The meeting.
Virtual Annual General Meeting. My name is Gordon Dickinson, and I'm the Chairman of our company. I now formally commence proceedings by declaring that a quorum of members necessary to constitute a meeting is present, and therefore the meeting is declared open. We'll commence proceedings soon, but before doing so, I'd like to note that online are the following directors of our company: David Orton, Tony Morganti, Bruce Rodgerson, and Iven Mareels. We have an apology from Lynda O'Grady. Also present is Rachel Smith from our current auditor, Deloitte. We also have Andrew Bendall, our CFO, and Oliver Carton, our company secretary, present. Tony Batsakis from our new auditor, BDO, will be joining us shortly. Rubicon Water remains committed to addressing global water scarcity and advancing agricultural efficiency.
Financial Year 24 has been a year of laying critical groundwork for the long-term success of our company amidst evolving global challenges and opportunities. Globally, the importance of efficient water management continues to rise, driven by factors such as climate change, population growth, and the urgent need for sustainable food production. This urgency emphasizes the relevance of Rubicon solutions. In the United States, we see parallels to Australia's early 2000s adoption of advanced irrigation technologies, where severe droughts were the catalyst for systemic changes. Rubicon's positioning to meet these challenges remains strong as governments and private sectors worldwide increasingly prioritize water efficiency. Despite financial challenges stemming from slower-than-expected sales in some markets and some strategic decisions, such as reallocating resources in China and providing for a one-off doubtful debt in Chile, we've remained focused on aligning our operations with long-term goals.
They allow us to focus on identified growth markets, including the USA, India, Europe, North Africa, and Central Asia, which together represent a combined addressable market exceeding 20 times the size of Australia. Such immense potential offers a pivotal growth trajectory for Rubicon. Our successful capital raise across August and September this year positions us well to fund our future growth plans and demonstrates the strong belief among existing and new shareholders in our future potential. Financial Year 24 also reinforced the importance of our globalization strategy. By expanding into 22 countries and increasing our workforce outside Australia and New Zealand to 140 over the last five years, we've made significant strides in becoming a truly international business. These efforts provide the foundation to capitalize on opportunities in existing and emerging markets.
For example, our memorandum of understanding with Egypt's Ministry of Water Resources and our contributions to transboundary projects in Central Asia highlight Rubicon's capability to address critical water security challenges globally. Looking forward, Rubicon is in position to play a key role in addressing the growing demand for innovative water management solutions. With the groundwork laid, we're confident in our ability to unlock value for our stakeholders and contribute meaningfully to global sustainability efforts. Finally, I'm grateful for the dedication of our team and partners and the trust of our shareholders, which enable us to continue this journey. I'll now invite Bruce to present the Chief Executive's address.
Thank you, Gordon. Good afternoon, and thanks for joining us today at our FY24 Annual General Meeting. As evidence of the truly international nature of our business, I'm joining you today from our Beijing office in China, where I've been spending the week working on the formation of a new joint venture company, which will have Chinese national distribution rights to our products and solutions. This year, Rubicon achieved several operational advancements, and as Gordon mentioned, we've more than doubled our workforce outside the ANZ over the past five years. Our localization strategy has been instrumental in enabling us to serve diverse markets effectively and drive meaningful engagement with customers.
We now have a global footprint of large-scale modernized irrigation networks, which are reporting measurable benefits from Australia to the USA, India, China, Europe, Central Asia, and importantly now in Latin America, where we secured our largest contract in the region to date, a $2.5 million stage one project in Costa Rica. The US market has been a standout performer in FY24, achieving record orders of $33 million. That's an extraordinary 200% year-on-year increase. This reflects the growing recognition of Rubicon solutions amidst heightened pressures for water conservation and efficiency. A key highlight was the milestone FarmConnect contract in California, which showcases the relevance of our on-farm technologies. As we refine these offerings, we anticipate further growth in the US and other markets. Conversely, here in China, temporarily reduced government funding for irrigation projects posed challenges.
In response, we reallocated inventory to focus on higher priority regions, ensuring we remain agile. For our new JV, we are currently restructuring our operations for what is still a significant future market for our products and solutions. Similarly, our work in emerging markets such as Egypt and Central Asia exemplifies Rubicon's ability to adapt and deliver solutions tailored to diverse needs. Rubicon's business model is evolving to include a greater focus on recurring revenue streams. While integrated hardware sales still accounts for the majority of our revenue, further long-term value lies in the ongoing maintenance, support, and software services we provide. This approach has proven successful in Australia, where annual revenues between AUD 15-20 million are derived from ongoing agreements, solution enhancements, and system renewals. By replicating this model internationally, we are not only diversifying our revenue streams but also deepening customer relationships.
This shift aligns with Rubicon's strategy to build a sustainable and resilient business that continues to meet the evolving needs of our clients. FY24's financial performance was impacted by specific challenges, including slower-than-expected sales in some markets, a one-off doubtful debt provision in Chile, and the reallocation of contract assets from China. Importantly, our recent capital raise provides us with the resources to pursue larger opportunities in expansive global markets. Rubicon's active international engagement remains a key driver going forward. Senior leadership has prioritized face-to-face interactions with stakeholders, strengthening trust and credibility across markets. We have also increased our presence at major industry events, including co-hosting a leading irrigation conference in Las Vegas and presenting at Expo Agua in Santiago, Chile. These engagements enhance awareness of Rubicon solutions and position us as a global leader in water management.
Pleasingly, we recently reported that Rubicon Water has continued to generate positive operating cash flows for both the current financial year and the calendar year to date. These outcomes include the collection of $5.1 million of aged debtors' receipts in the company's aged segment that start this financial year. At the same time, we also announced that our partner in Italy has been awarded a tender to deliver $5.8 million in Rubicon products and services. This will constitute the company's largest contract to date in the EMEA region. We've also signed an MoU as part of the company's Chinese strategic review and welcomed key delegations from Egypt, China, and Japan to Australia, who have all shown dedicated interest in understanding and witnessing the company's Total Channel Control technology. The demand for efficient water management systems is set to rise, and Rubicon is uniquely positioned to meet this demand.
Our operational progress, combined with our innovative solutions and strong market presence, provide a robust foundation for future growth. I would like to take this opportunity to thank our board, all our employees, and shareholders for your continued support.
Thank you, Bruce. We'll now proceed to the formal items of business. As this is a virtual meeting, the following rules will apply. All resolutions will be put to a poll. You will have received instruction on how to vote with the meeting documents, but if you're having any problems, please use the Zoom Q&A function. I'll open polling soon, and polling will close once the meeting closes. The results will then be tabulated and announced to the ASX. I won't reconvene the meeting. I note that I, as Chair, will vote all proxies, appointing me in favor of all resolutions. Questions can be asked during the meeting by using the Zoom Q&A function. If you want to ask a question or make a comment, please use that to advise what the question is and request to go off mute. I'll direct questions to the relevant person to answer.
Questions may be amalgamated, and only questions relevant to the business of the meeting will be answered. We hope that all will proceed well. However, if we experience any technical difficulties with the internet connection, I will make a determination at the time as to whether or not to continue the meeting. I advise that the company has received 42 proxies, representing approximately 180 million votes eligible to be counted today. The formal business of this meeting will now commence, and I declare that polling is now open, allowing holders to vote on the upcoming resolutions. I propose that we take the notice of meeting and explanatory statement as read. We can then deal with each item of business in turn. Item one is the receipt of the financial report.
The financial report forms part of the annual report, which is posted on our website and was forwarded to shareholders who had requested it with the notice of meeting. It is not necessary to make a formal resolution in relation to the financial report or to take a vote. However, we do want to give shareholders an opportunity to ask questions on the report. Please note that representatives of our auditor are attending the meeting, and questions can be directed to them. Have we any questions been received concerning the financial report?
Yes, we do, Gordon. I have a couple of questions. So on page 81 of the annual report, it says that we have 851 shareholders and that there are seven substantial shareholders with more than 5% who collectively own 75% of the company. As a relatively new retail shareholder, I don't recognize any of those substantial shareholders. There is no Vanguard, BlackRock, Perpetual, UBS, Australian Super, Future Fund, or Berkshire Hathaway. Could the Chair please briefly summarize who are the seven substantial shareholders who control three-quarters of this company? How many of them are associated with our directors or senior executives? Who are the completely independent directors representing us small retail shareholders? And which of the major shareholders have no affiliation with management or the board?
That's an extensive range of questions, so I'll do my best to recall them all and answer. The shareholding base is well represented by founding shareholders, the majority of whom have been with the company for 25 years. There were five original founding executive directors who were all shareholders. They were joined then by another three, which was, I think, 18 years ago, of which I am one. All of those shareholders are still there. I think you probably should see it as a vote of confidence that all those founding shareholders are there, and none of them took the advantage in the listing in the IPO to sell down their shares, nor have they done so since.
They're probably the people that have, courtesy of history, the sort of deepest understanding of what the company is trying to achieve internationally, and they all remain confident to do it, that the company can do it. On the question of board composition, we have a number of completely independent directors: Tony Morganti, Iven Mareels, and Lynda O'Grady, and they're there specifically as independent directors to represent all shareholders, just as we all do, but they certainly meet the test of being independent. Now, I think there was another question embedded in that, which is, looking at the share register, should you expect to see more conventional, large-scale institutional shareholdings, and that is certainly something that we would expect to develop in the company as we sort of grow and mature.
When you look at the investment mandates of those very large companies, we wouldn't be big enough by either market cap or daily turnover to meet their sort of filter requirements of where they invest their money. We would expect and hope that that will change as the company grows. And I guess eventually the shareholding base will diversify as some of the original shareholders move into a different phase of their career or life. But it doesn't surprise me that those very large shareholders are not there at the moment.
Thank you, Gordon. Just another one on the financial reports. On page 83 of the annual report, in the corporate directory section, our head office is listed as being located at Cato Street in Hawthorn East. The corporate directory also lists our solicitors as being Rob Walker Pty Ltd, which also lists its principal place of business as being at our head office in Cato Street, Hawthorn East. Rob Walker is also our company secretary, who is no doubt a lawyer who does a great job and doesn't cost as much as Freehills. Do we have any external legal providers, and who are they? How often do we tender for the provision of external legal services to our AUD 80 million market cap company? Or does Rob Walker handle everything in-house?
I might get Bruce to answer the second part of the question, but I think if you go through our ASX announcements, you'll find that we announced a couple of months ago that Rob Walker was concentrating purely on our legal side, and Oliver Carton has been appointed as our company secretary. That's a role that he has done for some time and is eminently qualified to do it. So Rob's on the legal side. Bruce, you might like to comment on our use of legal resources, particularly as we go into some of the international markets where we obviously have to draw on some local expertise.
Yeah, for sure. So Rob Walker is an ex-partner at Baker McKenzie, so very experienced corporate law, particularly in IP, so very related to us. So the opportunity to have him working out of our offices and on tap as our in-house legal counsel is great. But Rob's a one-man show, so we do take extensive use of other legal firms: Baker McKenzie, Gadens, and also Gilbert & Tobin. So we have not done. I think part of the question was, how often do we tender for legal services? We haven't tendered for legal services as such, but we certainly have multiple, as I say, those Bakers, Gilbert & Tobin, and Gadens for the different areas of the business we reach out to them.
Additionally, we're working in many international jurisdictions, so we utilize those networks of particularly Baker's and G&T, but also in-country lawyers in all the markets where we are. So we're certainly not just reliant on Rob Walker Legal.
Are there any other questions?
There are no further questions regarding the Annual Report.
All right. Well, then item two is adoption of the remuneration report. The second item is related to the first in that it concerns the remuneration report contained in the financial report. There's a requirement that shareholders be asked to adopt the remuneration report as a non-binding resolution. I note that the board and key management cannot vote their shares concerning the remuneration report resolution, and it requires a 75% vote to pass. Proxy numbers for this resolution and for all subsequent resolutions are set out on your screen. I therefore propose the resolution set out on your screen. Are there any questions?
There are no questions.
I declare then that a poll will be taken. Polls are now open, and you can vote on this or any of the resolutions. The third item of business concerns the election of directors. The company's constitution requires that one-third of the directors be re-elected each year, and the directors appointed during the year are elected by shareholders at the first AGM after their appointment. The persons this applies to this year are Tony Morganti and Lynda O'Grady. I note that their backgrounds are set out in the notice of meeting, but they both bring important skills and experience to the board and are chairs of our audit and risk committee and remuneration committee, respectively. I now propose that the resolutions set out on your screen. Are there any questions on either resolution?
There are no questions.
I declare that a poll will be taken on each resolution. The fourth item of business concerns the appointment of an auditor. Deloitte Touche Tohmatsu is being replaced by BDO Audit Pty Ltd as auditor of the company, subject to the consent of shareholders. I note that since the notice of meeting was issued, ASIC has consented to this appointment. I therefore propose the resolution set out on your screen. Are there any questions?
There are no questions.
I declare that a poll will be taken. The fifth and final item of business concerns approval to grant long-term performance rights to the CEO, Bruce Rodgerson, and Executive Director, David Orton. The company proposes to issue securities to them under the company's LTIP. As directors, they are related parties to the company, and therefore the issue of the securities requires shareholder approval. I now propose the resolution set out on your screen. Are there any questions on either resolution?
There are no questions.
I declare that a poll will be taken on each resolution. Please note that the polling will close soon, so please vote if you haven't already done so. I'd now like to give shareholders an opportunity to ask any other question concerning the operations or management of the company. Are there any questions?
Yes, we have a couple of questions. So given that we offered shareholders the Computershare platform for live online voting today, why didn't we use our share registry provider to run a proper hybrid meeting rather than denying shareholders an opportunity to interact with the board in person and also using the inferior Zoom online meeting platform when the Computershare system is the world's best? Will you run a proper Computershare hybrid AGM next year, and please explain the thinking behind this year's setup?
Bruce, I might just pass to you there, I think.
We will take that as feedback on the platform. As I understand and been advised, this is the format we have used is regularly used for the businesses, and I was unaware there is a view that it's a substandard approach to running a virtual meeting. I think we'll take the question certainly as a comment and commit to look and take some further advice on what we do going forward with the AGMs. We've given certainly everyone's had the ability to vote, ask questions, so I'd need to look into whether anything we've done is substandard or problematic.
Yeah, but we'll take the question seriously, and we'll look into that, see if we can sort of better satisfy next year.
Thank you. Next question. Why wasn't the recent capital raising a pro-rata renounceable rights issue that treated all shareholders equally and compensated non-participants? As Chair Gordon Dickinson would know from his UBS days, placements favor big end of town investors at the expense of retail, and even when retail are offered in SPP, the vast majority don't participate. The biggest victim in Australia, anything goes capital raising system, is the retail shareholder who doesn't open a mail or email. So please take this into account next time we do a capital raising. Do you think about doing a pro-rata raising? Sorry, did you think about doing a pro-rata raising?
Thank you. We did spend considerable time looking at this and thinking through the situation of retail shareholders. The company wanted to have the certainty of a capital raising, and we felt that this mechanism delivered that. And with the share purchase plan and the fact that and the amount of it, we looked at how many shareholders would not have the mathematical ability to participate at least pro rata, and it was a very small amount. I mean, in fact, well, virtually all the retail shareholders, the $30,000 limit would have given them the opportunity to subscribe for much more than pro rata. I take the point that some people may not have seen it or dealt with it in a timely way for their own reasons. We certainly didn't set out to achieve that.
We went to some trouble to try and make sure that actually retail shareholders could follow through and participate pro rata and not feel like they'd been diluted, with a handful of exceptions which would have been sort of large-ish, non-institutional, but a large retail shareholder with some hundreds of thousands of shares. There were a few there that would have been diluted, but virtually nobody else would have unless they chose to. But we do take that process seriously, and we'll continue to review it in the event that we have to do anything in the future, although I'd hasten to point out we have nothing planned.
Thank you, Gordon. Next one, there is a question in here. Most of it is a comment. It would be better to disclose the proxy position with the formal addresses. Can you do that next year? Also, when disclosing the outcome of the poll for the ASX, please also include scheme-like data disclosing how many shareholders voted for and against. The ASX itself, and our share registry provider both do this.
Yep, well, I think we'll put that with the other earlier question of a comment on how it could be done differently or better next year. We'll look at that. We think that we know that we're providing all the information that the ASX and ASIC require us to do. Whether we can provide more that's useful, we'll look at that.
Thank you. Next question. Why was there a 14% protest vote on one of the director election resolutions? Is that an independence issue?
Yeah, I didn't notice that, and I have no explanation for that. Ironically, it was one of our independent directors that had that negative vote against. I'm not sure. I can't understand it, and I certainly haven't had any contact from any shareholder with any comment or complaint about or any reasoning behind that vote. I have no explanation.
I thank you, Gordon. Next question. Mostly a comment as well. It would be better to disclose the proxy position on LTI grant with the formal addresses. Can you do that next year? Also, when disclosing the outcome of the poll for the ASX, please also include scheme-like data disclosing how many shareholders voted for and against the ASX itself, and our share registry provider both do this.
Take a comment. I mean, we'll supply the fullest level of detail that we can. I mean, we're not in the business of trying to hold detail back here. We're just trying to do it efficiently and accurately.
Thank you, Gordon. There are no further questions.
All right. Well, thank you. Very happy to have some interaction with shareholders. It makes it a lot more real than some previous meetings where there's been silence. So thank you for that. As there's no further formal business, thank you very much for your attendance. I now formally declare polling and the meeting closed. Good afternoon.