Good afternoon, everyone. I'm Murray King, Board Chair at LIC. Welcome to the 2023 annual meeting. Actually, we were back here in 2015, I think, was the last time we were here in Ashburton. Hey, firstly, I'd just like to acknowledge, I recognize it's a really busy time of year. These events are always difficult to find an appropriate time to run them, so I appreciate your attendance here nevertheless. There's a couple of housekeeping matters we'll just knock off. I might just say, we're running online as well, so you, it's not just the audience here. There will be people joining virtually as well, and we've run that procedure for the last couple of years, which seems to work reasonably well.
In order to vote, you need to have registered with Link Market Services. I believe you've probably done that on the way in. If you've not voted and haven't brought your postal vote with you, you'll have been given a voting form at registration. If you haven't registered, please do so out in the foyer. If you're voting at the meeting today, please indicate your vote on the voting paper that will be supplied. These will be collected at the end of the meeting, and I'll tell you when to do that. For those of you online, you can vote using the online platform. So please get the Get a Voting Card button, and enter your shareho lder number, and it will take you through the details of that.
There are 12 resolutions here today. And I'll deal with how they're gonna be voted later on. As with respect to general business, if anyone joining online has any items of general business or questions they'd like to ask, please send them via the Ask a Question link. And you can do that now or at any time during the meeting, and they'll be collated and answered at the end. For those of you in the room, please raise your hand to ask a question during general business, and we'll bring a microphone along to you. We've designed the procedure for today's meeting so that those online have the same opportunity to participate as those in the room. Before we officially begin the meeting, I would like to cover a few points regarding the use of the online platform.
So, you'll need your shareholder number. Talked about that. The voting remains fully confidential. No one on the call will see your vote. And for questions, to ask questions on the online platform, use that button, as I outlined earlier. If you do happen to have any problems, there's a 0800 number, 220. Sorry, 0800, 220. If anyone has any items of general business that are of the more technical nature, could you please ask them now? That's just if we need to get an expert from Newstead or wherever to answer anything difficult. But David, you'll be able to manage most of them, pretty sure. Has anyone got any really curly questions? Technical? No. Perfect. So let's get on with it.
So the notice of meeting has been circulated to all shareholders and taken as read. Quorum is clearly present, so we can begin. So firstly, a very warm welcome to all of our shareholders here, to fellow shareholders, to LIC staff, the Shareholder Reference Group, Ian Brown and Shirley Trumper. There you are. From the Honoraria Committee, LIC's auditors, lawyers, bankers, and advisors, welcome. Also joining us here today is, on my right, David Chin, our Chief Executive, and Brent Mealings , our newly minted CFO as of 10 weeks?
Ten weeks.
Yep. Also, our directors present here, and if you wouldn't mind just standing up so everyone can see you, would be useful. So Alison Watters.
Good morning.
Out of Waverley, Ben Dickie. And of Auckland fame, Candice Kinser. Our incoming chair, Corrigan Sowman. Where is he? There he is. Out of Northland, Ken Hames.
Kia ora!
From down the road in North Otago, Matt Ross.
How you doing?
Sophie Haslem from Wellington, one of our independents, and finally, our last independent, Tim Gibson. As chair, I hold eight... Sorry, 896,557 proxies from 26 shareholders. I'll now call-- Actually, I've got, I've got apologies from Mark Bent , Rob Wilson, Duncan Coull , David Jensen, Emlyn Francis, Andy Macfarlane , Scott Montgomerie , and Gordon Glentworth. I'll call for any other apologies.
Andy Grant.
Andy Grant. No other apologies? I'll move that those be accepted. Could someone second them?
Yeah.
Thanks, Ben. Moving on. The agenda for today's meeting, I'll just run through that quickly. I'll cover off the business highlights and look to the year ahead. David Chin and I will recap on the strategy and present how we're tracking. Brent Mealings , our CFO, will run us through some of the financials, an overview and the highlights. David will also talk to the priorities, including the herd improvement and the rate of genetic gain being made on our farms, LIC's focus on future solutions. From there, Ian Brown of the Honoraria Committee, as the chair, will present the honoraria report. We'll move into the voting resolutions and finally, the general business and the Q&A session. Where are we up to?
Key highlights of the year: the farmer uptake of premium genetics, the growth of animal health and DNA testing, the continued focus on R&D and technology investment. I'll go through them with a little bit more detail. The premium AB product. Our 2022-2023 result was fueled by the increased farmer uptake of premium genetics and herd improvement services to breed highly efficient cows with, and a lower emissions footprint. Farmer shareholders know that all cows aren't created equal, and they're investing in solutions to breed the cows better, faster. Using genetics from LIC, farmers have almost doubled the rate of genetic gain in their herds over the last 10 years. That works out at achieving around 18 gBW points per annum. Significant increase from what it used to be. We'll talk a bit more about that later.
LIC's premium genetics range accounted for 79% of the co-op's total artificial breeding inseminations, which was up from 71% the previous year. Orders for sexed semen also increased as more farmers factor this important tool into the breeding plans and accelerate the rate of genetic gain on farm. Now, we fully acknowledge that the non-return rate for sexed semen last season was well below what we would have usually expected, and several enhancements and changes to procedures have been made as a result, and we've continued to monitor the sexed semen non-return rate throughout the winter mating period, and the result is within the expected range, happily. The other highlight around animal health testing. So it's also pleasing to note that farmers have increased their investment in DNA and the testing services and animal health testing, particularly Johne's testing.
So notably, Johne's testing remains one of the most popular diagnostic services, reaching a milestone of over 1.1 million test samples processed, which is an increase of 16% from the previous year. So overall, animal health tests were up 13.2%, accounting for NZD 10.2 million of revenue. So over the next twelve months, we'll continue to focus on investing in the right R&D initiatives with an aim to deliver profitable and sustainable outcomes for the dairy sector. And we expect underlying earnings in the 2022, sorry, 2023-24 year to be in the range of NZD 17 million-NZD 22 million. The other thing I want to touch on here is the delivery on our commitments.
So it remains a key focus for the 2023, 2024 year, and I'll quickly recap on the strategy and then David will dive into it. Our strategy is focused on building a strong, sustainable cooperative, leading the world in the field of out- and delivering outstanding value to our customer, shareholders, and the industry. We create value through the focus on four key areas, and this is really important. Those four key areas are our farmers, the animal, data and digital, and innovation. There it is there. I'd like to cover off a few examples from the past year that show our strategy in action. Starting in the data and digital area, we've partnered with eight leading cow wearable technology suppliers to integrate our MINDA herd management system.
This year, we saw 426,000 wearables integrated with MINDA, and it's great to see farmers utilizing this integration to unlock even more value from the wearables investment. The genomics remains a key focus, which will enable us to continue to deliver value on-farm. The board remains strongly committed to genomics, and this is reflected in our investment in the technology over the past 12 months. So our genetics offering has continued to go from strength to strength with the increased focus on dairy beef genetics, which offers an alternative revenue stream for our farmers and supports the reduction in non-replacement calves. And finally, we also this is the 3rd year of the methane research trial. We're working in collaboration with CRV and Pāmu.
So 400 heifer calves have been born at one of the Pāmu farms near Taupō this year, and 200 of the low methane-emitting bulls, and 200 from high... Sorry, yes, so it's 200 progeny from low methane-emitting bulls and 200 from high emitting methane bulls. And we're measuring these heifers, and that'll be taken during their first milking season to ensure that they're representatives of their fathers, and so it's quite exciting research. We continue to focus on the three commitments which we outlined last year. And those commitments are faster genetic improvement, which I think you'll see from that 18 BW per annum gain on, and on operational excellence and on software reliability and performance. So I'll just one last thing.
This is my last meeting as Chairman, and I'm pleased to say the company is in good heart, and we've got a good board and a good successor, so, more, more, more to come. So I'll hand over to David, and we'll work through some of the, some of the progress.
... Thank you very much, Murray, and it's great to be here in Ashburton, and great, fantastic turnout. So thank you very much for giving up some of your time this evening to attend the AGM. Look, it gives me absolute pleasure to be able to talk to you about the commitments that we've made to our farmers and shareholders, and these commitments have kind of gone down really well, and it keeps everyone internally kind of focused on the things that really matter to farmers. The three commitments provide everyone with clear goals and expectations of delivery and what it looks like.
I'm really happy to report that the majority of the targets that we set for the business that year have been met and exceeded, and we really remain focused internally on achieving the ones that we haven't yet achieved and continue to work to better those in the upcoming year. Look, in the interest of time, I'm not gonna go through all of the results today, but I do want to share some examples of how we've set the commitments and how we've measured them to be completely transparent with everyone. The full suite of the commitments and all the measurements are in our sustainability report, and that's a really fantastic report. It's available online at our website.
So I do encourage you, if you want to look further, and investigate more about what we're doing and how we're holding ourselves to account to deliver to you, please read that report. Faster genetic improvement, like herd improvement is what we do. It's absolutely critical, and central to our cooperative. We're committed to helping the sector meet environmental challenges we face, and animal efficiency is really going to be at the center of this. One of the measurements we have is to ensure that we have a 15 BW increase per annum for our Premier Sires bull teams year-on-year, and it's great to see that, last year our team had a gain of 22 BW points, so, exceeding on that as well.
In the report, on the sustainability report, there's a whole lot of other metrics around how we measure genetic gain, and we're doing really well on, on most of them. In terms of operational excellence, making sure we deliver our services to you on time, every time, one of the commitments we have here is around ensuring that we get our herd testing results, out to, to farmers within 72 hours of doing the herd test. And it's great to see that we achieve that 99.99% of the time. And also another one is the GeneMark turnaround time. We know that the key to uptake of getting more people to do parentage testing is to continue to improve the turnaround time of this service.
The commitment was to achieve a 5-week turnaround time, and we achieved that 95% of the time. This year, internally, the operational team have a challenge to cut that down yet again to 4 weeks. So internally, we've got 95% of the time to get those results turned around in 4 weeks, and progress is looking really, really good for that this year. I would also say, you know, it hasn't always been plain sailing. Murray did acknowledge earlier on that the sexed semen performance wasn't where we want it to be, so we are doubling down on that operationally to ensure that this season, we return that product to a non-return rate, which we've achieved over the last 10 years.
So, pleasingly, the winter performance of sexed semen was within expectations, and really confident, the spring season will be successful as well. Software performance and reliability. MINDA is such a central part of most dairy farmers', businesses these days, and we want to really make sure that the software that we provide not only works fast and is responsive, but it's also available all the time. So, when you go into, your app or, online, that, MINDA is up and running for you. So we're, we set ourselves a target to make sure that the MINDA software is available 99% of the time. We exceeded that this year, 99.5% of the time.
Some of the reasons why it may go down is the patching and security, et cetera, but we're trying to make sure that we reduce that amount of time and so it's up and available for you. So this is just a snapshot of the progress we've made this year. These metrics have been. We recognize as being important to farmers, but what we do is we continually evolve them, seek feedback, and making sure that the things that we need to deliver on are clear for our internal people, and that we set a clear target for them. So we're constantly going to evolve them, change them, and make sure that they are relevant, and then we'll track them in a transparent way for you.
So that's just a review of our three commitments, critical part of our strategy, how we have delivered on those three commitments. I'm now gonna pass to Brent Mealings, to highlight our financial performance for the 2022-2023 financial year. Brent?
Thank you, David. Good evening, everybody. As Murray mentioned, I started in August as the CFO here at LIC, and today I'm—or this evening, I'm pleased to report another strong financial result for the co-op. Delivering value for our farmers is the center of everything we do, and it's results like this that enable us to deliver a solid dividend at a time when cost pressure on farmers is being felt, a strong portfolio of herd improvement products and services, and importantly, the right R&D investment to help our farmers keep their herds profitable and sustainable into the future. There are some specific numbers I'd like to highlight from our financial results. Our net profit after tax of NZD 27.4 million was up 22.4% from last year.
a dividend of NZD 23.3 million, or NZD 0.1638 per share, and underlying earnings of NZD 23.7 million, down 7.6% on the previous year. At the end of the financial year, your cooperative has a strong balance sheet, with no debt and total assets of NZD 382 million. Total revenue from continuing operations of NZD 276.5 million was up 5.1% on the previous year. This growth in revenue reflects our products and services are delivering to farmers, including our premium genetics offering, herd testing, and animal health testing.
Like our farmers, we are also faced with challenging economic conditions and increased cost pressures, which was reflected in our revised 2023-24 earnings guidance, which originally was between NZD 22 million and NZD 28 million, and we've now reduced that to between NZD 17 million and NZD 22 million. Despite this, we are committed to delivering exceptional value on-farm and investing in the right places to support a more profitable and sustainable sector for our New Zealand dairy farmers. During the 2023 financial year, we continued to invest in areas that support our co-op and our farmer shareholders into the future.
Capital approvals demonstrate the areas where we are reinvesting into the business, and you can see that 64% of our capital investment in the 2022-2023 financial year contributed to investing in building capability, including critical infrastructure, software upgrades, key minor enhancements, such as integrations with leading wearable suppliers. Investment in R&D was NZD 18.6 million for the year, up from NZD 18.2 million the previous financial year. This retains our position as one of the largest private investors in R&D for the primary sector at 6.7% of revenue. Our focus remains on investing in areas that will deliver value for our farmer shareholders, and a strong emphasis on genomics and key research programs that will help our farmers meet their long-term environmental goals. Thank you. David, back to you.
Look, thanks, Brent. That was a really good financial overview of how the cooperative is, is performing. Just this section, I just wanna reflect on a wee bit of what we've got in the future and have a think about the importance that cow efficiency is going to play in our dairy sector going forward. You know, we've reflected that we can improve our operations, and we've got some really good commitments to be operationally excellent, generate faster genetic gain, and deliver great software. But the investments that we're making towards breeding a more efficient and sustainable cow is more important now than it has ever been. LIC is more relevant now than it has ever been.
To help our sector meet its sustainability goals, to be sustainable, and for farmers to have a profitable farming business, we need to be breeding highly efficient cows, and through our products and services, farmers are doing just that. Look, our full suite of products and services are supporting farmers to breed better cows, and the support they receive through our nationwide Agri Manager network and field staff, means that every one of our cooperative owners, shareholders, has access to the best combination of tools to achieve their herd improvement goals. You know, Murray's highlighted already that we saw an increased uptake in premium genetics products, where the young genomically selected bulls are used to fast-track genetic gain. This, in turn, delivers more value on-farm through increased productivity and improved environmental outcomes. I just wanna pause for a bit and just take you through how this manifests itself.
Our latest research, when we looked at long-term users of LIC genetics, and we wanted to demonstrate the ability of them to achieve faster rates of genetic gain, and also demonstrate the huge opportunity that still exists in the dairy sector. Close to 1 million cows formed a sample set from current MINDA herds that were all herd tested, aged between 4 and 8 years old. We grouped these by breed, so this is just Holstein Friesians here, and put them into quartiles based on BW. What we can see is that the top quartile animals, the high BW animals, 221 BW in this, and these are milking cows in your herds right now. They are producing more milk solids, turning more feed into milk.
They're doing it with less live weight and have a fertility advantage, and they also have a lower emissions footprint per kilogram of milk solids. These are the sorts of gains that we see in herd after herd, and these are the sorts of gains that we want to unlock for the dairy sector. It'll be pivotal for our sector going forward. We don't need more cows. We just need the best cows. Today's best cows are producing 481 kilograms of milk solids, compared with an average, when we think about the 1950s, of 188 kilograms. Considering the progress that we have made through a sharpened focus on herd improvement, it's incredible to think the kinds of gains that we can make in the future as we double down on this focus....
If we continue to accelerate the rates of genetic gain, which we're committed to as a herd improvement cooperative, and breed only the best cows, I know that we can increase cow production relative to live weight. We can maintain more total milk solids production from fewer cows, and reduce agricultural emissions, and ensure that everyone has a sustainable and profitable business to boot. At an individual farm level, there can be many variable factors, but based on our research, we believe that it's absolutely conceivable that by 2030, you know, your herd today could be performing at the level of your top 25% of your cows, producing today through a good herd improvement plan focused on genetic gain. You know, the good news is that we're really making great progress in this space.
Over the past 30 years, we've invested more than NZD 80 million into genomic science, and alongside farmers' herd management decisions, this has played a key role into the rates of gain that we are seeing in people's herds right now. You know, to achieve these gains, we use a wide variety of tools, including artificial breeding, sexed semen, herd testing, DNA parentage verification, genomic science, and genomic evaluation. And looking forward, we're focused on future solutions as well. As highlighted by Brent earlier, we invest heavily into R&D, so we continue to deliver better outcomes for farmers. We've talked about the methane research program that we've undertaken. We're in our third year of that research program, and that's hugely exciting.
We know the results from the program have found that there is genetic variation in the amount of methane emitted after accounting for the feed eaten. And we're really looking forward to measuring the methane output of these bulls' daughters to confirm the heritability of this trait. We're also investing and investigating heat tolerance research. We know that in 2030, 2040, the climate will be a lot different to what it is now and be a lot warmer. And so we're one step closer to enabling farmers to have a more heat-tolerant cow. We've identified the Slick gene. We've, for the last eight years, have been breeding up these animals, which are more tolerant to warmer temperatures. They're more productive when the temperature increases.
We're testing them at the moment for cold sensitivity, and they've come through those research investigations really well. Now the next step is to undertake a round of matings, where we're putting the top Slick bulls, as we call them, into high genetic merit cows across the country to start breeding a more efficient cow. Assuming progress continues as planned, we look to be able to launch heat-tolerant cows by 2029. That's, you know, a really good clear demonstration of the sort of future-focused thinking and investments we're making now to ensure that when you need it in the future, that we've got solutions for you. Cows that are more emission efficient aren't just a hope for the future, they exist in the national herd today. We just simply need more of them.
Now is the time to sharpen our focus as a sector, not only by breeding highly efficient cows to help the sector remain profitable, but breed highly efficient cows to make sure we're sustainable long into the future. Well, I'd like to take this opportunity to thank you all for attending with us today, and, it's been great to share these results with you. I'd also like to thank Murray and the board for their support over the last 12 months. And also, Murray, thank you for your chairmanship of LIC. It's been wonderful. You've been a great leader for the cooperative. Finally, I'd like to thank all of our staff, many who are here today, for your contribution over the past year.
I really look forward to working alongside you to deliver another a great year of herd improvement and great results for our cooperative. I'll now hand over to Ian Brown, the Chair of the Honoraria Committee, to present the honoraria report. Ian?
Thank you, Mr. Chairman. Thank you, David. Good afternoon, ladies and gentlemen. In accordance with Clause 24.2 of the LIC Constitution, the Honoraria Committee is made up of between two and four farmer shareholders who are elected by shareholders. The current committee members are Shirley Trumper, who's here today, Gordon Glentworth, Scott Montgomerie , and myself. The role of the committee is to consider and recommend to shareholders the form and the amount of remuneration of directors and the shareholder reference group members. Last year, the committee met formally on four occasions in order to perform this task. It's important to note that the Honoraria Committee undertakes its role on behalf of the shareholders, independent of LIC, the board, and the shareholder reference group.
In arriving at our recommendation, the Honoraria Committee takes into consideration analysis of data sourced from annual reports and director fee surveys compiled by both Strategic Pay and the New Zealand Institute of Directors, consultation with the board and the Shareholder Reference Group chairs, LIC management, David Chin, as well as the committee's knowledge and judgment of the wider LIC operating environment. The survey size is approximately 400 public and private companies and encompasses response from some 2,500 individual directors. Although the data set is detailed and wide-ranging, the Honoraria Committee also more closely considers comparable agricultural organizations within that data set. The Honoraria Committee acknowledges the importance to the shareholders and farmers of LIC, of both attracting and maintaining a high caliber of directors on its board, and members of the Shareholder Reference Group.
The objective of your Honoraria Committee is to ensure that director remuneration is relevant to the market, there is some recognition of opportunities forgone, and is sufficient to attract and retain good governors for LIC. The committee recognizes the workload and the compliance obligations of the LIC board, given its listing on the New Zealand Stock Exchange. The view of the Honoraria Committee this year for the board, is to further increase remuneration, to maintain relativity to similar organizations in the wider operating environment of our directors. The committee has considered and continues its recommendation of a discretionary pool, up to a maximum of NZD 60,000, be made available to the board, specifically to compensate directors for extra duties, skills, and roles, including committee chairs. This year, the board used approximately NZD 45,000 of that total pool.
The committee recommends for this year, an increase of 8.3% for the chair, from NZD 132,000-NZD 143,000. 10.1% for directors, NZD 59,000-NZD 65,000, and an overall increase to the honoraria of the board of 8.8%, resulting in a total remuneration pool of NZD 723,000. The Shareholder Reference Group. The role of the Shareholder Reference Group differs from that of the board, in that it is an independent body of shareholders, whose purpose is to work collaboratively with the board and LIC management, to promote the interests of farmer shareholders, and assist the company to deliver on its purpose and vision. There are few organizations that have a body similar to the Shareholder Reference Group.
Given its unique role, and as such, the Honoraria Committee has few organizations which it can use for direct comparison. Again, discussion with the LIC management, board, and Shareholder Reference Group help inform our view. This year, the Honoraria Committee recommends an adjustment to remuneration of the Shareholder Reference Group, to ensure fair recognition of the commitment to the role, and the time away from the members' own farm businesses. The committee recommend the following increases to members of the Shareholder Reference Group: The chair, NZD 36,500, increasing to NZD 40,000, 9.5%. The deputy chair, from NZD 17,000 to NZD 19,000, 11.7%. Members, NZD 12,600 to NZD 14,000, 11%. An overall increase to the honoraria of the Shareholder Reference Group of 10.8%, resulting in a total remuneration pool of NZD 19,900.
199,000, sorry, forgot the extra zero. The committee also considered the daily allowance paid to members of the Shareholder Reference Group, for days spent on LIC business outside of their normal meeting schedule, and recommend the current daily allowance of NZD 350 increase to NZD 400, a 14.2% change. I would like to finish by thanking Melanie Tonkin for her knowledge, effort, and support as Secretary of the Honoraria Committee. And I would also like to acknowledge the contribution of my fellow committee members for their efforts over the year. Thank you. Thank you, Mr. Chair.
Thank you, Ian. We move into the resolutions part of the meeting now. So there's a few procedural things I'll just outline here. So there are 12 resolutions to be considered today. A poll will be held for each one. So resolutions 4, 5, and 7 are elections for the Board of Directors and Shareholder Reference Group, and enable, And sorry, and members of the employee share scheme are unable to vote on those. Shareholders in the North Island region can vote on resolution 4. Shareholders in the South Island region can vote on resolution 5. Shareholders in the Lower North Territory can vote on resolution 7. We use a first past the post system for the Board of Directors and Shareholder Reference Group elections. This means that candidates receiving the highest number of votes will be appointed.
All shareholders can vote on all the other resolutions. Notably, resolutions 1, 2, 3, 6, 8, and 9 are ordinary resolutions and require 50% approval to pass. Resolutions 10, 11, and 12 are special resolutions that require 75% approval. Results will be going to the New Zealand Stock Exchange later tonight and be available in the morning. Approval of LIC director remuneration. To receive and consider the LIC Honoraria Committee's recommendation, as Ian has outlined, to directors' remuneration and if thought fit to resolve, by way of ordinary resolution, to approve the total remuneration of all nine directors to be a maximum of NZD 723,000 per annum. I'll call on Ian. Could you please move?
Move that, Mr. Chair.
Thank you, Ian.
Second.
Thank you, Shirley. Have a mover and a seconder. Is there any discussion? It would appear not. Those of you who haven't voted, and you're in the room, you can mark your paper, and if you're online, you can vote accordingly. We'll move on to the next slide. Thank you, David. Have you done the breakdown? Yep, okay. This is for Resolution two. This is to approve the total remuneration of all Shareholder Reference Group members being increased from NZD 179,500 to NZD 199,000, and to increase the daily allowance from NZD 350 to NZD 400 per day. Once again, thank you, Ian, and-
I'll second that.
All right. Nathan's bit well.
Sorry.
Pick one. We'll take, take yours, Shirley, since you've done all the work. Thank you. Is there any discussion? Would appear not. We'll then move to the next item, which is Resolution three, which is the reappointment of Chartered Accountancy Partnership, KPMG, as the auditor until the conclusion of the company's next annual meeting. And that the directors be authorized to fix their remuneration. I'm happy to, to move this resolution. Thank you, Ben, as a seconder. I suspect there's no discussion. Trevor Newland does a great job. Would you please mark your voting papers accordingly? We'll now move to Resolution four, which is the election, to elect one candidate representing the North Island region as an elected director to the board of directors with effect from the conclusion of this meeting.
So please note that it's only shareholders from the North Island region, who reside there or have their participant code registered there, who can vote. So I'm happy to move this resolution. Okay, thank you, Ben. Second that. We won't have any discussion on that, so would you please mark your papers appropriately? And there they are there. So we've got Duncan Coull , Ken Hames, Matt Hocken , and Richard Luxton, of which you're here, Richard, I see. Yep. Thank you. So we'll move on to Resolution 5, which is to elect one candidate representing the South Island region. Big job, this. There used to be 2 of us for the South Island. We've now got, we've now got 3, so, so, so welcome to whoever that may be.
So, and noting only that, this can only be shareholders from the South Island who can vote for this resolution, and I'm happy to move it. Thank you, Corrigan. So would you, oh, and the candidates there are Tony Miles, Andrew Slater, and Victoria Trayner. So if you'd mark your voting papers, and we will keep moving. This is a very important one, this one. This is to ratify the reappointment of Sophie Haslem as an appointed director for a term expiring at conclusion of the third annual meeting, following this annual meeting. So approximately three years. It's approximate because we never quite know when the annual meeting is going to fall. So, Sophie, I'll speak on your behalf. Sophie is the Chair of our Audit, Finance, and Risk Committee.
This is your-- this, you've done, served two terms? Oh, one and a bit, because we had a change around with some of the, some of the terms. Sophie resides in Wellington, and she's a professional company director. She's got a, a finance background. She is very astute. She serves on a number of boards, and if I can remember some of them: CentrePort, Rangatira, former chair of MetService, Kordia. What am I missing? Oh, Ngāi Tahu. Yeah, currently on the Ngāi Tahu board. She does a great job, and she is a very important part of our board, and acting as an independent in that role. I'm more than happy to move that resolution.
Happy to second the motion.
Thanks, Matt. Does anyone want to ask any questions of Sophie? Would appear not, so we'll let you vote accordingly. We now move on to Resolution seven, which is to elect two candidates from the Lower North Territory to the shareholder reference group, with effect from the conclusion of this annual meeting. Now, just noting there's only shareholders from the Lower North Territory are eligible to vote for this resolution. I suspect there may be one or two of you here. I'm happy to move that resolution.
I'll second.
Thank you, Ben. Seconded. And the candidates, sorry, I should run through them there, Sean Baxter, Mark Hooper, and Thomas Read . So if you'd vote, make your vote. Moving swiftly on to Resolution 8, which is to approve the re-election of Ian Brown to the Honoraria Committee, with effect from the conclusion of this annual meeting. And once again, I'm happy to move that resolution.
Happy to second it, Chair.
Thank you, Ken. If you'd kindly make your vote. And in a similar light, we've got the to approve the re-election of Gordon Glentworth to the Honoraria Committee, with effect from the conclusion of this annual meeting. And once again, I'm happy to move that resolution. And I'll ask Alison.
Thank you.
Thank you. Thank you for seconding that. So please mark your voting papers. Now, we move into more complex sort of, part of the, part of the meeting, which is around some constitutional matters. And what we have done here is, wrapped up a number of things, because you don't get to do this very often. Make sure we cover a few things in here. So Resolution 10 is the Delegations of Authority. So the constitutional amendments set out in Part A of the table in Schedule One of this notice of meeting, as reflected in the form of the amended constitution available on our website, be approved. So once again, I'm happy to move this resolution. Thank you, Matt. Is there any discussion? I suspect not. These are largely, common sense resolutions, to be honest.
And Resolution 11 , which is the Governance Amendments, so, this is around the constitutional amendments set out in Part B of the table in Schedule 1 to this notice of meeting, that they be approved. And once again, I will move that and ask for- Thanks, Matt, to second. Thank you. So any discussion? No. If I'm not mistaken, we're Resolution 12, which is Administrative Updates, the consultation... Sorry, the constitutional amendments here in Part C of table Schedule 1, and the notice of meeting be approved. And once again, I'm happy to move this.
Thanks.
Thank you, Nathan. Seconder from the West Coast. And so any discussion? No. So please mark your voting papers. Which concludes the formal part of that procedure. So, as I said, the results will be available later. So we, we move into general business, but do we need to take a quick break just to compile some of the questions that have come in? Have any questions come in from abroad? You got some there, Maurice. Do you wanna share them with us, or?
Just-
Yep, so the first-
Do we need to take a break, or you can handle them all right?
Yep.
Perfect. Let's get into them. General business.
First question is: What is LIC's position on gene modification?
Yeah, happy to take that one,
Yeah, but we have discussed it as a board quite recently, actually. So yeah, David, what is your interpretation of the board's directive?
Hot seat. Look, we think to achieve our goals around sustainability and climate going forward that we will have to look to the use of innovative technologies, and gene editing is one of those. So as a cooperative, herd improvement cooperative, we absolutely keep an active watching brief on technologies and try and stay abreast of those things internationally. Given our current legislative framework in New Zealand, we can't obviously adopt those at the moment. But if that sort of changes, we'll look to where things are appropriate and offer true benefit to farmers and allow us to continue to farm sustainably and profitably; we'll be looking to commercialize those. So yeah, actively keeping a watching brief.
It just occurred to me that actually some of you may be filling in your voting papers still and probably haven't handed them in, so maybe we can just collect those up while you're thinking about your next question. So I've got these guys circulating. Some more coming in. While those are being collected, Maurice, did you have another question?
I do. The next one is: How is LIC working with other industry partners to help their shareholders meet sustainability reporting requirements?
Once again, I'll let you do that. You're in the hot seat on that. We've been discussing that again today as well, so yep.
Well, yeah, partnerships and collaboration are a critical part of our strategy. We think as a sector, there's no individual organization that can tackle all of these issues alone, so we are looking to actively partner with many organizations. I think a good example of that is the wearables integration, where we're actively opening up API integrations between MINDA and these wearables. I think another really good example is the collaboration that we've got with, you know, one of our biggest competitors, CRV, with the methane research. We're also working in that with Pāmu and, you know, with some very generous help from the government through MPI and MBIE. Absolutely need to collaborate more and work together, and that's a strong message that we receive from our shareholders as well.
You know, the cooperatives that we own, we're blessed as an agriculture sector to have great co-ops, underpin our success. And, you know, we need to work together more often for better outcomes for the sector.
Any questions from the floor? If there are, raise your hand and we'll give you a microphone. I'd be most surprised if Mid Canterbury doesn't have any questions. I'll start picking people if not... I will.
Just so we don't get home too early to dinner. Sorry, Murray, but hey, just an easy one so Dave doesn't have to take it. But last time we were here, we were talking back about, like, Afimilk and the risk around data ownership and herd testing. So probably just your view on that and, yeah, how's that progressing and our views towards our data ownership and our strength in there?
Really good question, and it hasn't, I mean, the issue hasn't gone away.
Someone else gave that to me.
You're bright enough to think of your own question, surely. Hey, you're quite right. I mean, that was a key consideration for the Afimilk proposal. And goodness knows where we'd be had that gone ahead. But two things have happened, as you're aware of: COVID and the current situation. But the access to data hasn't diminished, and it's still there, and if anything, it's increased further. Actually, I don't know if David would want to comment, do you think?
Probably the, also to add to that, you know, we're making huge investments, the back end of our data systems to modernize our platform. We see the movement of data around the sector as really, really critical to unlock, you know, profitability and sustainability. The key message I get when I'm walking, going around farms, is you don't want to enter the same bit of data twice. Anything we can do to reduce that, if you're entering your data into MINDA, how do we make that available to accountants, to your dairy processor if they need stock inventory, et cetera? H ow do we do that? How do we do that cost effectively for you? Committed to that, making some big investments to the back end IT to enable that.
Is that the correct answer, David? David's our technology expert. Any other questions here?
Question over here.
All right.
My question is regarding sexed semen. We run two 50/50 operations on the Canterbury Plains here and invest a fair bit of money in sexed semen over the last few years. The past season, we had a pretty dismal return on investment, in our opinion. As LIC as a whole, I just wanna make sure that you guys are focusing on that and how we improve that, because going forward, bobbies are probably a pretty big risk to our business. We use a fair bit of beef semen, and we're trying to create avenues of trying to sell beef calves so that we can kind of offset some of that bobby calf that go es on the truck.
When you have a season like last season, I mean, we're not doing it again this year until we can see a bit more of a change in what's happening. We've changed our business back to a structure where we're using—what do we—Full... No, not full back. We're using—
Nominate.
Nominate. Yeah, just how we can create a bit more continuity in that as an option for us in our businesses. Because going forward, if we can't create that as something that people are gonna use, then how do we combat that bobby scenario? I think the last season just been scared a lot of people,
... around that sexed semen. Me and Amy, we use that in a very high amount. We spend a fair bit of money on that, and we had a very average return on it, and we got a pretty generic email from you guys as a whole. Yeah, I'd just like to see that area of the business worked on, so that we can trust it, and we can use it. Because we wanna be able to use it, but, yeah, just our faith in that as a system is something that we're not gonna use in our business until we can see some change.
Thanks, sir.
Yeah, look, absolutely agree with you. We were very disappointed in the results. We did not see that coming. Of 11 years of providing that service, with, you know, non-return rates, which were fairly consistent, that caught us out of the blue. So we've absolutely looked under every single stone to go, you know, "How can we improve this and make that experience far more consistent?" We've made a lot of changes internally. It was really good to see that the winter performance of the 14,000 inseminations that, you know, qualified for analyzing the performance has returned back to what we would expect, and we'll be absolutely transparent with the performance this spring. We see the sexed semen as a critical tool going forward.
Absolutely critical around being able to breed, heifer replacements from your top cows, is gonna be huge for, cow efficiency, productivity on your farm. We're desperate to get this back on track and working, so rest assured, we are not leaving any stone unturned to get that back up and running for you.
I might just add that, you know, sexed semen has been on the board's agenda for as long as I've been on the board, and the reason that we haven't released it earlier is because we've never been, or until recently, that comfortable with the, with the conception rates, particularly with, with the frozen product. That's why when we were able to start the research and development on fresh, and the results were much better, we had more confidence. As you're probably aware, you know, it has been drip-fed into the, into the system. I, and I'm included, I was affected badly as well, so yeah. Acknowledged, totally acknowledged, but agree that it's, it's a really important thing, really important tool for the future. Really important. Yep.
Yep.
Yep, and globally, it's used really heavily, so to the point that it'd be less than 10% conventional semen used in some markets. But then they don't have the same seasonal calving pattern, which is so critical for us. So yeah, noted. Thank you. Any more questions from online, Maurice? Or one over here. Richard.
Sorry, the bobby calf thing sort of sparked a question for me. Assuming there is a change of government, what is LIC's role in lobbying that new government to reintroduce live export trade?
I'll give you the political answer. We are apolitical, so we have to remain agnostic to these things. Yeah, we can state a case, but there are other organizations which probably have more firepower than we do. I think most of the farmers in the room would acknowledge that actually it was a useful tool, and many of you will have been building your businesses around the export trade. Nevertheless, what other people think often determines what happens, particularly when it's political. Political decisions were made, and unfortunately, the loss of life and all those cattle in South China Sea didn't help....
But certainly, it would solve some problems, maybe around being able to, this is a personal view, but I think if we were able to export weaner beef cross cattle to, say, Australia to feedlot, would be a pretty good option. But, that decision will be made by people beyond us.
Cool, thanks.
Uh, Phil?
David, I don't think you really answered the guy's question about the sexed semen. The risk might be acceptable to you, but is it acceptable to him? So the risk may be acceptable to you, but is it acceptable to us? So what is the performance of that sexed semen trial over the winter mating?
Ninety-five, with the 95% confidence interval, we-- I think we've got it between, geez, I don't have the figures here, about -3.2% to about, I think on average, -4%. I'm looking at Malcolm.
Yep.
Yep.
Range 3.2-5.1.
Yep. Yep. So back to normal ranges. Yeah. Yep, so thank you.
Maurice, did you have a question from online? No. Any other questions from the floor? Did not pick on anyone. And if we're quick, we can get in within an hour of the start of the meeting, so fast meeting is a good meeting. All right, if there's no further business, I'll declare the meeting closed, and just remind everybody that directors are available to talk throughout the year. Just contact them. I'm pleased that the company is in good heart, and things are moving in the right direction, so it's good. Meeting closed. So there are refreshments next door, so just make your way through there. And we've got dinner shortly after that, and guest speaker who's arrived. Thank you, Colin. And take it from there. Thank you.
Thank you very much, everyone.