Good morning, ladies and gentlemen. Welcome to the annual meeting of shareholders of ArborGen Holdings Limited. I'm David Knott, and I'm the chairman of the board of ArborGen. Thank you for your attendance today. After three long years, I'm very happy to be back in New Zealand, and importantly, to be able to attend today's meeting in person. I'm pleased to advise that a quorum is present and this meeting is duly constituted. The notice of meeting sent to shareholders last month sets out the formal agenda of today's meeting. We are conducting our meeting this year, both here in person at the Ellerslie Event Centre in Auckland and online through the Computershare online meetings platform, Meet Now. All shareholders have the ability to ask questions and vote.
For those of you joining us online, if you would like to ask a question, please select the Q&A tab on the right half of your screen anytime. Type your question into the field and press Send. It will then be sent through for us to answer. If you require any assistance, refer to the virtual meeting guide that was sent to shareholders or use the chat function by typing your query, and one of the Computershare team will assist you. Alternatively, you can call Computershare on 0800 650 034. I would encourage you to submit your questions as early as possible, as that will allow us to answer at the appropriate time for the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together.
Voting today will be conducted by way of a poll on all items of business. In order to provide all online attendees with enough time to vote, I will shortly open the online voting for all resolutions. At that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the Vote tab. Once the voting has opened, the system will allow votes to be submitted. To vote, simply select your voting direction from the options shown on the screen. You can vote for all resolutions at once or by each resolution. Your vote has been cast when the tick appears. To change your vote, simply select Change Your Vote. You have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business.
The resolutions will now be open on the Vote tab. Please submit your votes at any time. I will give you a warning before I move to close voting. I would like to introduce you to the members of your board and management to you. Present with me today are two New Zealand-based directors, Paul Smart and George Adams. From the US, we have directors Thomas Avery and Ozey Horton attending virtually. From management, we have ArborGen's Chief Executive Officer, Andrew Baum, our Company Secretary and Performance Improvement Director, Sharon Ludher-Chandra, our CFO, Alex Brown, and our communications contact, Pam Wardenburg. Turning to our program for today. First, I will ask Andrew to update you on the progress we've made over the past year. I will then make some comments from the board's perspective. You will then have the opportunity to raise any questions you may have.
We will then deal with the formal resolutions to be considered by this meeting. I will now ask Andrew to review our recent activity for you.
Thank you, David, and welcome to our shareholders joining us today. As always, it is a pleasure speaking to you again, and as David acknowledged, I'm very happy to be able to do so in person after three very long years. With the completion of our strategic review, we have refined the business to focus on our core high-growth markets in the U.S. South and Brazil, where our key strategic objective continues to be the transformation of forest productivity as the leading commercial provider of advanced genetic seedlings. Our superior competitive positioning stems from decades of proprietary R&D investment, strong production capability and supply pipeline, and excellent sales and marketing skills.
We have never been in a better position to execute this strategy and with a strong balance sheet now allowing us to take advantage of growth opportunities in our core traditional forestry markets, as well as in new and emerging carbon markets. Turning to the results for the fiscal year ending March 31, 2022, while the global pandemic and supply chain challenges continued to impact overall sales in the U.S. and Brazil during the year, we were able to continue to execute the company's advanced genetics strategy, recording our highest level sales of Mass Control Pollinated, or MCP, products in the United States.
In summary, the group reported, and all these figures will be in US dollars, revenue from continuing operations of $47.6 million, up 11.1% on the prior period, comprising sales of $39.9 million in the U.S. and $7.7 million in Brazil. Gross margin from continuing operations of $17.8 million was up from $15.6 million in FY 2021. Operating earnings from continuing operations before other significant items of $2.7 million was up from $1 million in the prior year. Net earnings from continuing operations of $1.7 million was up from $1.5 million in the prior period.
Adjusted US GAAP EBITDA resulted with a result of $10.1 million, excluding public company costs of $1 million and other significant items, 36% higher than the prior year. Net cash from the operating activities of $7.5 million, down from $9.9 million in the prior period, which included COVID grants received. Other significant items during the period was an expense of $4 million compared to a gain of $1.9 million in the prior period, and comprised $900,000 of government grant income. $4.3 million was received in the prior period from the U.S. Small Business Administration, of which $3.4 million was recognized in the prior period. $1.6 million relating to the impact of COVID, resulting in the write-off of unsold seedlings.
$1.5 million relating to a freeze-related event that damaged flowers on our eastern orchards during the critical pollination period this year, calendar 2022, and $1.6 million of strategic review costs and $2 million of other costs. Approximately $600 thousand of this, of the strategic review costs related to transaction costs incurred, and the balance related to financial, tax, and legal advice from the wider strategic review. As you know, ArborGen sold its business in New Zealand and Australia during the period, resulting in net debt reducing substantially to $11.5 million, down from $27.4 million in the prior period.
The sales proceeds were used to repay $2.9 million of sub-debt raised in 2019 to fund the acquisition of our headquarters in Ridgeville , South Carolina, and we reduced our Synovus working capital facility by $5.5 million, collectively resulting in an annual interest cost savings of approximately $500,000. ArborGen's continuing operations in the U.S. and Brazil sold 362 million seedling units in FY 2022, up slightly on the prior period sales of 359 million units. Specifically, 284 million seedlings were sold in the U.S., including 258 million loblolly pine seedlings, of which 42% were advanced genetics seedlings, and 78 million seedlings were sold in Brazil.
In the U.S., s-unit seedling sales decreased slightly to 284 million units from 294 million units in the prior period as the emergence of the Delta and Omicron variants continued to cause significant disruptions in the sawmill industry, impacting log harvests and in turn seedling demand in the period. However, despite these headwinds, advanced genetic seedling sales were up from 81 million units in FY 2021 to 107 million in FY 2022, driven primarily by increased MCP sales to the private landowner segment, which were up almost 60% compared to the prior year, as well as increased supply. While our larger national accounts, primarily REITs and TIMOs, accounted for the majority of ArborGen's advanced genetic volume, sales to the private landowner segment now represent around 35% of advanced genetic volume sold and represent the largest growth segment.
In Brazil, sales of 78 million seedlings were 20% higher on the prior year. While the pandemic continued to cause significant disruptions in the period in Brazil, ArborGen was able to lift both eucalyptus and pine seedling sales, benefiting from the increasing recognition of the value of proprietary advanced genetics pine and eucalyptus products. As mentioned earlier, integral to the success of our strategy in the United States is moving the market to advanced genetics, primarily MCP products. The next slide shows our product portfolio, ranging from open-pollinated products to our advanced genetic products, in particular our mass control pollinated, MCP products, which are seedlings produced from crossing selected mothers and fathers to produce the best MCP hybrid seedlings and our varietal products, which are essentially identical copies of our best MCP seedlings. Importantly, ArborGen has the most advanced and broadly adapted pipeline in the industry.
The next slide shows the 5 loblolly deployment zones in the United States, you can see on the right there, spanning the coastal Piedmont and northern regions, or collectively the eastern regions, and the Arkansas and Texas regions, i.e., the western regions. As can be seen in this table, our advanced products are well represented in all regions with additional products in the pipeline. The value proposition of our advanced genetics is very compelling, with the key benefits being faster growth rate, higher yields of wood per acre, 30%-40% more high-value sawtimber, which sells typically for 2-4 times more than pulpwood, improved resistance to disease and stress, better straightness, reduced forking, and better branch morphology. With over 2 million acres of MCP now planted across the U.S. South, the evidence is undeniable.
By any metric, we are the leader with respect to MCP deployment and sales in the United States. Historically, we have sold over 80% of all MCP products to the market. We are the only seedling provider offering products adapted to all growing regions in our markets, and our portfolio is unmatched in terms of depth and quality. We can also produce substantially more MCP products than any other supplier, benefiting from the orchards which we planted over a decade ago in 2011 and 2012, which are now coming into full production. In addition, we continue to invest in our pine tree improvement program, allowing us to continue to widen the gap between ourselves and the rest of the market.
In recent years, we launched the next generation of MCP products, MCP 2.0, and for some provenances, MCP 3.0 is already in the pipeline and in development. In short, we're the market leader, and we continue to make the investments that will maintain and improve that leadership and market position. Now, beyond technology, an integral part of converting new and existing customers to advanced genetics are our sales and marketing efforts. With most of our industrial customers already committed to MCP, we continue to focus our sales and marketing efforts on private landowners who represent over half our market. Customer acquisition and conversion to advanced genetics is achieved through a multitude of financial multi-channel marketing and direct customer interaction initiatives.
These include the use of proprietary seedling revenue calculators and financial cash flow models to demonstrate the financial return to forest owners from planting different types of genetics on varying sites. Conducting field tours of MCP stands, new and maturing, webinars focused on the sale of advanced genetics, customer testimonials, and our website, a wide array of social media and publications like TreeLines, which supply technical information to our customers. We can say with confidence that none of our competitors are conducting a more significant or comprehensive program. The success of our efforts is evidenced by the increase in sales of the private landowner segment mentioned earlier. On the supply front, our extensive younger seed-producing orchards represent approximately 70% of our overall orchard footprint. These orchards have only recently become productive, with productivity expected to increase deeply over the coming years.
Our goal is to build at least two years of advanced genetics MCP seed inventory across all provenances to minimize reliance on single-year cone harvests as a key risk mitigation strategy. While we have approximately one to two years of MCP seed inventory in hand for the western regions, MCP seed supply is still tight in the eastern regions. On a positive note, ArborGen is projecting to harvest MCP seed equivalent to over 200 million seedlings later this calendar year. This is seed that will be available for next fiscal year, fiscal year 2024, sales, projected to be in excess of the seed required for forecast MCP seedling sales. We're building some buffer, which will help us build essential MCP seed inventory in our eastern regions for future periods.
As previously reported, a freeze event combined with very, very high winds during the MCP pollination period in February 2022 caused damage to pine flowers at ArborGen's eastern orchards, which will impact cones and seed to be harvested in November 2023, i.e., for fiscal year 2025 sales. This was an isolated event, it literally lasted four hours, that did not cause long-term damage to the orchards themselves, which will be at full productive capacity again next pollination season in February 2023. ArborGen's western orchards were not impacted. Pleasingly, though, our most recent comprehensive cone inventory count indicates that our projected 2023 harvest, that is the one that was affected by the recent freeze, could be higher than originally estimated, especially in the supply-constrained eastern provenances. We will continue to refine our estimates as we get closer to the actual 2023 cone harvest.
We have several years of open-pollinated seed in inventory and will maximize seed harvested in 2022, November of 2022, from targeted orchards. Turning to Brazil, our investments in the development of our Brazilian business are beginning to bear fruit. Strong end-use markets, combined with our expanding nursery footprints and increasing recognition of the value of our advanced genetic products, will allow us to generate improving profitability this year and in the years to come. In pine, we have already sold out for fiscal year 2023, and we are now negotiating sales for next fiscal year. Sales prices are increasing well ahead of inflation, and our margins are increasing as a result. Sales from our newly acquired pine nursery in Canoinhas are occurring ahead of schedule at lower cost than projected.
In addition, sales of pine proprietary products in fiscal year 2023 are projected to represent over 95% of total unit volume, validating our belief that the market will adopt advanced genetics as they have in the United States. The situation is similar in eucalyptus. Ongoing and announced expansions in pulp production by Suzano, Arauco, Bracell, and others are leading to increased eucalyptus seedling demand in Mato Grosso do Sul, in São Paulo state, and increased charcoal production to support the booming pig iron and steel sectors driving markets in Minas Gerais to rise. As a result, we are already sold out. As with pine, we are already sold out in 2023 and are negotiating sales for next year. Prices and margins are also increasing.
While we sell a greater proportion of non-proprietary eucalyptus products than pine, sales of proprietary products are increasing rapidly as they demonstrate the superior performance in commercial production. Moving forward, we are exploring opportunities to expand our internal production capacity for both pine and eucalyptus and hope to make announcements in this regard. Now I'll turn to carbon markets, an exciting new opportunity for us. The use of forests to sequester carbon will be an important element of global efforts to address global warming and represent a potentially significant opportunity for ArborGen moving forward. In our U.S. markets, we are beginning to see active programs to afforest, that is to plant new forests or new trees on pasture land or farmland.
We have been in discussions with several companies in this space, and I'm pleased to say we have executed agreements with two well-funded, experienced companies to supply them pine, including MCP and hardwoods for this season, and are negotiating longer-term supply agreements with both of them. Both of these companies have ambitious scale-up plans for the next few years, and while there's no guarantee they will execute those plans, if they are successful, they will represent new sales opportunities that are incremental to our existing markets in future years. In summary, although strong sales and earnings growth is projected in Brazil this fiscal year, in the U.S., we're expecting sales to be affected by the tail end of the ongoing pandemic factors, geopolitical tensions, and temporary customer-specific demand matters with some of our large national accounts.
As seedlings are planted in late April, May in the United States, we had also not planned for the additional sales this year from the recently executed multi-carbon contracts, which has meant some supply constraints. As a result, FY 2023 unit seedling sales, including the proportion of advanced genetics sold in the U.S., are not expected to be materially different from FY 2022. Added to this, historic MCP seed costs related to the pollination activity two years ago when production from our younger orchards was less than optimal due to maturity, combined with inflationary pressures, are expected to adversely impact gross margins in the U.S. this fiscal year.
Looking ahead, however, increased MCP seed supply, much of which is already on the trees, and related to this, lower MCP seed costs and projected sales growth in the U.S. core forestry markets, as well as incremental sales from our new seedling supply contracts with players in the carbon space, are projected to drive solid earnings growth in FY 2024 and beyond. We have the organization, people, products, and strategy to leverage these fundamentals to continue to drive the value of ArborGen for our shareholders. Thanks again for your commitment and confidence. Thank you. David?
Thank you, Andrew. Before moving to your questions in the more formal session of the day, I would like to make a few comments on the strategic review, the refocusing of the business, and the current fiscal year ending March 2023. In June, we announced the completion of the strategic review that the board undertook to consider all options to unlock value for the benefit of all shareholders, ranging from further investment in the business, the possibility of a U.S. listing, a full sale of the company, or a sale of some of the assets of the company.
As you know, the process resulted in the sale of the Australia and New Zealand business in November of last year for NZD 22.25 million, freeing up significant capital and allowing us to refocus ArborGen on its growth business in the U.S. South and Brazil, as well as on new and emerging carbon markets. The board concluded that this was the best path for maximizing value for shareholders longer term. As mentioned in our annual report, the board did consider the possibility of a U.S. listing, but concluded that at the current point in time, the expected cost of a U.S. listing outweighed the potential benefits. Since ArborGen's formation in 2000, the company has been committed to meeting the human need for wood, fiber, and fuel while protecting the world's native forests.
In line with this, we are strategically focused on our core traditional U.S. South forestry markets, where our competitive positioning is unparalleled. ArborGen is now realizing the gains from decades of investment in tree improvement with proven performance at commercial scale and increased market acceptance of our advanced genetic products. Added to this is our increasing supply of MCP products benefiting from major orchard expansion investments over a decade ago. Our traditional high-growth markets in Brazil, where ArborGen has grown to become one of the largest commercial suppliers of eucalyptus and loblolly pine seedlings. We are the only company providing superior proprietary genetics to Brazilian pine and eucalyptus growers, including to large integrated forestry companies with their own genetics programs, and leveraging our unique capabilities in emerging global carbon markets, which represent new opportunities for ArborGen.
Our advanced genetics and strong channels to forest landowners in the U.S. uniquely position us to exploit this opportunity. As Andrew mentioned, we are very pleased to partner with two credible parties in the carbon space and continue to engage with other prospective parties. With the foundations now laid, ArborGen's focus will be on continued conversion of customers to high-value seed, to high-value seedlings as they increasingly see the commercial potential of our advanced genetics products. The sale of our more mature business in New Zealand and Australia has strengthened our balance sheet, given us greater flexibility to pursue high return on investment opportunities in our targeted growth markets. That said, we do want to assure shareholders that we are being very selective and careful with any spend.
To date, we have committed to the expansion of ArborGen's in-house container capacity across two existing owned sites, which increases our in-house container seedling production from 10 to 16 million containerized seedlings per year. The cost of the expansion is expected to be less than $1 million as we are able to cost-effectively leverage existing infrastructure at our nurseries in Bellville, Georgia, and Bullard, Texas. The expected payback is less than 2 years, with benefits comprising cost savings from increased production efficiencies and incremental margins from additional containerized seedlings sales. This expansion is expected to be in place for the fiscal year 2024 seedling sales year.
The acquisition of a 10 million capacity pine nursery located in Canoinhas, Santa Catarina, Brazil, for less than $1 million, which was completed in February, and our intention to lease a third eucalyptus nursery in Brazil later this year, which will increase our internal capacity to nearly 50 million eucalyptus seedlings every year. Turning to our current fiscal year, due to the pandemic, inflation, and certain temporary customer-specific demand matters, we are projecting sales volumes and the proportion of advanced genetics sales in the U.S. to not be materially different from fiscal year 2022 levels. Pleasingly, to date, we have sold over 95% of all seedlings, and we have available in the U.S., including 99% of all MCP seedlings available, which will be lifted and dispatched from December onwards.
Beyond the current fiscal year, however, and subject to uncontrollable factors, ArborGen projects solid growth in advanced genetic sales in fiscal year 2024 with both our large U.S. national account customers and private landowner customers. This will involve managing MCP seed availability against demand growth in the eastern regions over the next two years, while also driving advanced genetic adoption in the western regions, where we expect to have good levels of seed inventory on hand. Longer term, the U.S. housing market is supported by strong underlying demand fundamentals, in particular favorable population demographics as a large proportion of the population enters the house buying phase. This, combined with timber supply issues in Canada and Europe, should drive solid growth and demand for wood products produced in the U.S. South in the medium to longer term.
Supporting this view is the significant expansion in sawmill capacity in the U.S. South, either announced or already underway. In Brazil, the underlying market drivers are very strong, with new pulp mills and strong charcoal markets driving domestic demand for eucalyptus and softwoods. As a result of this growth in demand, combined with much stronger projected pricing and margin for ArborGen's eucalyptus and pine seedlings, our Brazilian earnings are projected to be over $1 million, materially higher than the break-even result recorded in fiscal year 2022.
Taking these factors into account, as well as the temporary gross margin contraction in the U.S. that Andrew mentioned earlier due to historic seed costs being expensed and the implementation of a short-term incentive and retention plan that the board has approved given extremely tight labor market conditions, we expect U.S. GAAP EBITDA in the current fiscal 2023 year to be approximately 10% below the $10.1 million adjusted U.S. GAAP recorded in fiscal year 2022. That said, cash flows from operations are projected to be materially higher than prior year, which subject to any further approved expansionary capital expenditure, should result in net debt dropping by 30%-40% by the fiscal year-end.
Looking ahead, reiterating Andrew's comments, increased MCP seed supply, lower MCP seed costs, and projected seedling sales growth in our core U.S. forestry markets as well as in the carbon space are projected to drive solid earnings growth in fiscal year 2024 and beyond. Outside of growth opportunities that we will continue to evaluate, the strategic review process has identified a number of operational improvement opportunities. To ensure we realize these gains, we have initiated an organization-wide effort comprising multiple project teams to systematically evaluate and implement agreed initiatives, which should in turn drive improved earnings and cash flow performance in future periods. We will update you later in the year on progress made here. Before I move on to the business of the meeting, I would like to reiterate that the board and management are very excited about ArborGen's future.
We have refined the business, significantly strengthened ArborGen's balance sheet, and are now well-positioned to grow in our core and emerging new markets. In order to ensure we deliver on the company's growth potential in these areas, the board is committed to increasing resources as needed. On behalf of the board and management, I would like to take this opportunity to recognize the significant contribution that Ranjan Tandon has made to ArborGen during his board tenure. Ranjan has invested considerable time and emotional energy to support the company, and we wish him the best in the future. I would also like to acknowledge and thank the ArborGen teams in the U.S., Brazil, and New Zealand who have worked tirelessly in challenging conditions to deliver a strong result for shareholders.
Finally, I would like to thank all of our shareholders for your continued support, for which we are very grateful. I will now open up to questions. If you are yet to submit your question online, select the Q&A tab on the right half of your screen, type your questions, and press Send. For questions relating to the actual resolutions, we'll respond to these as we deal with each of the resolutions in turn. For those shareholders who are present here in Auckland who want to ask a question, please raise your hand and wait until a microphone is brought to you. Please then clearly give your name for those online before you address the meeting. Thank you.
Jim Hamilton, Shareholder. I just wondered about your staff, how many staff you have. You've got about 8 operations in America. In a typical operation, can you describe a typical operation? Maybe you have 10 or 50 people working-
Yeah.
10 or 15 people working there, and most of them are doing the basic routine stuff. Then you have some of the specialized nurseries which are doing the more specialized stuff, which means covering the cones and seeding and that. Is that done in all the nurseries or just some of them?
We have two different types of operations. We have nurseries where the seedlings are actually produced. The starting product there is seed. Each one of those nurseries will have between 4 and 7 people, depending on the size. The typical operation will have a nursery manager who's responsible for the site, a production coordinator who manages the actual growth of the crop, primarily. A business specialist who is the person who's air traffic controller I call them of the nurseries, take orders, place orders, manage all the administration. Then 2 to 4 nursery specialists who actually do the tractor driving, spray the crops, and the rest. We're very fortunate that a lot of these people have decades of experience.
This type of production is very empirical, and although we continue and invest in new standard operating procedures, equipment, and technology like GPS tractors and precision seeders, ultimately you still need good farmers and good green thumbs, and we have those. Our orchard facilities, where I think we have six now, typically, and that's where the seed is actually produced and the bags are put on the crops, put on the trees, typically comprise two to three people actually out full-time operating those orchards during the year. They're responsible for, again, taking care of the trees and making sure that the orchards are in good shape. At both sets of facilities, at the appropriate times of year, we will bring in large numbers of temporary labor.
At a typical nursery in the southeastern U.S., between late November, December, and the end of February, we will have anywhere between 20 and 60 temporary laborers working for us more or less full-time to handle that upsurge in production. Typically, at our orchards, we'll have a similar number of people twice a year. Once to do the bagging, where they're going up on the lifts and placing the bags up. I mean, we put up 1.6 million bags this last season in about 4 weeks with that staff. Then we have a smaller number come in during harvest. We do a lot with a little, but the little we have are really, really quality people. I'm really fortunate as CEO to have the staff that we have.
It's quite easy to make them like that. Nothing much you can automate.
It's a great question, and we're continually looking at automation opportunities, and we are bringing some automation for some operations. The challenge is we're operating these facilities for, you know, where the intense labor is there for a period of three months in some, in the case of the nurseries, and in the case of the orchards for three to four weeks twice a year. While we continue to look for those, it's got to make financial sense for us to do that.
Just one other question. I know you're not all that financial, but are you making any donations to any university, institution? Like in New Zealand, we've got specialist people who research biology, botany, all these subjects.
Great question. In the U.S., we have what are called forestry co-ops, which are run by the universities. Those co-ops are involved in everything from basic genetics all the way through to orchard management, nursery management, and silviculture, and we belong to all of those organizations. We also have collaborations with universities on ArborGen-specific issues across the Southern U.S. We operate in a similar way in Brazil with respect to engagement with the industry. As an industry leader, we're expected to do that, and it gives us a lot of leverage in the industry.
Do you make a donation?
We make what are called co-op fees. We don't donate, but all members are expected to make contributions to those organizations.
Yeah. It's Hailey Ching, a shareholder. Nice to catch up with all of you after three long years. What should I say? First of all, I appreciate that, David, you are the most generous of all chairman. Just charging NZD 1 per year. I think you are too generous, and so generous that have you sold the New Zealand and Australia section too cheap? Because I was a shareholder of PGG Wrightson, and they have sold their grass seed business about maybe just three or four years ago to the Austrian company. They have a small business in Australia as well. Guess how much they sold? They sold for, I think it's roughly NZD 350 million to nearly NZD 400 million.
I think you are too generous in selling this business. May I ask then, how much did Rubicon buy this seed business, and how long ago then?
Yeah, well, thank you for the compliment and buttering me up before the hardball question. So basically, I think we got an incredibly good price for the ANZ business. It's a mature business with not a lot of growth built into it anymore, and we kind of saw it better off in hands that were private and that knew what to do with it better than we did, while we can use the cash to shore up our balance sheet and invest into high growth opportunities that are much better for ArborGen as a whole.
Even if you need cash, don't just rush to, what should I say? Sell your family treasure.
No, I understand that perspective, but we ran it through a really exhaustive process during the strategic review where we contacted a number of companies, close to 100 or more, I think. This proposal that we had for the ANZ business was the best one that we received, and we thought it was too good to turn down, and still feel that way.
Yeah, excuse me. What do I say? How much business left in New Zealand then? Is it the horticulture seed business?
We don't have any Australia, New Zealand business anymore.
No, nothing in New Zealand anymore?
We have Sharon and Alex and Pam.
Yes, yes.
That is our operation in New Zealand.
Yeah. I think the Fletcher family got a very good deal because now sustainability, they can borrow less than 2% for their growth of the company. Because of the carbon credit, and carbon value had increased, will be increasing. Yeah. They are one of the richest family in New Zealand. You make them richer then. We can't do anything then. I can do something now because my family, actually, my uncle, long time ago, Uncle Edmund Cheng, he was the professor of biology in the University of Iowa, but he just died in the early fifties because when he was driving to the university, he just have a car accident.
Also, my niece and nephew, et cetera, they are doing very well in America, so I know quite a lot of different states. Yeah. My niece is a microbiologist and a scientist in USA, so earn a lot of professional money. The point I'm going to say is that you have invested quite good in Texas. I appreciate that very much in 2019, because Texas now is the state. Elon Musk go there to build their car factory there. It's really hot.
It's a very tax-friendly state.
You pay the money in for the office there. For long term, it will be very good. How many years to last time is it five years mortgage or 10 years mortgage for the Texas one? Yeah.
The operation in Texas is a five-year lease, and at the end of that lease period, we will end up buying the orchard, the nursery on predefined terms.
Yeah
from the previous owners. That is well in train, and that's the plan. I believe that will take place in the next 24 months.
It's just not a lease. Actually, the company have bought the property for around, I think, NZD 11 million or
You, you're referring to our headquarters in,
Yeah, that's the headquarters.
Ridgeville, South Carolina.
Yeah, yeah.
That was in South Carolina. There's two different transactions that took place. One, we did buy the headquarters in Ridgeville, South Carolina.
Mm-hmm
in return, reduced our expenses and our payments by $several hundred thousand a year. It was a very cash positive transaction. We actually retired some of the debt, the sub-debt, as we talked about earlier, by out of the proceeds from the sale of New Zealand. That is going well. We also, at a separate transaction, entered into an agreement with a large TIMO called Campbell Global to acquire a nursery in Jasper, Texas, where we produce seedlings. That transaction consists of two elements. The first is a five-year lease, which facilitated our cash management, that we are now in the fourth year of that lease and it's gone well. At the end of the fifth year, we will buy that business from Campbell for a predetermined price.
We've already negotiated that, and we are on track to do that as well. That will complement our existing nursery in Bullard, Texas. We're the only company with nurseries in the state of Texas, and the only nursery with bare root containers in Louisiana as well. We're in a very, very strong position in that part of the market.
Yes. I wish that the company will be doing well, particularly in the annual report, it mentioned about sustainability. Are you going to apply for sustainability criteria, that sort of thing, that can enhance our company's status in USA? Because now President Joe Biden had passed the bill, and now this sort of business is very, very good.
Re-
Yeah. Are you going to apply for the sustainability status, David?
Andrew, I mean, you can.
Look, let me speak to that as well. There's two elements to sustainability. One is how we operate as a company, you know, and how much energy we use, how much water we use, how we work to contain and minimize our environmental impact. There are a lot of different sets of rules and regulations in the US that one can consider to use, and we're trying to figure out not if, but how and when we're gonna begin integrating those sustainability criteria into our business. I think excitingly, though, for us, where the rubber hits the road, if you will, is in carbon.
We've been looking at the carbon opportunity for four years and, you know, our conclusion was that as the leading seedling supplier in the Southern U.S., the best position for us was to have the carbon companies come to us, the people who are actually generating the credits, because we were the only way they were gonna get seedlings for the markets they were hoping to grow. I'm pleased to say that we've entered, as we mentioned earlier, into two agreements where we're selling double-digit millions of seedlings this year to those companies, some of which is MCP, some of which is hardwood, which at, you know, are profitable levels, which begins to immediately impact our bottom line. Both of those companies have strong bold ambitions. They're very, very well-funded.
We'll see, you know, whether or not those come about, but we will be their exclusive supplier in the years to come. We are actively engaged in a very aggressive way with the sustainability opportunities that are created by increased recognition of the value of forests in sequestering carbon. I'm really, really happy and excited about what those relationships might bring because the volume and the types of seedlings that they're buying were completely incremental to anything we've ever seen with respect to the base you know, timber and pulpwood markets we've seen in the past. Those are great upside opportunities. There's a lot of things that could happen with respect to carbon, as we all know. You know, a year ago, we were talking about the hope that these would come about.
They're real now, and we'll just have to see how big they get. It's a big opportunity, and we spend a lot of time working in that space.
Yeah. Thank you. I just wish to enhance the company's fame in sustainability because I own the shares in T &G Global , and it had revenue of NZD 1.3 billion, but its profit is only NZD several million. Actually we are doing quite well now. We have NZD 2 million profit. What they are good at is. They are now in the whole world, the top inside the top fifty sustainability and climate leaders. Yeah. They have a video of how they do that. I would like to give it to you afterwards.
Thank you. We are always looking for
We can.
We need all the help we can get.
We like to be top 500 even though if we are not top 50.
Right.
It will enhance the company's future and our shareholders' future as well. Yeah.
Thank you.
Thank you, Ms. Ching.
Thank you.
Hi. Just an operational question. The cost of sales is about NZD 30 million, and the admin on that was about NZD 15 million. The admin seems very high. A lot of the admin of the nursery is actually included in that figure.
Some of the admin is included, some of it is not.
Yeah.
The admin includes, at the consolidated level, the U.S., Brazil, and corporate-
Do-
depending on the figures that you look at.
Do you think you'll be able to, after the costs of disposal here and other costs of that nature, do you think you'll be able to trim that 15?
Whether or not we trim it is an open question. You know, we're going through this strategic review that David mentioned internally and looking at operations, and that's certainly one of the objectives.
Mm-hmm.
I think what I can say with very high degree of confidence is that that infrastructure would be able to support a substantially greater increase in revenue and volume. We're at an inflection point as a company-
Yeah
where we need a minimum research program, as David spoke to, and as I spoke to be able to generate that leadership position. You need a-
Mm-hmm
sales team to generate that. As the markets recover and our advanced genetics sales increase, we expect to see a substantial increase in profitability. You can really see that in Brazil, where, you know, with the basically the same team size and infrastructure we had last year, we're going from break even to a projected revenue over $1 million. That's what's the beauty of this business, is we enter a period of growth, and we entered a period of increased adoption of advanced genetics, both because of supply and market conditions.
Mm-hmm.
That's how I think you're gonna see this business grow, that the percentage represented by admin costs all in will decline as if only because the top line is going to go up and the profitability is going to go up.
Yeah. Thanks.
Yeah. There's a lot of operational leverage in the business, especially at the volumes that we're talking about.
Yeah. I get that impression too. Yes.
To clarify that our US GAAP admin costs is R&D costs and sales, general.
Right
Administrative costs is around NZD 10 million, excluding depreciation. In here, excluding this bit, we also put IFRS accounting, so it's how we amortize our-
The amortization costs come into that?
Yes.
Yeah. Okay. Thanks.
Thanks, Sharon.
I'd just like to go back to Brazil. Thanks very much for your explanation of the way the nurseries are structured. That's quite helpful. Brazil's really in the news all the time in New Zealand about the, shall we say, the encroachment on the Amazon Basin forests, the natural forests. It's so bad and so difficult that it's actually threatening our survival. I wondered whether you could foresee something that you can do to compensate for that.
Well, that's a great question. I spend a lot of time in Brazil. I have a great love for the country. Yeah, I would note that in Brazil, you know, we talked about the nursery operations in the U.S., having 6-8 people. In Brazil, because everything is done in containers, our typical nursery will have an admin staff of 6-8 people, but we are typically one of the larger employers in the communities which we operate because we have those temporary people we bring in for 3-4 weeks in the U.S., we have that number working full-time in Brazil because we plant all year. To make it clear, we, you know, we.
For example, in one of our communities, we are actually employing Venezuelan refugees who came in from Chávez's regime looking for work, and we've been able to find a way for them to work gainfully in our country. In Brazil, our employment base, just to make it clear, from a social, the social part of ESG, is 430 or 400 people. We're really proud of the fact that we've been able to give people who otherwise wouldn't work, be able to work jobs. With respect to the Amazon, it's important to understand that where we sell our trees is outside of Amazonia, so we're largely very well south, Mato Grosso do Sul, Paraná. If you look at a map, Amazon is, Amazonia is up here, and we're down here.
What's driving the deforestation of the Amazon is mining, soybean farming, and cattle, right? That's an unfortunate fact. The government has not been very aggressive, to put it kindly, in terms of trying to mitigate that impact.
Mm-hmm.
I could go on for hours about Bolsonaro.
Yeah
... et cetera, but I won't. The number one thing to make clear is we're not involved in that at all. We're the antithesis of that. You know, we are working to increase the tree cover in Brazil because there's a massive expansion of forestry that's basically converting old pasture land and old farmland into trees. In that regard, we are a net benefit, if you will, against the deforestation that's taking place because we're enabling acres to get planted that otherwise wouldn't get planted. To be honest, you know, the deforestation of Amazonia is well beyond our ability to mitigate.
Yeah
or address. You know, we are certainly a force for good, both socially and in terms of environmental mitigation, in the country.
That was gonna be my suggestion to you afterwards, that maybe next time you could show us a slide of the band of activity, ArborGen activity in Brazil as well as U.S. I found that band very interesting in terms of your map today, that you're concentrating on particular areas. I guess they're related to the areas that grow loblolly.
Absolutely.
Climatically.
That's the Loblolly pine belt in the southern U.S.
Yeah. Have you had a look northwards? Because there's obviously massive milling and operations right up as far north as Canada.
That's a great question. We have looked across the United States for opportunities. The other area that would a priori be a potential candidate is the northwest U.S. and Canada. That includes Oregon, California, and Washington. There's no advanced genetics per se. Those trees take so long to grow that the ability to carve out a competitive space, which is served by some very good commodity producers, doesn't make sense for us. We are looking at that. We're also looking at the ability to deploy some of our hardwood technology in the northeastern U.S.
It's in the early days of evaluation, but there's increasing interest in hardwoods for some of these, carbon and reforestation and environmental initiatives where we think we can take our expertise potentially and deploy it there. That's a very early-stage initiative. We have actively looked at those areas in Canada as well.
Mm-hmm.
Good morning, Mr. Chairman. My name's Richard Flower. I've been a shareholder for far too long in this company. Probably a bit like you. We look at the share price in New Zealand at NZD 0.23. Your balance sheet says it's got an asset backing of $0.30, NZD 0.47. This situation has lasted for years and years and years. I've got two questions really.
I guess around the structure, you spent $1 million on investigating the company, and really came up with one thing to sell New Zealand. What is the long-term goal of the board now? We not even have no interest in New Zealand at all, apart from 3 employees that are here. Most of the shares, or over 50% of the shares are held in America. What do you intend to do on a long-term basis? We now have two New Zealand shareholders, and that's another question I look at. I see the amount paid to the shareholders in this company is over $600,000. 10% of the sales, I can't believe it.
I could approach you hundreds of companies in New Zealand where the director's fees are nothing like paid to these to the directors in this company. We've got two New Zealand directors sitting here doing, I'm not sure what. What is your long-term plan for the company now we have no interests in New Zealand?
All right. There's a lot to unpack there. I'll start with the remuneration, the director's remuneration. We have an interesting situation here where we've got a New Zealand-listed company with the majority of our operations in the U.S., and frankly, no operations left in New Zealand. We have to support the U.S. operation of this company 'cause it's the core of the business. To do that, we need to hire U.S. quality directors that are trained to a market rate in the U.S. that is different than how you compensate directors here in New Zealand. Personally, as an investor, I like to see my directors and my management team aligned with shareholders and holding stock in the company, and that's why we put that the shares for directors.
The remuneration I think is very fair for the amount of work that everyone puts in up from the board on this company. I can speak directly to that. It's almost a full-time job at times. I think that we're getting the talent on this board very cheap. You're getting me for free, which I don't know if that's any value to you or not, but that's that. What was the next question?
What is your long term, well, short and long term, board think here on the company continuing to be listed in New Zealand when we own over 50% of the shares are held in America and, we don't have any interest in New Zealand at all?
Sure. Yeah. I personally think that a U.S. listing makes a lot of sense for this company, just currently not at this time and the reason being there is the company is too small, I think, to get any traction in the U.S. There's a lot of costs involved in that, in the kind of doing a U.S. listing that I don't think are very beneficial to shareholders at the current time. We need more scale, but I think at the end of the day, down the road, it's something that we're gonna pursue or look into again. And maybe it will be a good decision or maybe it will be something that we decide to put off again. I'm not quite sure where that'll wind up.
It also depends on the market dynamics going on in the U.S. and globally at the time, along with a couple other things. You know, with respect to the strategic review, you know, we did spend money there, and we did spend a lot of money there. We got very good value for the ANZ business. Beyond that, we also found a lot of different things at the company that we can benefit from and shareholders can benefit from in the long term. We found holes in our organization that need to be plugged. We found tax benefits down the road that we can pursue further. There's a number of other things that came from it.
also things that will come from it in the future as we kind of go through and continue this postmortem of what we found during the strategic review. We essentially got the benefit of having, you know, a consulting team coming in and picking apart the company for us from the prospective buyers. I think we benefited greatly from that, and we'll continue to. Thank you.
Good morning still. Yep, everybody. Gentlemen, coincidentally, I was gonna ask the question about U.S. listing. Obviously, primarily we're out in New Zealand. We're American and based in other places. That was exactly what I was gonna ask. Thanks for that question and part of that question. Can you reveal to shareholders the approximate cost of listing our shares in the United States at the moment? You've obviously done your homework on that. Thanks.
I don't have a number for you offhand. We could probably get one together if we really looked into it. I think that there's also. It's not just the cost of the listing, it's also the market dynamics. It's also the size and the scale of the company currently and. You know, you don't wanna do a U.S. listing and then become an orphaned company in the U.S. It's just as bad as being an orphaned company here in New Zealand, but actually it's probably worse.
Great. Hearing what you conveyed to us just a moment ago, and with a potential excellent expansion in the next two to five years, which we're moving forward, and the fact the gentleman shareholder over here did mention that the share price is pretty well languished for quite a long time. Is there the probability that we will commit to relooking at this within the next two, three, four, five years of a possible U.S. listing that which will may have potential benefits for shareholders or greater exposure to the world, you know, beneficial to the share price potentially, providing we've got good growth?
For sure. Yeah. I think that's something that we're gonna evaluate every year, at the end of the year or whenever it comes up. We will definitely be evaluating it year in and year out. I think that you're right that we can get the story to a lot more people with a listing in the US, and I think that's one of the goals long term. We just wanna make sure we do it responsibly and at the right time.
Look, thanks very much for that response. Appreciate that very much.
Of course. Yes, Ms. Ching again.
Yeah, yeah. Because I wish the gentleman have some experience about listing in U.S., et cetera. Also because I was a shareholder of Diligent. Were you a shareholder of Diligent? No? Yeah, then I tell you. Diligent is what should I say? Board management company. At one time during the 2008 financial downturn, it went down to NZ$0.10 per share. Actually its business is mostly in U.S. Then when I bought the shares in I think 2016, it was about of already NZ$5 New Zealand dollar. Afterwards, some mishap because the company did not submit its financial returns for two or three years promptly.
They were fined by the New Zealand Stock Exchange. Afterwards, it then being better because then you earn a lot of revenue from USA. They have, guess what? They have cash surplus of $68 million and only a small part of business in Hamilton. They decided to delist from the New Zealand Stock Exchange. The chairman at that time also called David . They quoted the price of $4.88 US dollar. You can accept US dollar or New Zealand dollar. At that time, it's about 0.64 exchange rate. Because the majority were owned by big shareholders, like the Fletcher family, previous founder, et cetera, and they agreed to sell.
For USA, still one and a half years ago, I met one of the, what should I say? director. She told me that it's not yet listed in the U.S. market. It's still held by the equity company in its hand. It's still doing a lot of business. Because USA is quite difficult to maintain the listing. If your share price is less than, I think, what price? I forgot. Maybe $1, then you stop trading.
Yeah.
Yeah.
Ms. Ching, I'm sorry. I appreciate learning about Diligent. Is there a question coming?
Oh, my point is be patient. When we earn more money, private equity will come and get out.
Great. Thank you.
Our company. Yeah.
Thank you.
Thank you. Hope that the world is peaceful as well.
Thank you. Do we have any more questions in the room? One over here.
Hi. Gordon Wallace, shareholder. I'm glad you've been able to make it to come here because it has been a real trying time. But also to hear about the company and things that you've all mentioned because it's a shame we can't have, like, a little bit more, like, exposure, like you said, because it's so interesting on certain, you know, facets of it. You know, when you have your orchards or that side of where you're growing all the seed, are they very big in terms of size?
Great question. The orchards will vary in size from 30 or 40 acres. Typically of our orchard footprint, half is in use, half is devoted to other, you know, corridors and windbreaks and whatever. The orchards range in size from 20 acres all the way up to over 100 acres. Our biggest orchards, which are in Blountstown, Florida, which was affected by the hurricane, they are magnificent sites. I mean, they've got trees ranging from just planted to those trees that survived the hurricane and are 15, 20 years old. We've spent a lot of time learning how to organize those orchards so that they're really productive.
We've spent a lot of money, and one of the reasons you're seeing this upsurge in the production of seeds ahead of what the industry would have projected in those orchards. We've spent a lot of money establishing them. Irrigation. There's a lot of nuts-and-bolts things we do. The biggest orchards are over 100 acres on a single site. Most of our orchards are actually orchard complexes, which will have 2 or 3 different orchards within a 10- or 15-mile radius.
Right. Do you have trouble getting staff?
Well, as David mentioned, it's certainly, as I understand it, in New Zealand it is a very tough employment environment right now. It's difficult to get new staff. We've been relatively fortunate in that we've had relatively less turnover, and we'd like to think in part it's because of the way we treat our employees than most other companies. As every industry in every part of the world, you know, employment and getting people and keeping people is an ongoing part of what we do.
Is that why in Brazil you have Venezuelan, do you think?
Absolutely. That's absolutely right. We just could not get Brazilian workers in the area where we were operating to do that work.
It's just that we hear on the news, you know, there's always something happening in Brazil in terms of you wonder how the people survive over there sometimes and how you price things because there's just so much happening there. Obviously, you're one of the main suppliers, and people are putting trees in.
No, Brazil is a very interesting place, and it's in the news a lot. You know, I think one of the things that's important, couple things to recognize. One, in spite of all of the dynamics that have happened in Brazil, the pulp sector there and the steel industry there have been.
Is that the eucalyptus, is it?
Yeah. They have been relatively oases of stability in an otherwise fairly dynamic environment.
Okay
which is great for us.
Okay.
When you take a look at all the things that have happened there, the pulp sector was entirely out of it, which is great.
Right.
The other thing that we've been able to do in Brazil is find a management team that is Brazilian, that knows how to navigate and anticipate the various dynamics in that country, but operate according to a more what I would call a more American or Anglo-Saxon.
Sure, sure.
set of practices.
Well, we have that problem here. What we're gonna say is also fires. Obviously, we see on the news these massive fires in America, but obviously it hasn't affected you.
Those fires are almost entirely in the Pacific Northwest through the Southwestern U.S. Because you have so much more rain, and you have so much more, well, you have so much more rain in where we operate, fires are very, very rare. Now, you will have the opportunity for drought occasionally, but fires per se are very, very unusual. It's not to say they won't happen. We had one in Texas a few years ago, but it's a very different environment.
Right.
Yeah, I think we confuse people a little bit when we discuss the West in relation to ArborGen. The West is the western part of the Southeastern U.S.
Yeah. Southeast.
The west for us is Eastern Texas.
Right.
Okay.
Yeah.
Okay. Well, let's hope also that. Look, it's all good news. I mean, it sounds like, you know, letting the New Zealand part go, as you've said, let's hope that things will be a lot better. You know, that's all we can hope for, but it's just somehow I just wish the share price would tickle up a bit for those like all of us here that have been in for so long.
Well, one of the questions that I know we were asked, Sharon, online was, you know, what are we doing to be able to communicate our results and the progress that we're making and the excitement that we feel about the business? Because as CEO, it's been a tough slog. I know as shareholders, it's been a tough slog. I'm a shareholder. As a CEO, I can tell you know, this is a hard business. What I feel is, I'll say two comments. One, we've put position in place with the MCP seed supply coming on, Brazil in a great position, MCP adoption, advanced genetics adoption, all the pieces are falling in place. That's number one.
Well, is that carbon too?
Carbon is.
Sure.
You know, we've worked hard to put ourselves in a position to be in the way of those people. You know, that creates unanticipated upside. The other thing I would say is, you know, we had just initiated a much more active investor relations program in 2019 when the strategic review started. Once the strategic review started, there were very clear things we could not do while that process was underway under the New Zealand rules and the New Zealand Stock Exchange regulations. With the completion of that process, you know, one of the. Somebody asked about commitments. One thing we are committed to doing is reengaging that program in a very active way because we don't wanna hide our light. This is an American expression. We don't wanna hide our light under a bushel basket.
You know, we wanna go out and make sure that people understand what the excitement is, what the opportunities are, so that ArborGen and its shareholders, including me and David, are able to capture the full value of that in an appreciating share price.
Well, I mean, you're selling the product, aren't you? It's just somehow to get it across that it's such a good story.
Yeah.
Thank you.
There are no online questions, David.
Okay, great. Thanks everyone for your questions. I now propose that we move to the two formal resolutions for this meeting. These were notified in the notice of meeting and explanatory notes have been provided. Only shareholders, proxy holders, or corporate representatives of a shareholder may vote on today's resolutions. Voting on each of the resolutions in the notice of meeting will be by way of poll. We will answer any questions on each resolution after I have moved it. Let's now turn to the individual resolutions. First resolution. This resolution relates to the reelection of Independent Director George Adams. George was appointed to the board in August 2019. He is based in New Zealand and brings broad industry knowledge to the board.
His previous management positions include managing director of Coca-Cola Amatil in New Zealand and financial controller of British Telecom Northern Ireland, and he is currently on the board of several New Zealand companies, Hellers Group Holdings, chairman of Bremworth, Netlogix, Asmuss, and New Zealand Frost Fans. In addition, George is the executive chairman and co-founder of Apollo Foods and Insightful Mobility. George also chaired the Independent Forestry Safety Review in 2014 and is chair of the Business Leaders' Health and Safety Forum. George retires from the board of ArborGen and, being eligible, offers himself for re-election. The board unanimously supports George's re-election today. I will now ask George to address you regarding his appointment.
Good morning, everyone. If I could just say a few words, that would be great. It is good to be back in an in-person as well as online meeting. You know, I am George Adams, and I'm offering myself for re-election to the board today. No doubt you will have noticed in my bio that I'm a fellow of the Institute of Chartered Accountants, and I'm a chartered fellow of the Institute of Directors, with about 30 years international business experience under my belt. As you will be aware, I was first elected to the board in 2019, and a heck of a lot of water has passed under the bridge since then. I certainly hadn't foreseen a global pandemic taking center stage at that stage.
To its credit, though, our board has quickly dealt with the logistics of running our corporate governance remotely, and many's a long and pleasant hours being spent on the now infamous Zoom meetings. Aside from our board, I also serve on the audit committee, the nominations committee, the remuneration committee, and in the past year, the strategic review committee. I'm happy to report to you that we have very lively and very robust discussions about the business. Most notably in the past year, I spent a considerable amount of time on the strategic review committee, which was a subcommittee of independent directors. Like many others, our business has weathered significant pandemic-related challenges, and with those now largely behind us, I think, touch wood, the future is looking good.
We have a product that is now in significant demand, and we are on the cusp of having sufficient product to safely satisfy that growing demand. In seeking your support, I continue to advocate for all shareholders and play an active part in ensuring the business is effectively and efficiently run on your behalf. I will, if I can, answer maybe the earlier question, what do I do? 48 meetings in the last 12 months, regularly beginning at 5 A.M. CEO monthly catch-ups with Andrew. Sales and marketing team sessions, where we've spent the past year working on perfecting our approach to private landowners.
Before that, I spent quite a bit of time with the team on the varietals project, really understanding the business, how to work through optimizing its approach to the varietals production. While I'm sitting here, certainly and you know, in the past two years have not been on an international flight anywhere like all the rest of us, I think we've actually found a way to actually work very effectively from New Zealand. Certainly, as David says, on occasion, it does feel like a full-time job. Thank you for your support, and thank you.
Thank you, George. Are there any questions in relation to this resolution? Ms. Ching, we'll get you a microphone.
Yeah, yeah. Can I get the microphone? Sure.
Oh.
Bring it back. Thank you. Yeah. I wish to mention that George Adams was a director of Tegel. Tegel was raised in the market about NZD 1.50, and then just after two or three years, Tegel was take over by a Filipino company at NZD 13. George Adams did not mention this, what should I say, this directorship in the just now because he caused a lot of us losing money. I know that there are some shareholders here losing money as well. Why should I, what should I say, to let you to be a director once more? There are no business in New Zealand. Why should we not save the NZD 100,000 at least? Yeah. Thank you.
Thank you. Are you looking for a response on that?
Hmm?
Yeah.
No.
No. Okay. All right. Well, thank you, everyone. The second resolution. Sorry, do we need to give time to vote?
No.
No. All right.
I think we're fine.
Resolution two relates to our auditor, Deloitte. They have confirmed their willingness to continue in that role. Thank you. Deloitte is automatically reappointed at this annual shareholders' meeting as auditor of the company. The proposed ordinary resolution is required to authorize the directors of the company to fix Deloitte's fees and expenses for the following fiscal 2023 year. Are there any questions on this resolution? Any online? Okay. All right. There are no further resolutions. I wish to advise that votes have been received in respect of 292 million shares, being approximately 58% of the total shares on issue. Please ensure you have voted on all resolutions by selecting your voting option online. If you have any difficulty, please follow the instructions in the virtual meeting guide. In a minute, I will close the voting system.
Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize these votes. All right. Great. Thank you. Online voting will now be closed. The results of these votes will be released to the stock exchange later today. That brings the formal part of this meeting to a close. Is there any other business shareholders would like to discuss? I thank you for joining our meeting today and for your questions. I now declare the meeting closed. For those shareholders present here today, please join us for some refreshments at the end of the room. Thank you.