by the results. Taken together, they represent a fundamental and lasting repositioning of Rivco Australia. The internalization.
Following shareholder approval at the May 2025 AGM, the company completed its transition to a fully internalized management structure in November 2025. This was a watershed moment for Rivco. We now operate with a much simpler, more scalable structure, one that eliminates external management performance fees entirely, and one that ensures the interests of our management team are fully aligned with those of shareholders. We have undertaken a substantial and deliberate reduction in debt, bringing down borrowings from approximately AUD 116 million to AUD 20 million. This has reduced our leverage from 31% to approximately 7%, and a transformation of the company's risk profile that affords us considerably greater financial flexibility as we look to the period ahead.
Our lease water entitlement percentage has increased from 37% to 66%, and the company is progressing confidently towards its stated target of greater than 70% by 30 June 2026, and we may even be closer to the top end of our target of 80%. This shift underpins a more predictable recurring revenue base and is central to our strategy of delivering consistent returns through the cycle. Furthermore, our weighted average lease expiry has moved from 2.8 years to 3.1 years and moving towards our four-year target. I assume the role of independent chairman on 1 June 2025, succeeding Mr. Ed Peter. We've also welcomed Mr. Chris Larsen to the board as an independent non-executive director. These appointments strengthen the independence and depth of experience at the board level, and I'm confident they will serve shareholders well.
Recently, we also farewelled Mr. Dennis Mutton, who served on the board for over nine years, as well as Mr. Ed Peter, our founder and former chairman, along with Mr. Dirk Wiedmann, who has retired from the board as of this morning. The board maintained its dividend commitment throughout the year while conducting a comprehensive review of the dividend framework, which is continuing, and I'll speak more to that shortly. The ongoing strengthening of the company's governance structures and leadership capability remains a standing priority for the board. Against the backdrop of all this structural change, I'm proud to report that the company has delivered a record financial result for the year ended 31 December 2025. Profit before tax reached AUD 33.5 million, earnings per share of AUD 0.14, and representing a 133% increase on the prior year. Total shareholder returns for the period were 15.8%.
These are the results which the Rivco team can be genuinely proud of. More significantly, they've been achieved in a year where the company has undergone a material restructure and all the costs associated. This record financial result was achieved after absorbing all one-off costs associated with internalization. The company reported a net profit before tax of AUD 33.5 million for 2025, which was an increase of 152% on the prior year figure of AUD 13.3 million. Net profit after tax was AUD 21.9 million, compared with AUD 9.3 million in FY 2024. The underlying performance was driven by improving yields on the company's high-security water assets, active management of unleased allocations, and the realization of profits from water entitlement sales to the Australian government under the Federal Government's water buyback program.
Earnings per share of 14% represents 133% increase on the prior corresponding period, a result that reflects both operational excellence and the accretive impact of the structural changes undertaken during the year. I would like again to acknowledge the contribution of every member of the Rivco team on these results which we are reporting today, which are a testament to their dedication, expertise, and commitment to creating long-term value for our shareholders. From a net asset value perspective, our pre-tax NAV increased to AUD 1.75 per share during FY 2025, representing growth of AUD 0.10 per share over the course of the year. Including our dividends paid, this equates to a total NAV return of 12.9% for the period. It is worth noting that water entitlement values were broadly flat during FY 2025.
The strong NAV performance was therefore primarily attributable to the team's capacity to generate material returns through that sale of entitlements at prices above prevailing market values, which is a reflection of the company's deep market relationships and active portfolio management. The company also held approximately 5.3 million of unleased water allocations at 31 December 2025, which is carried into this financial year at a nil cost base. We have continued to realize this into the market in early 2026, providing additional earnings support for the current year. We continue to monitor water entitlement markets for well-priced acquisition opportunities in zones that are complementary to our existing portfolio. FY 2025 marked the successful completion of two landmark achievements, the internalization of management and the transition of the company's name and identity to Rivco Australia Limited.
The internalization, approved by shareholders at the May 25 AGM, has been implemented smoothly and with continuity. All one-off costs associated were recognized in FY 2025. The internalized structure is expected to reduce total operating costs from approximately AUD 3.6 million per annum under the previous management model to approximately AUD 2.6 million on a like-for-like basis, implying a recurring cost saving of approximately AUD 1 million per annum with no performance fees.
Beyond the financial benefits, internalization has delivered important qualitative improvements, a more scalable business model, a more transparent operating structure, and meaningfully stronger alignment between management and shareholders. On our rebrand, the transition from Duxton Water to Rivco Australia reflects the company's evolution and its identity as an independent Australian-focused water business. The response from our investors, our customers, and other key stakeholders has been encouraging, and the board believes this new identity positions the company well for the future.
The significant reduction in the company's debt position represents one of the most consequential steps taken during FY 2025. Total borrowings were reduced from AUD 116 million to around AUD 20 million, with our leverage declining from 31% to 7%. This deleveraging was funded principally from proceeds received through the water entitlement sales to the government. Total interest expense for the year was AUD 3.2 million, compared with AUD 6.7 million in FY 2024, which was a reduction of 52%. With a material lower debt position heading into FY 2026, this reduction in interest costs will continue to benefit shareholders. During the first half of 2025, the company also completed on-market share buybacks totaling 1.6 million shares at an average price of AUD 1.50 per share. Purchasing shares at a discount to NAV is accretive on a per share basis and reflects the board's commitment to disciplined capital allocation.
The company paid two fully franked dividends totaling AUD 0.0743 per share during FY 2025, up from AUD 0.073 per share in the prior year. Since the company's first dividend payment in November 2017, total dividends of AUD 0.524 per share have been returned to shareholders. I'm pleased to announce that the board has declared a fully franked final 2025 dividend of AUD 0.0372 per share to be paid to all eligible shareholders on 30th of April 2026. Looking ahead, the board intends to evolve the company's dividend framework with effect from October 2026. Under this revised approach, dividends will be primarily underpinned by core operating earnings. Realized capital gains from the sale of water entitlements will be assessed on a case-by-case basis and subject to prevailing market conditions and strategic priorities.
They may be allocated in whole or in part to reinvestment in additional water entitlements, further debt reduction on market share buybacks, or supplementary dividend payments. This framework is designed to enhance the sustainability and discipline of our capital returns while preserving the flexibility to deploy capital in the most accretive manner available, with the overarching objective of maximizing total shareholder returns over the medium and long term. Further detail on the specific parameters of the revised dividend framework will be communicated to shareholders in the month ahead. Ladies and gentlemen, on behalf of the board, I want to express my sincere appreciation for your continued confidence in Rivco Australia. The changes we have made over the past 12 months are structural and enduring. They reflect a commitment to building a company that is simpler, more transparent, more aligned, and better positioned to generate long-term value for all shareholders.
I'm very proud of what this team has achieved in a year of significant change. I'm confident that the foundation we have laid will deliver meaningful benefits to shareholders in the year ahead. I will now hand over to our portfolio executive, Mr. Lachie Beech, who will provide you with an update on the portfolio. Over to you, Lachie.
Thank you, Brendan. For those of you who haven't met me, my name is Lachie Beech, and today I'm going to cover off on portfolio performance, diversification, leasing, and provide a water market update. Following this, I'll hand over to my colleague, Lachie Campbell, who will take you through an outlook and wrap things up. The key theme for FY 2025 has been active management of our portfolio. During the year, we completed a number of acquisitions and disposals as part of our ongoing strategy to rebalance the portfolio.
In total, the company sold 18.1 GL of high-security entitlements and 15.5 GL of general security entitlements for a combined total of AUD 143.4 million. These transactions generated AUD 38.7 million in realized capital gains, by far the strongest result in the company's history. For context, on the screen, there's a chart that shows the realized capital gains for each year since inception.
These sales were executed at prices materially above carrying value, which resulted in a significant uplift in NAV and contributed strongly to our 12.9% total NAV return for the year. Entitlement market conditions were mixed throughout the year, and the Rivco Entitlement Index increased by 2.7% in the first half of 2025 before declining by 1.5% in the second half, resulting in a net annual increase of 1.2% for the full year. Importantly, this highlights the value of an actively managed portfolio rather than simply holding assets passively. Now, as I've mentioned in the past, a key pillar of our strategy is diversification, both within our portfolio of water entitlements and within our portfolio of leases. The portfolio is diversified across regions, entitlement types, and security classes.
With the shift to drier conditions over the last 12-18 months, the company's high-security entitlements have become the primary driver of returns, reinforcing the importance of portfolio diversification. Meanwhile, our general security assets provide more upside in average to wet conditions. Importantly, the portfolio is currently 80% weighted to high security entitlements, which typically perform better in more average to dry conditions. As a result, we believe our portfolio is well-positioned for the current environment. To summarize, the key takeaways to diversification are diversification across security classes and regions is paramount. Scale is key, and having strong relationships with our lessees, customers, and other market intermediaries, such as brokers, remain critical to our strategy going forward. Turning to leasing, this has been one of our key focus areas over the last 6-12 months.
The company's leasing revenue for FY 2025 totaled AUD 5.8 million, with 54% of the portfolio locked into long-term leases at the end of the year. While this is up from 37% at year-end 2024, we've been actively working towards increasing our lease percentage for the years ahead. We've seen a clear increase in demand for leases and water security as irrigators position for the current dry conditions. Looking ahead to the water year commencing 1 July 2026, we have approximately 71% of our portfolio committed to leases and forward allocation contracts. This includes AUD 8.3 million of lease revenue and AUD 830,000 of forward contract revenue, totaling approximately AUD 9.2 million of committed revenue. On a high-security basis, that's approximately 78% of those assets being committed.
Our target is to increase our committed percentage further in the coming months, and we have a pipeline of opportunities that we're progressing, and lease rates are now improving to around that 5%-6% per annum for most major high-security entitlements. Increasing our lease percentage and weighted average lease expiry provides greater earnings visibility and stability, supporting more consistent and predictable income profile for our shareholders. Turning to the water entitlement market update. Over the long term, water has delivered a compound annual growth rate of approximately 7% since 2007. This reinforces our investment thesis and highlights our view that water is an attractive, defensive, and uncorrelated real asset. Government buybacks continue to play a role in absorbing entitlements from the market. The Australian Government actively acquired large volumes of water entitlements during 2025.
At 31 December 2025, approximately 221 GL had been recovered toward the 450 GL target, leaving around 230 GL still to be recovered by 31 December 2027. The government has indicated it expects to reach approximately 400 GL by the end of this year, 2026, through existing and expanded buyback programs. In respect of FY 2025, specifically, asset values traded relatively flat. The strong returns this year were primarily generated from selling assets at above-book values, not from capital growth in the underlying assets. That said, in early 2026, we started to see improving transaction activity and stronger pricing coming through on select high-security parcels, driven by tightening supply conditions and increase in demand for water security. I'll now hand over to Lachie Campbell, who'll run you through our outlook. Thank you.
Thank you, Lachie, and a warm welcome to everyone this morning. My name is Lachie Campbell, and it's great to be presenting once again at our AGM. Today, I'll share with you some insights into where we believe we are in the current cycle before providing an update on recent share price performance and our key priorities for 2026. I want to start with dam storages, as these are the single most important supply-side indicator in our market. Dam storage levels determine how much water is available for agriculture each year, and they directly influence the yields that we can generate off of our assets. The table on the screen tells a clear story. At 31 March, the weighted average Southern Basin storages sit at 42% capacity. While this is lower than the long-term average of 51%, interestingly, it is broadly comparable to what we saw in early 2019.
For those who follow water markets, early 2019 is a significant reference point. That was the period leading up to when we saw Lower Murray spot prices surge to over AUD 1,000 per megaliter during the last drought. Now, I'm not here to say that we are absolutely heading for a repeat of 2019, but what I can say is that the storages today look very similar to what we saw in early 2019. Therefore, storage inflows in the coming months will be critical in determining and influencing what the spot price does in the year ahead. If we see an average or wetter winter, storages can replenish and the market may ease. If conditions remain dry, supply will tighten, and that is historically when the value of high-security water entitlements has most clearly been demonstrated.
This is exactly why we've been focused on building our lease book, increasing our recurring revenue, and extending our WALE, and securing water for our customers in advance of what may be another dry period. This table represents how much water has been allocated to entitlement holders so far this year. When allocations are low, there is less water available in the market, which tends to push spot prices higher. As you can see, awarded allocations as of early 2026 are again broadly similar to what we saw in early 2019, particularly across Murray and Murrumbidgee systems. As of March 2026, the combined average annual allocation determinations are sitting at 52%, compared to 50% in early 2019. Now, adding to this, South Australia announced earlier this week that its expected minimum opening allocations for 1 July 2026 are expected to be 62%.
This would be the first time this entitlement type hasn't opened at 100% since 2019, and before that, it was the millennium drought. These are just really some key reference points that market stakeholders should have in mind when thinking about the year ahead. The key difference today, though, is that Rivco is better positioned than it was in 2019. No management or performance fees that scale with NAV, a higher proportion of leased entitlements at attractive yields, and a stronger balance sheet to take advantage of attractive opportunities should they present. Just quickly on this chart. This shows how allocation prices have moved over the past 9-10 years and how the current dry conditions have translated into higher spot prices. Again, going back to 2019, allocation prices in the Lower Murray reached AUD 1,000 per megaliter.
Prices then reduced significantly in the years ahead, driven by a prolonged wet period, with prices falling to as low as AUD 5 per megalitre in 2022 and 2023. Recent dry conditions and lower storage levels have contributed to upwards pressure on spot and lease prices, with the Lower Murray reaching as high as AUD 550 per megalitre earlier in the year. While it's since dropped to about AUD 400 per megalitre, the current trajectory reinforces the strategic value of water ownership and our ability to help farmers secure long-term access to water in a capital-light manner. Now, beyond water markets, this slide highlights how recent strategic actions are beginning to translate into positive performance. Over the past 12 months, we've seen improved share price momentum and a meaningful narrowing of the discount to NAV.
Our discount to NAV reduced from 15% at the end of January 2025 to just 1% at the end of January 2026. That being said, we believe global market volatility has been a factor impacting many small cap share prices in the last couple of months, leading to a slightly higher discount of late, but we believe the trend is clear. We believe recent positive share price momentum has been driven by the cumulative effect of the strategic actions Brendan mentioned earlier, internalization, de-leveraging, increased lease percentage, and greater engagement with our shareholders in the investment community. We remain focused on continuing our efforts to narrow the gap between NAV and the share price. Looking ahead to 2026, this slide sets out the five areas where the board and management will be directing their attention and energy.
First, increase earning stability by continuing to grow our lease percentage towards 70% or above to enhance recurring cash flow and reduce earnings volatility. Second, portfolio optimization. Rebalancing capital into high-income, high-growth zones using a selective valuation-led approach. Third, disciplined capital management, ensuring we deploy capital to the highest risk-adjusted return opportunities while still preserving flexibility. Fourth, leadership and governance, finalizing our leadership structure and continuing to enhance board capability and composition. Fifth, refining our investment proposition. We'll be launching an updated investment thesis, which we will clearly communicate, and clearly communicate our future strategy to the market in due course. We are excited about the year ahead and confident that Rivco is well-positioned to deliver long-term value for shareholders. Now, before we move to the formal items of business, I'd like to invite Ed to say a few words.
As shareholders may be aware, Ed will be stepping down from the board at the conclusion of today's meeting. Over to you, Ed.
Thanks, Martin. Thank you, everybody. I'll keep this brief, but I did want to take a moment to reflect over what we've accomplished and where we sit today. When we started this business, it came from an idea on a, funnily enough, very rainy, dark day in the Adelaide Hills. It was pouring with rain. I was sitting in an office. It was a Friday afternoon. Peter Michell and I had opened a bottle of wine, and we're sitting there, and we're talking about the way balance sheets and companies work and allocation of capital and what's good and what's not. We're talking about farms. We're talking about the fact that a farming balance sheet, if you set it up the right way, can actually have a lot of upside, and that water, as part of that balance sheet, was a very stable, boring, regular thing.
It was almost two different risk buckets. That's where the idea of this company was born, was the fact that the water part of that balance sheet is a nodding duck, boring, wonderful, patient asset. For those of you who are not up on current events, there's a war happening today. Iran and the U.S. are beating on each other and thumping each other. We may have peace in the next couple of days, but this asset in that environment is about as good as you're going to get. I've said over the years many times that we would see an inflationary period. I am, at this point in time, absolutely sure that we're going to see a nasty bout of stagflation. That's inflation, but with a non-growing economy.
We've hit over 90 processing plants, refineries, for those of you who don't know, a processing plant in the Middle East. We've knocked out in one fell swoop 14% of the global production of nitrate-based fertilizers. We're going to see ag inflation as well. If you look at just the other damage to the economy, it's roughly 32%-34% of the fertilizer compound that's going to get whacked. We will see inflation through food, we're going to see it through energy, we're going to see it through the fact that we don't have helium to make computer chips, et al. That said, a real asset like water has nowhere to go except up in that environment. We will adjust with farm prices. We will adjust as a hard asset, even though this is a theoretical asset.
When Peter and I sat down that afternoon and we discussed how this should perform in different types of environments, you couldn't get a better environment for this asset, much less with the background right now that we probably will go into a dry. You've got the government that's going to take out another 200 gig of water. For me, I can't be prouder of my team. The two Lachies, who came in a little bit wet behind the ears for Beachy and tall, willowy, and an accountant for Campbell, have done nothing short of extraordinary things, as you can see from the compound growth rates over the last eight and seven years, respectively. As two bright, articulate, wonderful young men, I cannot say enough good things about them.
They've proven me right repeatedly, and I'm very happy that they are in the positions that they are and taking care of this portfolio. From my side, the fact that Peter Michell was crazy enough to believe in creating this company, I will always be in a debt to him for. For the fact that he's pushed me, in fact, to say, "Let's make this happen," a couple of times, so we actually went and spent the year and a half of work to get the company built. Starting off with AUD 37 million, it was very small, and for those of you who've been here since the very beginning, thank you, and hopefully you feel boringly well rewarded. From my side, I want to thank my fellow board members.
I'd like to thank especially Dennis, who's not here, and Peter, who's not here, and I am absolutely sure that going forward, that the company will do great boring things for you. From my side, we've had a little bit of a difference of view on how do we grow. From my side, I've been very, very clear. I think we stay very boring, but we'll see what happens with that in the future. To all of you who've been here all the way through, and put up with me in all the investor meetings, all the little coffees, et al., all my rants and raves, I do appreciate it a lot. God bless you all. I am officially resigning right this second. I will sign the letter and say goodbye to you all.
Happy to have coffee with anybody and share the views on the economy and everything else. I think we're in for one heck of a rough time, and I think the markets in general will be having a little bit of a beating. That said, I think this company is going to be absolutely fine through that. Thank you all. God bless you, and it was a great ride.
Thank you, Ed. It is a great story of how this company was formed. It is a wonderful asset. We do believe in it immensely, and as Ed said, the two Lachies have done a tremendous job with where the business is at today. Again, thank you, Ed. On behalf of the board and the entire Rivco team, we extend our deepest thanks for your vision, your leadership, and your contribution to this company, and we wish you all the best with your future endeavors. I now table the notice of meeting, which was made available to all shareholders on the 18th of March, and if there is no objection, I propose that the notice of meeting be taken as read.
I advise that no notice of any other items for today's agenda has been received, and therefore declare the only matters for our meeting today that can be dealt with are those set out in the notice of meeting, excluding Resolution 3, which was the re-election of Mr. Dirk Wiedmann, which has been withdrawn by the board. Shareholders and proxy holders attending today, you should have been provided a blue or pink attendee card at registration. If you have not received an attendee card, can you please see a Computershare representative at the registration desk outside the room. For each resolution, I'll invite questions from you at the appropriate time, and those wishing to ask a question in the room, can you do so by please raising your blue or pink card.
For those shareholders and proxy holders here in person holding a blue attendee card, on the reverse of your card is your voting paper and instructions. We will open the poll after all items in the notice have been introduced and discussed. I will then ask all shareholders and proxy holders holding a blue card to vote on the reverse side of the attendee cards, which will be collected once the poll closes. I will conduct the meeting by referring to the resolutions in the presentation behind me. Should any member have a question with regard to any of the motions being considered, there'll be an opportunity to ask questions prior to voting on each resolution. I refer to those matters set out in the notice of meeting.
The first item of business today is to receive and consider the annual financial report of the company for the financial year ended 31 December 2025, together with the declaration of the directors, the directors' report, the remuneration report, and the auditors' report. I wish to advise that a copy of the company's most recent annual financial report was lodged with the ASX and is also available for download from the company's website. I think we also have a few floating around in the room if you'd like to grab a hard copy. Please note that the company's auditor, Mr. Justin Humphrey from Grant Thornton, is also present today here in the front row if you have any questions for him. Justin, you'll put your hand up just so thank you. We are not required to formally adopt these reports.
However, I invite any discussions or questions in relation to the company's annual financial statements. Please raise your blue or pink admission card and wait to be acknowledged before speaking. Can we please ask that you state your name prior to asking your question, and one of our team members will be walking around with a microphone for you. If there is no further discussion, I will now move to the next item. Are there any questions on the annual report itself? No. Okay. We'll move to the Resolution 1, to the adoption of the remuneration report. I now inform the meeting that the explanatory notes accompanying the notice of meeting and the company's financial statements provide the background and details of the remuneration report.
I now move the motion to consider, and if thought fit to pass, with or without amendment, resolution as shown on the screen as a non-binding ordinary resolution. Please note, the key management personnel of the company, including the directors and their closely related parties, are excluded from voting on this resolution as set out in the notice of meeting. Also in accordance with Section 250R of the Corporations Act, this resolution is advisory only and does not bind the directors of the company. The slide behind me shows the details of votes received by proxy. The directors unanimously recommend that the shareholders vote in favor of adopting the remuneration report. For any proxy votes where the chair is nominated as proxy, these votes will be cast in favor of the resolution.
I now invite discussion of that motion, and please raise your blue or pink attendee card if you have a question or comment. Yes, Ian.
Thank you. Good morning, Mr. Chairman. My name is Ian Gibson, and I'm here representing my super fund. Today is our first opportunity to address the board since the AGM in relation to the internalization of the management and the removal of Duxton Capital Australia as the manager. To be clear, I'm all for the internalization process that occurred. My issue was with the process and the price paid. Given the circumstances around the vote, it's reasonable for us to use this forum at the remuneration report to question some of the governance matters around the internalization and the subsequent running of our company. DCA received around AUD 14 million in payments as part of the internalization, which on my simple analysis, could have been nil or close to nil if we waited a further approximately 12 months. Nonetheless, this has happened.
The internalization was supposed to sever the ties to DCA. However, there remains an ongoing influence from DCA on our board today. Mr. Peter has accepted the changed circumstances, and I'm pleased to see he's retiring at the close of the AGM, and I wish him absolutely the best. Also, the announcement this morning regarding Mr. Wiedmann is another positive development. However, Mr. Duerden has so far failed to see the governance issues of having the CEO of the former manager remain as a director of our company. Could Mr. Duerden please explain what benefits he brings to maintaining a directorship on our company in this time when we're trying to separate ourselves from the former manager?
Would you like to come up, Steve?
Yeah. Thanks, Ian. I'm happy to answer that. Yes, I have been the CEO of Duxton Capital. I've recently stepped down from that position. I'm still employed by Duxton to look after other things. I would say that I would've been quite happy to go with the water team to Rivco, but I don't think the two Lachies want me looking over their shoulder. In terms of my role and what I bring to the board, I have always taken the view that if there's been, and rightly so, any conflict between the interests of the manager, and the board or the business, that I've recused myself from those discussions, as appropriate. Indeed, the fellow board members will confirm that that's been the case. I think Brendan's quite happy to stand by that.
In terms of what I bring to the business, I've got 20-odd years investment knowledge around agriculture. I come from a background where my family's been involved in agriculture. I understand the issues around water. I've been involved in the inception of this business. I'm very much wedded to the business. I love the business. I think it's a great investment. I've got pretty much my entire family wealth tied up in the business. I think I can bring a lot to the table in that regard. Also, the other boards that I sit on around agriculture, I've got exposure directly to farmers and irrigators across New South Wales, Victoria, South Australia. That gives me real-time information about what people are thinking about and what they're doing.
I'd like to throw in on the side. I cannot find a person who has got more integrity, and who's more honest than Steve. You'll often find him in the office working 9:00 P.M., 10:00 P.M., 11:00 P.M. to make sure things work and make sure they work seamlessly. He has, in my experience of him in the last almost 20 years, never, ever let the side down. Anytime there's been something prickly or difficult, he's gone out and solved it for us as Duxton Water. More importantly, he brings a deep knowledge base of what's happened to this company all the way through, and he's probably the last person here who's here at inception. When I step away, the two Lachies were not here at inception. Viv was not here at inception, nor was Brendan.
He's lived through every single trade we have done, literally physically signed most of them. From my side, and also as a large shareholder, I cannot speak highly enough about him and his integrity. I think that from my side, I'm very happy to support him as a board member. I know that many other folks are, and I cannot imagine many people with more knowledge of what we do, how we do it, and how we process trades on the planet.
May I have a follow-up, please, Mr. Chairman?
Well, I think in terms of what we've said today is we've gone through a refreshed process, and we are working through that. We think everyone who serves on the board has served it to their best ability. We have had independence on the board. Steve is one of the founding directors. He does add incredible contribution from a skills-based perspective, and we respect your views as shareholders that you see the fact that there has been a payment and a transition, and we get it, that Steve's part of Duxton, was the former CEO. We get the view of some of the shareholders is that there's a governance issue there. As I said, from a skills-based perspective, we don't have any issue, and the way that Steve's conducted himself, there's certainly no issue as well.
He's been an important member of the team, and we're managing through, but we certainly respect the views of our shareholders.
In terms of severing the ties with the former manager.
Yeah
T his is not a good indication, where up until today, three of the six directors had broadly an association with the manager. I might add that in the ASX announcement where Mr. Peter’s resignation occurred, there was a concluding comment that inter alia said, “That the board’s balance will be adjusted, to be able to support the ongoing strategy and governance requirements.”
Yeah.
I'm just not sure that I see how good governance can be maintained when you've got such an influence of the former manager. I might also add, or question, at the next AGM, I believe that Mr. Duerden is up for re-election. Can we have a commitment as to whether he will stand for re-election then or whether he will resign at or before the next AGM? Thank you.
Sure. Sure, Ian. That's fine. Look, I'm not going to make a commitment at this stage as to whether I'm going to stand or not. I think while ever I can add value, there's a reason for me to stand. I would say I'm not the only director sitting on the board, so it's not like I sit here and make all the decisions and suddenly everybody does what I want. Far from it. There's a majority of independent voices on the board. I take a bit of umbrage to the assumption or accusation that somehow I control the board and the board's not independent. The board's very independent. I think what I bring is a long history of exposure to agriculture and in particular water investment, as well as formal training in finance.
In terms of where we go next year, look, that's clearly up to the shareholders. I appreciate there's a number of you in the room who have significant shareholdings, and you can vote those as you see fit. I will always do the best by the company. As I say, a significant part of my family's wealth is tied up in this company, so I certainly want to see it achieve.
Thank you.
Yeah, Rhett.
Good morning, everyone. My name is Rhett Purvis. I represent RPG Management. We're a substantial long-term shareholder in the company. My question is another one for Mr. Duerden. Mr. Duerden, until recently, you've served as the CEO of Duxton Capital and the director of Duxton Farms. At the Duxton Farms AGM in late 2025, shareholders delivered what can only be described as a significant rebuke to the board. Over 73% voted against the remuneration report, constituting a first strike under the Corporations Act. Over 80% rejected the proposed increase in director fees, and the proposal to issue equity under Listing Rule 7.1A was also defeated. Three of five resolutions were rejected outright.
We note that the Takeovers Panel received formal applications in connection with the merger of unlisted Duxton entities, although they did not proceed with that investigation, and that the independent expert found that that merger was not fair to shareholders. As a director of Duxton Farms and as the CEO of its management company at the time, you had governance obligations in respect to these outcomes. Do you consider the governance outcomes at Duxton Farms to be relevant context for shareholders assessing your fitness and continued role on the board?
Thanks, Rhett. It looks like I'm fairly popular today. Look, it's not my intention to talk about Duxton Farms clearly without the other directors here, but I welcome the opportunity to reject what you've put forward there and perhaps give a more detailed explanation to the room as to the circumstances surrounding that. Firstly, on the alleged government failures, I will acknowledge the takeover was indeed a very complex takeover transaction. It involved multiple entities, multiple boards, and different shareholder bases. We weren't going to please everybody. To confirm, the transaction was run by the independent directors of all of those boards, and I excused myself from all the debate around that transaction, both from Duxton Farms side and on the merged company side, because I was sitting on both sides of the fence. I stepped back completely.
I had no involvement in the due diligence processes, in the pricing, or in any of the decision whether to proceed or not. Just to confirm on that, parties related to Duxton as the manager were prohibited from voting on that merger transaction. Just to be clear, we followed very much first principles in terms of governance. The board of Duxton Farms went to great pains to ensure that there were appropriate governance and controls around that transaction, and I'm happy to introduce you to the partner at Clayton Utz that sat across that transaction and made sure we followed everything, not only to the letter but to the spirit of the law.
In addition, I point out the transaction was vetted by ASIC and the ASX, in terms of approving the documents before they were dispatched to all the shareholders of Duxton Farms and the acquired entities, and that's a requirement under ASX Listing Rules and obviously ASIC. Given it was a scheme of arrangement structure where we needed everybody in the room basically to approve the transaction. The transaction documents were even approved by the Federal Court, both before they were dispatched to shareholders and after shareholders had approved them. Yes, I acknowledge there was an application to the Takeovers Panel, which any shareholder who doesn't agree with the takeover is permitted to do. The Takeovers Panel did not see merit in that application, and again, happy to provide you with the written advice that was received from the Takeovers Panel.
In terms of the fair and reasonable opinion, the independent directors of the board of Farms had RSM acting as the independent directors for the shareholders of Farms. Technically, you're correct, they opined that the takeover offer was not fair, but it was reasonable. The reason why they said they couldn't opine that it was fair was that in assessing the assets that were acquired, they were obliged to assess those assets at their net tangible asset value, not at their business value.
If I can quote from the independent expert's report, "We consider that the acquisition of portfolio assets with high growth potential for primarily equity consideration, together with the diversification of business activities and the risks that the acquisitions provide, gives rise to greater advantages to non-associated shareholders than the disadvantages." Absolutely we followed not only the letter of the law, but the spirit of the law in that acquisition. In terms of the AGM that you raised, yes, there was a vote against the directors' remuneration proposal and the remuneration report at the AGM. I note there was probably about a 20% vote. 20% of ASX-listed companies had a vote against their remuneration report last year. We've spoken to one of the major shareholders behind that vote.
They've indicated their support for the board going forward, and they also voted to support the transaction and actually provided funding for the transaction. I hope that addresses the issue.
Thank you, Mr. Duerden. I should—
Probably the biggest problem with the transaction was valuing bees, because there's no land associated with bees. As I tried to explain to Phil, the bee business, which we are currently co-equal biggest in the country, is a uniquely difficult business to value because a hive has 60,000 bees, and how do you attribute value to that? You can attribute to a box, but not to a hive. So you have to do it on forward earnings. So it becomes very difficult to say, "This is land and this is bees." So that was the real crux of that question. I can explain it to you later if you want.
Thank you. I should have mentioned that these questions were submitted in writing to the company beforehand, so thank you for your response. We ask that they be entered into the minutes in full and the responses as such within 14 days.
Happy to do that. Great.
I just wanted to ask a follow-up on that. The challenge we see, Mr. Duerden, is that one event on its own is maybe questionable and something we want to look into. But when we consider the recent IMA expiry scenario and accelerator, this raises more questions for us and a pattern starts to develop. The IMA, the Investment Management Agreement, with Duxton Capital, which you were the CEO of, was due to expire in July of this year, only 14 months after internalization was proposed. The board was required to put a termination resolution to shareholders at the end of the IMA in mid-2026. Why did the company pay AUD 14 million to terminate a contract that was contractually scheduled to come before shareholders for termination anyway?
The independent expert report modeled two scenarios, the first of internalize immediately for AUD 24 million-AUD 29 million, or continue into perpetuity for AUD 38 million-AUD 48 million. The expert did not model what was the most obvious scenario, allow the IMA to expire, save AUD 14 million, and internalize at minimum cost. The meeting acknowledged this option existed but dismissed it as unfeasible without detailed analysis. As the CEO of Duxton Capital and as a board member, you sat on both sides of this transaction, receiving AUD 14 million in payments and shares, and a director of Rivco while making those payments. We would like you to explain why the board did not present this lower cost option to shareholders and to confirm whether DCA or its representatives made any representations to the independent directors about the consequences of allowing the IMA to simply expire.
Thanks, Rhett, and again, I acknowledge that you did give a heads up there that you were going to ask some tricky questions. Look, I think to be clear, the independent directors did address this last year. I'm quite happy to go back through that. First of all, to be clear, I didn't sit on both sides of the transaction. Again, both Ed and I excused ourselves from those decisions, and in fact, it was the independent directors that brought the decision to Ed and I as the representatives of the manager at the time, to basically terminate the contract and in-source the business. At no point did I participate in those deliberations, and that was all done by separate board meetings that didn't involve myself or Ed. At no time did we deliberate in the quantum of what was decided.
By the way, it was about 12.5, not 14.
Sorry, the annual report has 13.6.
I can show you it was about 12.5. It probably depends on how the last management fee was paid in the last month. Basically, the transaction was put to the manager from the independent board as to we think this is the best way to go. There wasn't room from our side for negotiation. Don't think that by any means we sat there in the room and said, "Oh, we think this is what you should pay us." The independent directors came to us having had advice from BDO, KordaMentha, who did their financial modeling, and Allens and Steinepreis Paganin legal partners who advised them, and they brought the transaction to us and said, "Look, this is the way we want to move the business forward." Obviously, they're a majority on the board. We agreed to work with them.
We accepted that they wanted to cancel the contract. Obviously, there was a termination price in that. Then we agreed to work with them on the transition. Now, can I just point out that I understand what you're saying is, "Oh, why don't we just let it run out, and then off we go to the races." Duxton spent considerable time building this business, and basically we'd built the employees, we'd built the IT systems, the IP. We ran the office. We provided the accounting and financial support. So all the costs over the last 10 years, we have been paying for the business. Yes, we've been seeing a management fee, but the reality is that management fee barely if, in actual fact, did cover the costs of running that business. You can see that, I think Brendan mentioned today, the internal costs are AUD 2.6 million a year.
That gives you an idea of what it does cost to run this business. Having said that, we agreed to work with the independent directors to transition across the IP that we had built, across all the IT systems, to encourage the staff to move across. We paid staff out incentives and long-term bonuses that came out of our pocket. There were also some staff redundancies that we paid out. Then in addition to transferring the IP, we transferred the IT, the hardware. We transferred across, as I said, the staff, the accounting team, all the financials, and then arranged with the two Lachies, looking at the internalization of things like running a business, your HR, your legal, your IT support, transitioning them into new offices. All things that we've provided over the last 10 years.
As part of that process, so picking that whole business up and basically moving it across and outside of Duxton, and giving them the tools and the staff to run the business. In addition to that process, there was also a requirement that Grant Thornton provide a review of that transition for the independent directors, and then the independent directors themselves had to sign off on that transition to satisfy themselves that the business had been successfully moved across. Again, I can't stress enough, I think if you look at the results in that last 12 months, and bearing in mind that Duxton was responsible under that transition, even from the date of termination, which was back in May of 2025, right up to the end of November when we finalized the transition, we were responsible for the supervision and management of the portfolio.
In those 12 months or 11 out of those 12 months, we've actually achieved a record profits for the business. I think if you look over the 10 years that we managed that business, we returned something like AUD 65 million in dividends, which equates to about AUD 0.53 a share. We had an annualized return of 9.7%. I think, initially you would look at the business and you'd say, "Oh, well, they should have just passed it across." I think
We had to carve the staff out, so they had non-competes. It wasn't just we can go click, clack, clunk. You got to get staff who didn't have the right to go. Normally, it would just rolled over the contract, and we worked in good faith trying to internalize. The goal was long-term to internalize, but when the company was a little bit bigger. The flip side of that was everybody was worried that there might be another big performance fee because we're going into dry. We said, "Okay, fuck it. Let's just go forward and take the fuck out of any minutes there, and just move forward and try and work in good faith." Everything we did was in good faith, and I didn't want to do it. In the end, since everybody else did, bang.
Look, I appreciate the response. I guess the question that it opens up to us is around, you mentioned the complexity of the business, the cost of the business, and its requirements. The TSA, I think, the Transition Services Agreement, is a good example of actually how simple this business really is. It was supposed to take 18 months. It was done in six months. DCA would then receive a bonus on top of that.
The guys came out and said, "Let's give you an incentive to move it quicker, to make it easier." That's what their incentive was. They said, "Look, we'll do it this way, but you need to make sure it works." They took a window and said, "This is the short, this is the long. Let's try and make it happen faster, so we're going to incent you to do it." We did from Duxton's side, the best we could to make sure it was seamless, it worked, and everything got carved out. A bunch of people didn't want to come. A bunch of the employees that were there didn't want to come. We had to sort out who was coming, who was not, and give a business that goes on forever. Now, in terms of friction costs, they're very low comparatively.
If you were going to buy this business, you'd have paid a lot more. The guys from Regal, when they came and pitched to me to buy the business off of us, we're talking much higher numbers. When Brendan, what's his name, the CEO of Regal, came and pitched to me, he was talking double that. What ended up happening, the cost of moving this was much lower and we tried to do our best for everybody.
Thank you, Ed. Can I just finish my question for Stephen, just on a follow-up?
Oh, sorry. Apologies. Didn't mean to talk over you.
As the CEO of DCA, you had a financial interest in triggering that payment of an accelerated TSA, and as a director of Rivco, you had a duty to ensure internalization was genuinely complete and not prematurely declared. At the time of that early completion, six months in, the company had, to our understanding, two direct employees. No publicly articulated independent strategy, no disclosed capital framework. The TSA contemplated an 18-month transition to deliver a fully operational independent company. Can you confirm the exact dollar amount DCA received under the accelerated clause? What specific deliverables DCA completed to justify that early termination, and confirm what governance safeguards were put in place to prevent you, as a person who stood to benefit financially, from influencing the timing of that internalization to termination?
Do you accept that the accelerated clause created a financial incentive for DCA to declare completion prematurely, that given every month of completion increased DCA's effective fee?
Yep. I think I addressed that earlier. Basically, Duxton didn't have a say in when completion was finished. That was up to the independent directors to assess the business. They brought in Grant Thornton to do a financial review as well. It wasn't a case of Duxton going, "Hey, guys, we're finished." "Yep. Write us a check." In terms of the staffing, the way that we agreed to approach it was to give two Lachies, obviously, key management personnel, some security around their role going forward. We agreed that we would move them into the business straight away. As part of that, Lachies, I hope you don't mind, we paid out their long-term incentives that they had earned within Duxton.
We continued to work around moving all of the business in, as I say, transferring across the IP that had been developed over those years, moving the IT systems across, and then working with other staff. As Ed said, there were a range of staff, some who wanted to go, some didn't want to go. In the end, we came up with an agreement as to who was moving across, and they moved across just prior to transition. Again, Duxton paid out their long service leave, their historical balances, their bonuses, et cetera. We also managed some of the staff that remained redundant. We had IT staff leave as part of that process because obviously we had a full IT team supporting the water business. We had another analyst who worked with the team that left as well.
It wasn't a case of, in any way, me or Ed or anyone at Duxton going, "Yep, look, we've finished. Write a check." It really came down to the independent directors being satisfied. Again, I get to the point, the whole issue around this was trying to do this quickly and efficiently so that we had minimal disruption to the business. I think we achieved that by the record results that we achieved for the year end of December 2025, which Brendan has just stepped through. I'll leave it at that.
Mr. Chairman, my understanding is the restraint clause in the transitional services agreement prevents DCA, Mr. Peter, and Mr. Duerden from competing in a water entitlement space for only 18 months from June 2025, meaning that the restraint expires around December this year. After that date, there's no contractual barrier to stop Duxton Capital, Mr. Duerden, or Mr. Peter from re-entering the market and leveraging the proprietary information or knowledge that they've gained while being directors of our company. How is it reasonable that Mr. Duerden?
I was the portfolio manager.
Can I ask, how is it reasonable that Mr. Duerden continue as a director, given the limited restraints and particularly that he's envisaging being a director up and beyond the actual expiry of those restraints at the end of this year?
Thanks, Ian. I'm quite happy to take that. Look, as I say, I've stepped down from the CEO role of the Duxton Capital business. Having said that, yes, there is a restraint of trade for 18 months. I think it's quite reasonable that I would step down from this board if we were to go and enter into another listed, in the remote chance that we enter into some sort of a listed water business similar to this business. I think it's quite reasonable that I would step down. I can't see me being able to sit on two businesses that were operating in the same market.
Sorry, just is it only restricted to an ASX-listed water? In theory, you could go and start a private water business.
We could start a private one. I can't see that happening.
Just reemphasizes my governance query.
Ian, we run farms all over Australia. We buy and sell water for those farms.
So it's not a—
This is an inherent conflict.
Look, as I said, I'm quite happy to reconsider that position, if we get to that remote possibility where we start up another business. It took us 10 years to grow this business. To be frank, it wasn't very profitable for us. I can't see, certainly in the immediate future, I don't have a crystal ball, but as I said, I'm not involved as the CEO of the Duxton Capital business, but I can't see that happening. I can take your point, Rhett, and I'd be quite happy to step down.
Thanks, Ian and Rhett, for your questions. Voting on this resolution will now be held over until the conclusion of the final item of business to allow the poll to be conducted. Resolution 2. I now move to Resolution 2, Election of Director Mr. Chris Larsen. More background can be found in the explanatory notes. I now move the motion to consider, and if thought fit, to pass, with or without amendment, the resolution as set out on the screen as an ordinary resolution. The slide behind me shows the details of the votes received by proxy. Each of the directors, other than Chris, who abstains, recommend shareholders vote in favor of the resolution. For any proxy votes where the chair is nominated as proxy, those votes will be cast in favor of the resolution. I now invite discussion of that motion.
Please raise your blue or pink attendee card if you have a question or comment. Yes, Ian?
Mr. Chairman, firstly, I congratulate you on finding someone of Mr. Larsen's experience to join our board. My only question, and I'm sorry if he can't see us or hear us, but my question.
I think he can hear us for some reason, just not on the screen.
My question directed to you then perhaps, or to some of the other people on the board.
There's Chris. He's right—
Here he is now.
There he is. Great.
There he is.
Welcome and congratulations, Chris. My question is whether Mr. Larsen has any historical relationship with either Mr. Peter or Mr. Duerden, and have they previously worked together in any capacity?
Yeah. Hi, Ian, and thanks for your comments there before. Yeah, I can confirm that, yes, I have worked with Ed many years ago in our time at Deutsche together. We haven't worked formally since then. I think that ceased, if my memory serves, in 2007.
Any further questions on Chris's appointment? No. Voting on this resolution will be held over until the conclusion of the final item of business to allow the poll to be conducted. Resolution 3. As per my previous remarks, resolution three has been withdrawn from the agenda items of today's meeting, so we'll move on to Resolution 4. Approval to issue securities under an incentive plan. I now move to Resolution 4, Approval to Issue Securities under an Employee Incentive Securities Plan. More background can be found in the explanatory notes as well as the clarification announcement that was lodged with the ASX on the 9th of April. Following the company's internalization, the board has established a remuneration framework for our key personnel comprising fixed annual remuneration, short-term incentive, and a long-term incentive, each with measurable objectives linked to the performance of the company.
Components of the STI are delivered in restricted rights, and the LTI is delivered entirely in performance rights designed to align the interest of management with shareholder outcomes. The board wishes to make clear that the maximum quantity of 3.176 million securities stated in this resolution represents an approval ceiling only. It does not reflect any present intention to issue securities up to that number. The board has deliberately adopted a conservative approach, seeking authority equivalent to 2% of the issued capital, which is well within the ASX approval limits. I now move the motion to consider, and if thought fit, to pass, with or without amendment, the resolution as shown on the screen as an ordinary resolution. The slide behind me details the votes received by proxy. The directors unanimously recommend the shareholders vote in favor of the resolution.
For any proxy votes where the chair is nominated as proxy, those votes will be cast in favor of the resolution. I now invite discussion of that motion or any questions. Please raise your hand if you have a question or comment. Yes, Ian?
Don't like to be dominating here.
That's all right.
Mr. Chairman.
Of course.
I have absolutely no issue with an incentive plan for company executives. Indeed, I think they're critical to retain people of the caliber of our two Lachies.
Yep.
My issue is the size of the request under Resolution 4. My expectation would be that a few hundred thousand shares per annum might be appropriate given the size and scale of our business. You're suggesting that you're being conservative in only—
Yeah
— seeking approval for 3.2. That does not seem conservative to me. Given my overall concerns about governance, I don't know how the board can justify seeking 3.2 million securities with next to no detail about whom, how, vesting hurdles, et cetera. Can you please justify the quantum, in particular, and the details surrounding this resolution?
Yeah. Thanks, Ian, for your question, and it's a common question. That's why we announced the clarifying statement on the ASX on the 9th of April, and we've obviously had discussions on that with several shareholders. Yeah, as you know, we internalized the company. We've got our own staff now. We went through a process of putting in a framework for the team, which is considered best practice. It does consider short-term incentive and long-term incentive. You're right. There's no intention. I guess our word conservative is probably flipped the other way around. AUD 3 million is a conservative number. We don't expect to get anywhere near that. So it's conservative in that respect, not conservative the other way. So it's probably just the terminology there. But I think you're right.
It's a three-year approval, so the initial feedback from us through our lawyers, and [K Sec], who drafted this, was a 5% figure of placement. We said, "Well, that's too much. Reduce it to 2%." We honestly didn't think it was going to be that much of an issue. Because of the immaterial nature within this, it was just putting a percentage in there. We respect your views, but it's entirely driven to incentivize our staff with short-term incentives and long-term incentives that are sort of governed by restrictive rights and performance rights, which are, as you'd expect, tied to absolute shareholder return and total relative shareholder return. We have established, since internalizing, a rem and nom committee, which Chris is the chair of. Vivienne was the prior chair until she's taken over as chair of ARC, and Chris has taken on that.
The usual process would be to go through the rem and nom committee for construction approval, and then it goes to the board for approval as well. We have set that up in place. Again, I appreciate the number in isolation looks big, and we have committed to disclosing, under our disclosure requirements, what that actually looks like in due course. Rhett?
Thank you. Thank you, Brendan. I just want to come back to that comment earlier about the remuneration of related parties. It sits at AUD 8.9 million and AUD 4.7 million together, which is approximately over AUD 13, almost AUD 14 million.
Yeah.
If that's not correct, then the annual report will need to be reviewed.
Sorry, Rhett, just so I can confirm, that would include the management fee for the 2025 year?
The five months before.
Okay, it's not 14, it's 13. That makes sense.
The five months of management fees beforehand.
Yeah.
Yeah.
That's where the confusion.
Which is still—
Yeah
—which is still too much. Just with regards to the LTI, we're asking shareholders to approve 3.2 million shares, roughly 5.7 million at NAV.
Right.
For a business the size we are, that's a significant amount of money.
Yeah.
Especially for one that has two people.
Yeah.
Two FTEs. With no disclosed KPIs and no exercise price, and a full board discretion to waive conditions, what is the one specific performance metric that would be attached to these grants if they were issued?
One specific, as I just said, for LTIs, for example, it's a 40%, as you'd expect with most. Part of that is total shareholder return in an absolute basis and total relative shareholder return to the ASX 300 constituents over a three-year period. Like I said, it's designed under best practice. I take your point. We're in the process of restructuring and setting up the company. It's the same as we've requested an increase in director fees in here as well, which will be the next resolution. It's not our intention to go out and spend that money straight away. We're trying to set the company up. We don't know what the structure's going to look like in two, three years' time.
We have put it in place as a measure, so if we grow the company, if something happens, we've got those measures in place that we can attract key executives into key roles and put something in place. Today, like I said, in isolation, the number is large. We're just looking forward, and like I said, our view of conservative is probably the opposite view of conservative to you. We're just saying we're putting it in place so we can keep the business moving.
Brendan, if you don't mind.
No, go
If I just add a couple of points there. Just to clarify, there's four full-time employees, not just the two Lachies. In the Duxton business, when we were running it, there were significantly more employees. We had a much bigger business. Obviously, being a small business sitting on its own, it doesn't have the ability to manage that overhead. Things like HR, legal, IT are all outsourced to keep costs down. That's why at the moment it's a smaller in-house team. It's quite likely that as the business grows, that in-house team will bring some of those outsourced services into the business, when it actually makes sense from an economic perspective. As I say, internally, when it was all in Duxton, there was a full IT support crew there that supported them, being HR, legal, et cetera.
At the moment, and I think everyone would agree, the business isn't big enough at AUD 300-odd million to support all those people, but obviously going forward, once it makes economic sense, we'll look to in-house that.
Thank you, Rhett. Voting on this resolution will be held over until the conclusion of the final item of business to allow the poll to be concluded. Resolution 5, approval to increase Non-Executive Director fees. Again, more background can be found in the explanatory notes. I now move the motion to consider and, if thought fit, to pass with or without amendment the resolution as shown on the screen as an Ordinary Resolution. As set out in the Notice of Meeting, all the company's directors and/or their associates are excluded from voting in favor of this resolution. The screen is showing those votes received by proxy. For any open proxy votes where the Chair is nominated as proxy, those votes will be cast in favor of the resolution. I now invite discussion of that motion. Please raise your blue or pink attendee card if you have a question or comment.
Go ahead.
Thank you, Mr. Chairman, again. In my opinion, this resolution should not be overly controversial.
Yeah.
However, once again, my concerns lie around the historical governance issues.
Yeah.
Page 36 of the annual report includes a footnote saying that no fees were paid or are payable to Mr. Ed Peter and Mr. Duerden since the termination of the transitional service agreement, therefore they received no director fees.
Yeah.
Can you confirm that no fees have been paid or are payable in 2026 to both these gentlemen, and that the AUD 14 million we paid to them is sufficient compensation?
Yes. Confirming that, well, Ed's retiring, so certainly they have not received a director fee since the termination.
Not even free coffee then.
The, uh-
Oh, thanks.
As far as Steve goes, I think it's December.
December. Yeah.
December. Mid-December.
We've agreed that I haven't taken director's fees since the day the business was listed, and have agreed that I won't take them up until the theoretical termination of the transition, the full 18 months, that transition period.
Yeah.
We thought that was fair and reasonable. As I said, I haven't taken them for 10 years. I just want to make that.
Okay
Clarify that.
Voting on this resolution will now be held until the conclusion of the final item of business to allow the poll to be conducted. Resolution 6, renewal of proportional takeover provisions. More background can be found in the explanatory notes. As this is a special resolution, I note that in order for it to pass, it requires approval of 75% of the votes cast by shareholders on this resolution. I now move the motion to consider, and if thought fit, to pass the resolution shown on the screen as a special resolution. The slide behind me shows the details of votes received by proxy. A proportional takeover bid is a takeover bid in which the offer of each shareholder is only for a proportion of the shareholder's interest in the shares.
The company's constitution includes provisions that enable the company to refuse to register shares acquired under a proportional takeover unless a resolution is passed by shareholders approving the offer. Under the Corporations Act, these provisions expire unless renewed by a special resolution of shareholders. Accordingly, the directors consider the shareholders should have the opportunity to vote on the renewal of the provisions in the constitution. The explanatory statement outlines potential advantages and disadvantages of the renewal of the takeover provisions, and on balance, the directors consider that the possible advantages outweigh the possible disadvantages, such that renewal of the proportional takeover provisions are in the best interests of our shareholders. The directors therefore unanimously recommend that shareholders vote in favor of the resolution. For any open proxy votes where the chair is nominated as a proxy, those votes will be cast in favor of the resolution.
I now invite any discussion of that motion. Please raise your blue or pink card if you have a question or comment. Okay. Voting on this resolution will now be held over until the conclusion of the final item of business to allow the poll to be conducted.
Sorry.
Brown.
I do have a question.
Oh, sorry, Greg.
Not specifically related to that, but having heard the answers to some of the previous questions, if I can ask a question.
Yeah.
I've heard variously that the water business is dull and boring. We talked about the fact that the business wasn't large enough yet to fully staff up, and a number of the functions are outsourced. The good news is that it is being set up and built for scale, and there is a revised dividend payout framework in place that's focusing on paying dividends out of earnings. My question is really the general one, is in this dull and boring business that's built for scale, what are the potential catalysts for growth that you do see that might make it not dull and boring, that might take advantage of the fact that it's built for scale and that we may see growth outcomes in the future?
It's a good question, Greg, and perhaps that's one for a coffee. Look, we've gone around and spoken to a lot of our shareholders about where they think we should sit on strategy. A lot of people do think we should just continue to be a boring, strong, solid asset class in investment, and they feel as though they can get diversity through other things. We're consistently looking at all opportunities, whether that's in water infrastructure, whether that's in consulting, anything within that water sphere. Ultimately, our core, we want to stick really strong to our core, and at this stage, that's what we're doing. Yeah, water is such a critical asset to agriculture. We saw one of the listed companies yesterday announce a really great win for them, which is providing town water up in the Pilbara, which will be extremely profitable for them.
This whole thematic around water isn't going away, and there's a lot of opportunity. The theme at the moment is data centers and how much water they use. There's going to be plenty of scope for water into the future. All we can say, Greg, is we'll look at every opportunity as it comes up, assess it. I think the key thing for shareholders at this stage, and their key feedback was, if you do diversify, it's got to have a similar level of risk. We don't want you to go out and do anything super crazy that goes away from core strategy. Like I said, we'll look at it. I think given where we are in the market, to echo Ed's comments before, we are very well-placed given just everything that's happening with government water buybacks, going into a dry period.
The supply-demand modeling that's been done as part of our investment thesis shows that it's simply going to dry. There's simply not enough water to irrigate all the permanent plantings there. We don't find it boring as such, otherwise we wouldn't be here. We get pretty excited by being able to find opportunities in the market, and look, full credit to the team. I know we can point to the government buybacks and say we had a win through all this. We were the first big corporate to get the nod from the government because we're easy to deal with, because we pitched at the right price, and because we pitched the right assets to diversify our portfolio to get it in the best shape going into the next period. I've said that we've got our lease percentage up from 37% to 66%.
That's because of the composition of our portfolio, and we sincerely hope to be in a position to come out from 1 July to say we're in that 70%-80% bracket, which we said to shareholders from day one. On the outside, it might seem boring, but to the inside, we're pretty excited by water and its importance. Any further questions? No. Okay. We might move over to Resolution 7, approval of additional 10% placement capacity. As this is also a special resolution, I note that in the order for it to pass, it requires the approval of 75% of the votes cast by shareholders on this resolution. I now move the motion to consider, and if thought fit to pass, with or without amendment, the resolution shown on the screen as a special resolution.
The ability to issue new shares under the additional 10% placement capacity will enable the company to issue shares in circumstances where it might otherwise be subjected to the cost, delay, and uncertainty of having to go back to shareholders for approval. I should mention here that should this resolution be passed, it does not necessarily mean the company will raise capital in line with the resolution. The directors believe that the resolution is in the best interest of the company and unanimously recommend that shareholders vote in favor. The screen is showing those votes received by proxy. For any open proxy votes where the chair is nominated as proxy, those votes will be cast in favor of the resolution. I now invite discussion of that motion. Please raise a blue or pink card if you have any questions or comment. Ian.
Thank you. Mr. Chairman, once again, this resolution should not be controversial. However, given the board's willingness to significantly overpay for the internalization of the internal management structure, I'm concerned about giving the board unfettered ability to issue an additional 10% placement capability on top of the existing 15% limit. What assurance can you provide that the nature and circumstances under which you would utilize the ability to issue 25% of new shares as part of a transaction? I might add that I'm not liking hearing your concepts of diversifying into consulting and water infrastructure and agriculture more general.
Well, we're certainly not doing that, Ian. I just said there's things out there that we could consider. We're not looking at doing anything outside of the core business at this stage. In relation to trusting us, and I've heard, I guess, a few times, that the view that we've overpaid, and I think we've addressed that enough last year. It was passed at the AGM last year. The concept of internalization, I think it's important to overlay the governance method that has been here by the independent directors. At the five-year process, we ran an independent review through Lonsec to review performance at the five-year mark done by the independents. That review showed that performance was better than peers in the market where we could get information. You'd be familiar with some of those, and the fees were in line or better than market as well.
There was a tick at the five-year mark. We had some feedback from some advisors that back in 2024, when our share price was pretty close to NAV and the government was about to go and start buying up a lot of water, that it could be a potential opportunity to raise capital. The feedback was that there was murmurings from shareholders that we couldn't grow any further unless we're internalized. That came from the market. It didn't come from these guys. Dirk and I went and met with several key shareholders with one of our advisors, and I've apologized that we missed one of our key shareholders in that process with RPG, but we did go to five of our top shareholders, and we asked them for some of their views and it went beyond that as well in a second round.
When I talk to things like we moved from external management to internalization, we moved the debt from 31% to 7%, we've moved lease percentage from 37%. This was all the feedback we got. You're externally managed. Your debt's too high, your lease percentage too low, so your recurring income's too low. You don't have an independent chair. You don't have a sustainable dividend. We've taken all that feedback on board, and we're trying to go through it step by step. We can't fix everything overnight. Key thing in a restructure, stabilize the business, get the business in great shape. We have got the business in the best shape it's ever been. We appreciate we have to do things and earn the trust of shareholders. I appreciate you think that payment was large.
That payment we had. I hope you don't mind me saying here, but after KordaMentha did their work, after we did negotiations, because it's a negotiation, we had to negotiate with DCA. We questioned the number as well. We put it through a couple of our advisors that said it's in line with market precedent, and I think we shared some of that market precedent with you. If we wanted to genuinely internalize the business, we had to have a vote for that, and we got the vote for that, and we went and sat down with shareholders, and we explained them through our process for getting to a number. In terms of internalizing quicker than some thought we should, Ed thought it should be a three-year process. We said it should be a six-month process.
We landed at 18 months, and we went, "Well, we want it done in six months, so we'll incentivize you to work your butt off to try and get it done in six months." There's been a very structured process there. As Steve mentioned, we've had Allens give advice around the whole independence of these guys because they were sitting on both sides of the fence, but we've excluded them. We've had our legal counsel from Steinepreis Paganin on a lot of our calls to make sure that we're doing everything right, and we got there. We appreciate it's a big number, but we've been able to do all that while still producing a record result for the company, thanks to the way that the business has been set up.
We also heard as part of that feedback that the other last raise we did for the treasury water was done at too much of a discount. We're listening to shareholders. I can guarantee you that if another transaction comes along or an opportunity or a placement opportunity, we will be vigorously reviewing it and making sure it's in the best interest of shareholders. That's our job.
Specifically to this resolution, my question is, why should we give unfettered ability for you to have 25% ability rather than 15% placement ability without a vote. Because having the control of having a shareholder vote being the determining factor is a great governance constraint, as opposed to you having unfettered ability to issue 25%.
Yeah. It's a good question, Ian, but I think we have set the company up. I think we're doing everything shareholders are asking. We're not going to obviously win or please every view in the room, but we did get the approval. Most of our shareholders are in favor of what we're doing. I appreciate that's not all of them. That first slide I put up around governance and things like that, it's still a work in progress. Like I said, we know we've still got to earn the trust of some of the people that have some questions, and we're committed to doing that, and we're committed to getting our governance in the best place that we can. That's through what we've done, internalized the company. Ed has stepped down. He retired from the board. Dennis retired. We've brought in Chris.
I know you asked the question, does Chris know Ed? Chris has been brought in on purpose, and Chris is a fantastic addition to the board. You can look his credentials up. That was designed specifically to replace Ed's capability and skills. We are committed to building here the best board we can with an appropriate skills matrix, and move forward from there. Yeah.
Brendan, if I can just add. Ian, look, I appreciate your concern. As I said, I've invested a significant part of my personal wealth in this business. As a shareholder, I'd be very concerned about any potential dilution from a placement like that. I think the thing we can point to is that historically, when there have been placements done, there's been a pro rata offer to the other shareholders, so to make sure that there's an opportunity to participate. I can't speak for the board, but from my own personal position, I would expect that we would continue with that approach.
David.
David Adams. Brendan, you mentioned at the last AGM there was a vote about internalization. Did the majority of shareholders approve that internalization, and do you know what percentage the vote was?
Yes, David. It was about a tad over 60% voted in favor, and obviously the remainder against. Yeah. Thanks, David. Any other questions? Okay. Voting polls are now open. We will now vote on all resolutions included in the notice of meeting, and I declare the poll open. I appoint the Computershare representative, Ms. Gemma Koscher, to be the Returning Officer and conduct the poll. Gemma has power to co-opt as her agents, members of her staff, and staff of the company. Over to you, Gemma.
Thank you, Brendan. Firstly, if there is any person present who believes they are entitled to vote but has not registered to vote, would you please raise your hand for assistance. The persons entitled to vote on this poll are all shareholders, representatives, and attorneys of shareholders and proxyholders who hold blue admission cards. On the reverse of your blue admission card is your voting paper and instructions. I will now go through the procedures for filling in the voting papers for resolutions one to seven, with the exception of Resolution 3, which has been withdrawn. If you are holding a proxy, your admission card includes a summary of proxy votes, which outlines the voting instructions provided by the appointing shareholder for each resolution. By completing the voting paper when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions.
In respect of any open votes a proxyholder may be entitled to cast, you need to mark a box beside the resolution to indicate how you wish to cast your open votes. Proxyholders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the resolution to indicate how you wish to cast your votes. Please ensure you print your name where indicated. When you have finished filling in your voting paper, please lodge it in a ballot box, which will be circulated, to ensure your votes are counted. If you require any assistance, please raise your hand.
Another one down the back.
Would you please indicate by raising your hand if you require more time to complete and lodge your voting paper?
Where's it gone?
Two of you behind looking exactly the same?
Bullshit. Yeah. Your shoulders the same, the haircut's the same.
Yes.
You better look. How about that? I'm not going to tell you much. Even the light blue shirt from behind.
Exactly. You know I'm retired.
How many maybe you want? Can you give me? Oh, it's not two? Or is it a sale? Do you know what the best part of this is? You can't ask me for signatures all the time anymore. I just signed William's thing.
Steve, you were saying earlier about somebody that Duxton had paid out. They were thinking of making terms.
We got netted out. No, that was [Mark Santana].
Okay.
We took the other one on initiation, so they paid out the other one.
Okay.
Steve, you need a good illustration for marketing?
No, it is. That's a baby. Jesus Christ. Wow. Walking. Not by itself. Pulling up on things.
Yeah. Remind yourself, as soon as construction launching, nothing's safe at that point in time. Everything ends up on the floor. Yeah.
All the edge sharpness is gone away. All small edges, any of the architecture is gone, just gone bye-bye. It's rounded edges and soft edges. Do you have any?
No, that's not all.
See them?
No.
We could try and catch up.
I think we're a bit better.
Are we lucky?
No, I'm all right.
No fucking way. It makes me doubt.
That's all wrapped up.
You can't make this up. Three dads in a row. Congratulations. Well done.
Congratulations.
You know what it is?
It's good.
Probably.
Probably.
How many of these from you lot without that?
What are you doing in retirement?
Not doing anything with watermarks. Promise. Hopefully, do more sailing. I'd like to do some more sailing, and I paint and draw.
Good.
I'll make you a painting. If you tell me something outside you like the view, send me a picture, and I'll do you one.
I think it's self-portrait.
It's actually a portrait of two monkeys. I don't do people. I can, but I don't like it. If you've got an outdoor view, I'm happy to paint it. People, I don't do. Except Joe. I'll do my wife. Where are you hanging out? Are you in semi-stock?
Yeah.
Yeah.
Thanks for bearing with us, everyone. We shouldn't be too much longer, they just look like they're finishing things up.
Somebody tell a joke. You? You're a broker. Don't you have a good joke you can share?
No.
Watch it. David?
I know I'm a strength today, but it's not one of them. Thank you. That's all complete. Back to you, Brendan.
Can I just confirm that all the votes have been cast? Yep. Okay. I now declare the poll closed and formally charge the Returning Officer to count the votes. Votes will be tallied, and the results will be available at the ASX announcements platform following this meeting. As there is no further business, I declare the meeting closed. We will now take some general questions from the floor unrelated to the business of the meeting. Can we please ask that you raise your hand, state your name prior to asking the question, and once you have been acknowledged, one of our team members will offer you a microphone. Yes.
Hi, my name is David Wall. I'm a shareholder. Just going back to your initial opening, you mentioned that you made quite a substantial debt reduction on water buybacks through the government. I'm just asking myself, given the demands a lot of people are making on government finances in this day and age, if you have any contingency plans in place for what should happen if that is changed in some way, the government don't have so much to spend on it?
It's a good question, David. I think the government seems to be committed, and all the states seem to be committed as well to see this through with the latest round of 450 gig of purchasing. They've just announced a new tender up in the northern basin, so I think all indications are they'll see it through. You're right, they've still got a long way to go. They've still got to do the expressions of interest, get the tender, go to contracts, make the payments. Anything could still happen, but I think all indications at this stage are that the government is fully committed to fulfilling their government buyback process. Lachie, I don't know if you want to add anything to that, but I think that's probably all we can foresee at this stage.
Yeah. That's correct.
Thanks, David.
I don't think we have a crystal ball.
No, we don't have a crystal ball. Yeah, it's an important question you raise, even considering the crystal ball moment is what happens. You take 450 gig out of the system. I think some of the supply-demand modeling sort of shows last time they did a big buyback. After that buyback, prices came down. Then when you take that much water out of the system and we know there's still so much demand, perhaps prices go up. I mean, we have seen prices plateau, as we showed in the presentation across 2025, and it was similar in 2024. Prices certainly haven't been on a run, but we do need to consider all the elements when thinking about strategically what move we make next too. Yeah. Thank you, David. Any further questions? Yes, Greg.
I'm still interested in the outlook question. I heard Stephen admit that Duxton Capital hadn't made as much money as it would have liked to make out of Duxton Water. While I can appreciate the uncorrelated diversionary benefit of water in my investment portfolio, I'm just trying to think out longer-term is, should I just think of it as a reliable dividend payer that's not correlated with anything? Or are there opportunities out there for growth? Should I have some growth in the back of my head as an expectation?
Yeah. I think if you look at, and maybe Lachlan Campbell can talk to a bit of this as well, but the modeling that's been provided is, and Lachlan Beech spoke to this, over the last 20 years, we've had, as in the physical asset has had a growth rate of 7%, and then typically our returns from a yield basis are anywhere, depending on the year, from 3%-6%. Which shows that the headline figure of this asset class should be in that 10%-12% bracket, less your costs, so as a total return. We've seen anomalies in the market. In the last wet period, when prices should have come down during COVID, the cash rate was 0.25%, and prices stayed elevated.
Then at the end of that wet period, when interest rates started to run, water prices should have dropped off, but then the government came back in and held prices up. We've seen a few anomalies in the market. If you look at the 20-year horizon, the returns are there, and the market has been flat. It hasn't been on a run, and we don't expect it to sort of fall off. Like I said, with the demand and the dry outlook, values should improve. We don't have that crystal ball that David was talking about. We do absolutely think it's a very strong non-correlated asset. I've got my own personal super money in water as well. I think it's a very strong, non-volatile asset that's got a very important use to agriculture and their way of living.
For all the reasons Ed said that he set up the company is why it's a great asset. It's typically non-correlated, and it's typically a very good inflation hedge as well. Not always, but generally speaking, it is.
Yeah, Greg, if I could just add to that. My family's originally from Sydney, or around Sydney. I have occasion to drive backwards and forwards. Just from an anecdotal perspective, historically, you used to drive across the Hay Plain, and it was pretty much all cotton. You drive across there now, and you can drive for miles, and it's all permanent crops that require watering every year.
Where we used to have farmers making decisions year to year about the price of water and if there was enough water in the system and trade off against what they were gonna get for their cotton crop or putting in a summer grain crop, now you've got big irrigators out there who have trees that have spent upwards of AUD 60,000-AUD 100,000 a hectare putting in that they have to keep alive for the next sort of 25-30 years. I'm talking about the nut trees, of course. It doesn't really matter what the price of water is. These guys are gonna continue to irrigate. Now we've had the government in there buying back at the moment, I think they bought back 220 gig, looking at 450, as Brendan said. I think this government's pretty much committed to doing that.
You can kind of do the math, and you just look at the number of permanent crops out there. There's just not the flexibility left in the system to provide water during those drier periods. I think we're gonna see some significant movement in pricing. We've got a great team on board here that will work in those constraints, and I think there's great opportunities for this business going forward.
Yeah. Even annual cropping, the government completed a billion-dollar program roughly six months ago. A billion-dollar drought innovation loan program, which is a lot of overhead irrigators that have gone in, which you'll see if you drive around the countryside as well. There's a lot of annual crop irrigation on top of that. Yeah, there's demand coming from both sides. Thanks, Greg. Anyone?
I'll ask another one if nobody wants the airtime. What does that translate to in a vision for the Rivco office? Does that mean that the Lachies are selling bigger chunks at bigger prices or the same chunks at higher margin? Or do we have a team of 5 or 10 or 20 Lachies racing around selling water to eager buyers? How should I envision the office in 5 or 10 years' time?
We'd like to think that's a good vision, Greg. I think at the moment, like I said, stabilizing the business and getting into a good position, we're firmly on track to get within that 70%-80% leased bracket. Once we've got essentially a fully leased book, that opens the window for us to grow thoughtfully in terms of with demand. once we're full up, if we're still getting a lot of demand from growers out there to want leases, then what a great scenario for us to be in to find water that we can lease straight away, and help grow the team that way. there is a lot of demand. The guys have done a great job.
Like I said, we hope to be in a position, come the new water year, which is 1 July, to have that percentage right up and yeah, get ourselves in that position. Lachie, do you want to talk any more to that in terms of demand at the moment that you're seeing or—
No, I think that summarizes it, but there's continued demand for leases, and you can be quite picky at the moment picking and choosing what you like.
If you scan the publicly available information on water security of some of the big users, it's fair to say that they're undersecured. We are getting inquiry on a bigger scale nowadays because of the amount of permanent plantings that are in. As you know, if you haven't got water, the trees, you either have to hibernate them or they can die. You either give them less water, which impacts your yield, or you don't water them, and they can perish. It's pretty important that they're secure. Thanks, Greg. No more questions in the room? Okay. Well, I'd like to thank the members in the room for their attendance today and certainly for all the questions. Please feel free to stay for some light refreshments. Once again, thank you for the interest and support in Rivco Australia Limited.
Once again, just want to pay our thanks, big thanks to Dirk for his service on the board, and especially to Ed, being the founder and his service on the board in setting this company up. Thank you, everyone.