Right-o. We good to go? Everyone hear me all right? 12:00, the allotted time, so we'll start the meeting. Good afternoon, everyone. I'm Murray King, Chairman of the board of directors at LIC. Thanks for coming along today. I acknowledge that it is a very busy time for everybody, and we didn't know when we set up this meeting that we were gonna be competing with the tractors from Groundswell. So maybe we're missing a few shareholders as a result of that. Nevertheless, really appreciate your attendance here today. Just before we start, there's a couple of procedural matters and housekeeping I just need to cover. This is a physical and virtual meeting.
I think you recall last year we were fully virtual, and the year before we were partially one of each, and prior to that, obviously, we were the normal meeting where everyone attended. I think it works quite well for those of you who are able to tune in from home at this busy time. Couple of housekeeping matters. To vote, you'll need your shareholder number provided by Link Market Services. That is if you haven't already voted. Voting was open earlier and closed a day or two ago and will open again once we commence the meeting and then will conclude at the end of the meeting.
For those of you in the room, if you've not yet voted and you haven't brought your postal vote with you'll need to register for the annual meeting today. If you haven't registered, please see the team outside the door. If you're voting at the meeting today, please indicate your vote on the voting paper supplied, and this will be collected at the end of the meeting. For those of you joining us online, you can vote using the online platform. Please click on the Get a Voting Card button and enter your shareholder number, and I'll cover this in more detail shortly. There's eight resolutions today to be considered, and a poll will be held for each one of those. Resolutions four and six are elections for board of directors and Shareholder Reference Group.
Shareholders in the South Island can be the only ones who vote on resolution four, and shareholders in the Upper North Island can vote on resolution six. We use a first-past-the-post system for the Board of Directors and Shareholder Reference Group. This means that candidates receiving the highest number of votes will be appointed. All shareholders can vote on all other resolutions, so that's one, two, three, five, seven, and eight, and these are ordinary resolutions and require 50% approval. Results will be announced soon after the conclusion of the meeting, and obviously, we will notify the NZX. As you may have realized, this is the first time we've held the director and Shareholder Reference Group meetings at the annual meeting. Normally, they occur at the end of the dairy season.
In order to simplify the process as part of our governance and representation review a couple of years ago, we've aligned it with the annual meeting. 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 button now or at any time during the meeting. These will be collated by the team and answered in the general business section towards the end of the meeting. For those in the room, please raise your hand to ask a question during the general business section and we'll bring a microphone to you. And we may take a few minutes to collate and review these questions at the commencement of the general business session.
We've designed the procedures for today's meeting so that those online have the same opportunity to participate as those in the room. I understand that these meeting formats can cause some complications with voting and asking questions. Before we officially begin the meeting, I'd like to cover a few points regarding using the online platform. For voting, to vote, you will need your shareholder number provided by Link Market Services, and you can vote using the online platform. Please click on the Get a Voting Card button and enter your shareholder number. Voting remains fully confidential. No one on the call will see your vote. For questions, to ask a question using the online platform, please click Ask a Question button, and you'll then enter your shareholder number. We may take a few minutes to collate and review these before the general business.
It's worth noting that your questions will only be visible to myself and the team who will be moderating and answering the questions. For those joining online, if you have any issues about asking questions or voting, please call the phone number on the screen now, which is 800-200-220. If anyone has any items of general business or questions that are of a more technical nature, please ask them now so that our team can get any answers while we progress with the meeting, and general business to be discussed. Are there any questions, any highly technical questions that might require some time to collate? Maybe not. Okay. If you're in the room and asking a question, can you please raise your hand, wait for the microphone, and state your name and direct your questions towards me.
Please wait for the microphone before you start. For those joining online, please comment with your question now so it can be answered, we can answer these during general business. Okay. Notice of meeting has been circulated to all shareholders and is taken as read. With a quorum present, I now declare the meeting open. Firstly, I'd like to extend a warm welcome again to LIC's annual meeting, first time in Palmerston North, I might add, to fellow shareholders, LIC staff, the shareholder reference group. Ian Brown from the Honoraria Committee. Andrea Blackie, I think you're here as well, and the LIC auditors, lawyers, bankers, and advisors. Also joining us today is LIC's Chief Executive, David Chin. For those of you who don't know David, our CFO, David Hazlehurst. Where are you, David? Down the back.
You'll be hearing from him later. LIC's eight directors who I'll introduce now. Ben Dickie from Waverley. If you wanna stand up and so everyone can see you, Ben. Dr. Alison Watters from just down the road, Feilding. Retiring Director, Gray Baldwin. Matt Ross from North Otago.
Hello.
Sophie Haslem, one of our independent directors from Wellington. Tim Gibson, another independent director from Auckland. Also from Auckland, Candace Kinser. Finally, from Northland, Ken Hames. I'd like to take a moment to thank long-serving board member, Gray Baldwin. Gray is stepping down from his role after 10 years serving the co-op. Gray has been an asset to the board, helping to guide us soundly over the last 10 years, providing a wealth of knowledge and expertise in the sector. Gray has always kept farmers and their animals at the forefront of everything he did, and he leaves a strong legacy for years to come. Gray has been an outstanding director, and we've really valued your contribution, Gray. Some Grayisms which have been quite entertaining from time to time.
He's had a degree of levity at times, and he's not shy of challenging the unconventional. I'd also like to take the opportunity to thank former Chief Executive Wayne McNee. Wayne completed his time with LIC late last year. David Chin inherits a strong financial foundation from his predecessor, and I'd like to acknowledge that the strength of this result is partly attributable to Wayne and his dedication to the business. I also just wanna pay mention to a number of Shareholder Reference Group members who are retiring or stepping down. A couple of them had come through from the former Shareholder Council, had been around for a while. Lina Beer. Lina, you're here, I think. Thank you for your contribution.
Your family has had a long association with LIC at a breeding level, and yeah, we wish you all the very best. Bruce Murphy from North Otago also steps down. Bruce was heavily influential in the governance and representation review a few years ago. Christine MacBeth from Nelson always is also retiring. As Chairman, I'm not sure how many proxies, Melanie. A number of proxies. I have apologies from the following shareholder reference group members. Mark Benz, Gerard Clark, Phil Lowe, Christine MacBeth, Johann Van Raat, and also have a farmer apology from Julian Raine. I'll call for any further apologies.
Jill Peterson.
Got that noted. Thank you, Melanie. Any other apologies? If not, I move that those apologies be accepted. Could I have a seconder, please? Thanks, Matt. Here's the agenda for today's meeting, which I'll run through briefly. There it is. I'll cover our business highlights and outlook for the year ahead. David Chin and I will then recap the strategy and present how we're tracking when it comes to delivering on these commitments. I'll then hand over to the CFO, Chief Financial Officer, David Hazlehurst, and he'll present the financial overview and some presentations on spend on research and development. David Chin will then talk about his priorities, including herd improvement, the results some farmers are achieving and the focus on future solutions.
From there, Ian Brown, the chair of our Honoraria Committee, will present the honoraria report, and we'll move into the voting on resolutions. Finally, under general business, there'll be the opportunity for Q&A. I'll now give you an overview of the business highlights over the past year, 2021-2022. The key highlights for this past year were the uptake of premium genetics and the results they're delivering on farm. Outstanding they are indeed. A continued focus on animal health testing and the appointment of our new Chief Executive, David Chin. For the premium AB products, this year our result was driven by increased farmer spend on the premium genetics and herd improvement services. This is just increasing year on year.
Farmer shareholders know that all cows aren't created equal, and they are investing in solutions to breed the very best cows faster. During the year, 71% of fresh semen straws used for breeding replacements were from LIC's premium bull teams. That's 2.1 million straws up from 60% the prior year. An increase of around 300,000 doses, which is impressive. Orders for sexed semen almost doubled from the previous year, exceeding 200,000 straws for the first time. These breeding decisions will serve farmers well into the future to build a more profitable and sustainable dairy sector to help the industry reach its climate goals.
If we move to animal health testing, it's also pleasing to see that farmers are investing more heavily in some of the non-genetic products we offer, such as milk pregnancy testing and Johne's disease tests. LIC commercialized the Johne's disease test in 2015-16 season, and it's now one of our most popular animal health tests and close to 1 million samples tested. That's up 28% from last year. Really strong performance there as farmers realize the importance of testing for Johne's. Overall, the animal health tests were up 21%, and it's a strong and growing part of our business. We're proud of the significant growth we've seen in this area, and it has grown to account for NZD 10 million worth of revenue, so a significant part. The chief executive appointment.
You'll be aware that we signaled last year that Wayne McNee would be standing down. David Chin's appointment as CEO in January was an exciting milestone for us. David's appointment continues a legacy of passionate and experienced people leading our business. David has a natural empathy for people, knows our farmers well, knows the business, having led several strategic key initiatives, including the recent transformation program. Importantly, David was heavily involved in the refinement of LIC's strategy. The implementation of this strategy has been a key focus for the cooperative under David's leadership and will continue for years to come. I'm confident that David's leadership, combined with his deep operational knowledge and passion for delivering value to our farmers, will serve the co-op very well.
Over the next 12 months, we will continue to focus on new and existing research projects with an aim to deliver sustainable advantage to the dairy industry. We expect underlying earnings in the 2022/2023 season to be in the range of NZD 20-26 million. That, of course, is barring any significant or adverse events. This is something that we've initiated over the last few years to actually provide a range of earnings guidance, and I think it's very helpful, certainly from a board's perspective, to have something to hold management to. Delivering on our commitments to farmer shareholders remains a key focus for the current season. I'll give a quick recap on the strategy, then I'll invite David to present to you the delivery against these commitments.
Creating value for our farmers is at the heart of everything we do. This is our refined strategy, and I think it will resonate with farmers. Our refined strategy, announced last year, focuses on building a strong, sustainable cooperative, leading the world in our field, delivering outstanding value to our customers, shareholders, and industry this year and five years and for many years to come. We will create value through a focus on four key areas, our farmers, their animals, data and digital, and innovation. I'd quickly like to cover a few examples from the past year that show our strategy is in action. Sitting in the data and digital and partnership segments, we've partnered with six leading cow wearable technology suppliers to integrate our MINDA herd management system with their systems, meaning farmers no longer have to double handle data.
MINDA continues to evolve, and David will cover this shortly when speaking about measuring our commitments. Sitting across a number of segments in the strategy, including innovation, animal and partnerships, is the methane research program, which has confirmed that bulls' genetics play a role in how much methane they emit. We're in the second year of this program, and this year, methane emissions are being measured from approximately 300 young bulls from LIC and CRV's 2022 sire proving scheme, and that's a significant program of work and very positive, I might add. Genomics, which also aligns to several sections of the strategy, remains a key focus which will enable us to continue delivering value to our farmers.
The board remains 100% committed to genomics, and this is reflected in the investment in technology over the past 12 years. We continue to focus on the three commitments made in our strategy. These include operational excellence, faster genetic improvement, and software reliability and performance. Our farmers rightly ask how they can hold us accountable for delivering on the commitments, and this has been our priority for the year. I'll invite David to come forward and present our progress towards delivering on achievements. Do you, David?
Thank you very much, Murray, and welcome everyone to the AGM. First of all, I'd like to say that delivering on our commitments is really important to us. We've internally set up a governance group to develop measures and targets for each of these commitments and to monitor the progress. These measurements will provide our business with clear goals and expectations for what delivering on these commitments actually looks like. They're not about perfection, they're about continual improvement and doing better and better each year. We're really pleased to report that we've achieved the majority of our targets and exceeded in some areas. We remain focused on meeting the targets that we have not yet achieved and will continue to work towards achieving those in the coming year.
In the interest of time, I won't go over all of the results today, but I will show everyone an example of each of these commitments, how we're measuring them, and how we're explaining them and communicating them. The full suite of commitments and our progress against them is outlined in our latest sustainability report, which is on the website. I do encourage everyone to have a visit the website and have a look at that. Very interesting document. For operational excellence. We are committed to getting the basics right for our farmers on time, every time. One of the measurements of this commitment is for herd testing and providing a herd testing result for 99.9% of all cows within 72 hours, and we're pleased to report that we've achieved this target for the 2022/2021 year.
With over 11 million samples tested, this is a great result, and congratulations to our herd test team for delivering that. Another measurement of this commitment was to achieve a five-week turnaround time for GeneMark, and we've only achieved 70% of that goal. We recognize that we must improve on this number and deliver on this commitment, and the team at GeneMark and the diagnostics lab are dedicated to doing that. For faster rates of genetic gain, we are committed to having your back when it comes to helping farmers meet the environmental challenges they face, and in particular, animal efficiency, nitrogen, and methane mitigation. One of the measurements of this commitment is to achieve a 15 BW increase per annum of our Premier Sires bull teams. Each year, the team improves 15 BW on the team last year.
Very pleasing to report that we've achieved 15 BW points on last year's team. For software performance and reliability, we're committed to being better at delivering our software to farmers and renew our commitment to continuous improvement and transparency around delivery of new features. One of the measurements of this commitment was to deliver all of the features on our published MINDA roadmap. In the end, we released 98% of these features, meaning we haven't fully achieved on this target and will be a focus for the year ahead to get 100% of these features and roadmaps delivered. This is just a snapshot of the progress we have made this year, and we encourage everyone to visit the website to view all of the metrics and measurements and how we've achieved in their entirety.
While these metrics have been recognized as important to farmers, and these targets are where we believe we can improve and make a difference, we know that needs will change. What we are looking at doing is tracking the commitments and various needs of our farmers, and we'll be updating these targets and reviewing which are the things to measure as time progresses. I'll now pass on to David Hazlehurst, our CFO, to reflect on our performance in the financial year for 21/22. David.
Thank you, David. We are proud to report another strong financial result this year. Delivering value for our farmers is at the center of everything that we do, and it's results like this that enable us to do just that through herd improvement products and services, a solid dividend, and importantly, the right R&D investment to keep our farmers' herds profitable and sustainable into the future. There are some specific numbers I'd first like to cover off. This year, we reported net profit after tax at NZD 26.7 million. This was up 16.5% over the last year. A dividend of NZD 26.2 million was also distributed of NZD 0.1843 per share. Underlying earnings of NZD 25.7 million, this was up 15.3% also over last year.
This year, as Murray said, expected underlying earnings in the range of NZD 20 million-NZD 26 million. We also have a strong balance sheet with no debt at year-end and a total asset base of NZD 385.6 million, up 1.2%. Total revenue from continued operations was NZD 263.2 million, up 5.7%. Several key on-farm drivers are impacting the revenue uplift, demonstrating continued farmer confidence in LIC's products and services. Some of these products and services include LIC's premium genetics, herd testing, GeneMark, and Johne's, as well as other animal health tests. For capital approvals, this demonstrates the area where we are investing into the business. Just like to cover off a few examples of where we're investing in each of the areas.
37% of our capital spend is on our data and digital assets. This includes investments into technology and data, including our MINDA projects, as well as software and server upgrades. We will continue to invest in this category into the future. 33% of the spend goes into our buildings. Some noteworthy investments here include upgrades to our Shannon building, where the majority of our semen processing and dispatch takes place. As well as this, we have had an upgrade to our Invercargill herd testing depot. These are both projects that will continue to deliver value to our farmer shareholders. 24% of the spend is on vehicle and plant and equipment. This includes investments into our herd testing fleet and the ongoing transition of our vehicle fleet to electric vehicles wherever practical.
We are replacing approximately 10 fuel-based vehicles with EVs each year, and currently, approximately 26% of our vehicle fleet is either hybrid or fully EV. In addition to this in this category, we also include a significant investment in new equipment to increase our herd testing capacity in the South Island. Investments in R&D was NZD 18.2 million this year, 6.9% of our revenue base, up from NZD 17.1 million over the prior year, maintaining our position as one of the largest private investors in R&D. Murray has touched on some of the current R&D programs, including animal health and genomics, and David will cover some of the future-focused solutions, too, including our slick breeding program and our methane research program.
I just wanted to touch on some of the R&D projects that we have commercialized that are now being delivering value on-farm. Over the last 10 years, we have invested over NZD 150 million into R&D projects. This past year has seen some particularly exciting findings. Four key projects are highlighted here on the page, and I will give you an update on a couple of them. Firstly, our GeneMark. Knowing which cow gave birth to which calf in peak calving can be difficult and prone to error. Through R&D, LIC scientists developed a solution. Using a small tissue sample from the animal's ear, our GeneMark service uses DNA technology to match calves to their parents, ensuring farmers retain their best calves that will grow into highly efficient milk producers.
Approximately 550,000 animals were tested for parentage this past year, and 3.88 million since 2012. In 2021, LIC scientists discovered six genetic variants that impact animal health. We estimate that these variants could be worth up to NZD 10 million in lost production each year across the national dairy herd. GeneMark allows farmers to screen for those variants free of charge, so they can be informed of such affected animals in their herd. Secondly, genomics. Having access to young, genetically superior bulls to build the next generation of dairy cows is key to increasing the herd's production efficiency. Traditionally, it has been difficult to get an accurate prediction of their performance at a young age.
LIC scientists developed a process utilizing genomic technology, adding a young bull's DNA into its evaluation to provide a much earlier, reliable prediction of the offspring it'll produce. This ultimately gives farmers access to the latest elite bulls for artificial breeding at two years of age instead of five years of age, accelerating improvement. We've genotyped 250,000 animals for genomic evaluation, and we are achieving high rates of genetic gain, contributing significantly to the industry each year. I'll now pass to David, who will cover off these rates and more on the impact of genomics in his address. Thank you.
Thank you very much, David. Just let me start by saying it is great to be here with you all today. Very fortunate. Over the last 15 years, I've had the opportunity to meet many of you. I came to this role really excited to lead a company which I believe is so critical to our dairy industry's future success, as well as our country's future success, and also to lead a team of truly fantastic and dedicated people. Today, it's a true pleasure for me to reflect on what we've achieved this year as a cooperative and to look and see what's next. As mentioned previously, we have made some commitments to our farmers in areas that deliver value to them, and as the Chief Executive, I'm absolutely focused on making sure we meet these commitments.
I believe that breeding the best cows and breeding them faster is key to unlocking value and helping farmers meet the challenges both of today and tomorrow to ensure that our industry is both profitable and sustainable. Herd improvement is what we do at LIC, and we've already heard today that farmers are making solid gains, and I'm committed absolutely to continuing that process. Farmers know that all cows aren't created equal, and the dairy industry needs to continue to evolve for climate and because of it. The production efficiency of the national herd is key to this. Not only do farmers want to be more efficient and sustainable, our consumers expect it. They expect a more sustainable approach to farming, so we must continue to improve our environmental credentials, and we're proud at LIC to be part of this solution.
We provide farmers with precision genetics and the technology and the tools they need to improve their herds, and we're amplifying this through genomic science to deliver results at a faster rate. Our full suite of products is supporting farms to be more profitable and sustainable. The support, the one-on-one support they receive from our AgriManager team, ensures that they have access to the best combination of solutions for their particular situation. Our solutions work and farmers value them, but we are continuously working to see how we can improve the performance of their herds. If you'd like more detail on this and our herd improvement tools, please refer to our sustainability report. 'Cause at the heart of our commitment to delivering faster genetic improvement is represented in these tables here.
This year, our team investigated the full spectrum of MINDA herds in search of the best cows and whether there's a clear correlation between Breeding Worth and milk production efficiency. This analysis reaffirms that the best cows with high BW are more efficient at turning feed into milk. They produce more per unit of live weight, and they are more emissions efficient. You can see here that the best cows are generating 502 kilograms of milk solids, and this is the weighted average of the top quarter-quartiles across all three breeds. If we're going to help our sector meet its environmental goals, New Zealand farmers must breed more of these highly efficient cows that sit at the top and fewer of those that sit at the bottom.
We've made great progress over the years, but to continue this trajectory, we need to sharpen our focus on breeding the best cows. Today, the best cows are producing 502 kilograms of milk solids, compared with an average of 188 kilograms of milk solids in 1950. This is a combination of improved farm management, feeding, and improved genetics. Considering that process, supercharged by the introduction of genomics, it is incredible to think what genetic gains we could achieve by 2030. If we accelerate the rate of genetic gain and only breed the best cows, we can absolutely increase cow production relative to live weight. We can maintain total milk production from fewer cows, and we can reduce agricultural emissions. Now, of course, at an individual farm level, there can be many variable factors.
Can you dare to believe that by 2030, your whole herd could be performing at the level of your top 25% of cows today? Farmers who utilize the cooperative's breeding program have almost doubled the speed of improvement in their herds over the last decade. They are breeding better cows faster, and genomics is a key contributor to this. Over the past 30 years, we've invested significantly in genomics, and alongside farmers' herd management decisions, it has played a key role in the faster rates of genetic improvement we're seeing. The increased utilization of these technologies in our breeding program and increased farmer uptake of young genomic dairy selected sires has gone hand-in-hand with higher rates of increased genetic gain in farmers' herds.
The second part of this equation is getting the best from the best cows, and we do this with a mix of solutions around sexed semen, herd testing, parentage verification, as well as evaluating young heifers on our genomic tools. These tools enable farmers to confidently select their highest genetic merit animals, adding precision to the farmers' breeding programs and breeding high-quality replacement animals. We're also focused on the future as well. As David Hazlehurst mentioned, we have invested heavily into R&D, and we do this so we can continue to deliver to our farmers with better genetics. I'd just like to talk you through a couple of these research programs that are showing lots of promise. In terms of methane research, we are in our second year of research into producing low-methane animals and investigating the links between the bull's genetics and its methane emissions.
The research measures methane emissions from young bulls set to sire the next generation of New Zealand dairy cows, and its aim is to provide Kiwi dairy farmers with the ability to breed low methane-emitting cows from low methane-emitting bulls. Over the first year of our trial, which scientists measured the output per unit of feed eaten, we have found that bulls' genetics do indeed play a role in how much methane is emitted. We have identified elite bulls that produce 15%-20% less methane than average once we account for feed intakes. This is incredibly promising for our animals' impact on the environment, but we are equally focused on ensuring our animals are resilient to climate change as well.
With our research that we're doing into slick gene and heat-tolerant cows, we are one step closer to enabling farmers to breed more heat-tolerant animals. Our trials have found that dairy cows with the slick gene are less affected by heat stress compared to their non-slick counterparts. The research tells us that the breeding program continues to progress, and if the breeding program continues to progress as expected, we'll have a commercial product to breed heat-tolerant cows by 2029. This slick gene research is complemented by our genomics. Instead of requiring years of back-crossing and progeny testing, with genomics, we can generate animals on the ground, evaluate them quickly, and utilize them once they reach maturity.
The updates this year demonstrate how all of LIC's products and services and R&D investments work together to ensure we are breeding world-class dairy cows and ensuring that we continue to have a world-class dairy industry. Farmers and the industry are aligned on the importance of improving the efficiency of our national herd. The results that some farmers are achieving show that if we sharpen our focus on herd improvement, we can continue to have the world's most efficient dairy herd at converting pasture into milk solids. High-producing emission-efficient cows aren't just a hope of the future. They exist in the national herd today, and we are well within reach for every dairy farmer. We simply need more of them. To conclude, I'd like to take this opportunity to thank you all for attending.
These results that I've talked about today are made possible by our incredibly dedicated team who are committed to maintaining New Zealand's position as one of the world's most efficient dairy industries. I'd like to thank Murray and the board for their hard work and support. Finally, I'd like to thank all of the staff who work at LIC for all their hard work over the past year, and I look forward to working together with everyone to delivering another great year of results. I'll now hand over to Ian Brown, Chair of the Honoraria Committee, to present the Honoraria report. Ian.
Thank you, David. Mr. Chairman, and good afternoon. Ladies and gentlemen, in accordance with Clause 21.2 of the LIC constitution, your Honoraria Committee is made up of between two and four farmer shareholders who are elected by the shareholders. The current committee members are Shirley Trumper, who's with us today, Gordon Glentworth, Scott Montgomery, and myself. The role of the committee is to consider and recommend to shareholders the form and amount of the remuneration of directors and Shareholder Reference Group members. The committee met formally on three occasions in order to perform its role this year. It's important to note that the Honoraria Committee undertakes its role on behalf of the shareholders. It's independent of LIC, the board, and the Shareholder Reference Group.
In arriving at its 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 Institute of Directors in New Zealand, consultation with the board and shareholder reference group chairs, as well as the committee's own knowledge and judgment of the wider LIC operating environment. The survey I referred to sizes approximately 400 public and private companies and encompasses responses from some 2,500 individual directors. Although the dataset is wide-ranging, the Honoraria Committee looks closely at comparable agricultural organizations within that dataset. The Honoraria Committee acknowledges the importance of LIC maintaining a high caliber of directors on its board and members of the shareholder reference group.
With the exception of the 2020 year, which was impacted by COVID, the Honoraria Committee have recommended that the honoraria for the board increase slightly each year, recognizing the time and commitment required as a director of LIC and to maintain relative parity with similar organizations. 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. The committee is aware of the workload and compliance obligations of the LIC board, given its listing on the NZX. The view of the committee in its considerations is that the honoraria currently paid to the board, given it was last increased in 2018 for the chair and 2019 for the directors, is no longer sufficient to maintain relative parity with similar organizations.
It has the potential to put pressure on LIC's ability to attract good governors. The committee has considered and continues its recommendation of a maximum NZD 60,000 discretionary pool be made available to the board, specifically to compensate directors for extra duties, skills, and roles, including committee chairs. This year, the board has used approximately NZD 47,000 of that pool. The committee recommends for this year an increase of 6.8% for the chair, currently NZD 123,600 to NZD 132,000, and 9.26% for directors, who are currently NZD 54,000, increasing to NZD 59,000. An overall increase to the honoraria of the board of 7.86%, resulting in total remuneration of NZD 664,000. The shareholder reference group.
The role of the reference group differs from that of the board, and 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 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 with which to compare. The Shareholder Reference Group's current remuneration was approved by the shareholders at last year's AGM, acknowledging the change in its role and increased workload. Noting this, the Honoraria Committee recommends an adjustment to the 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 recommends the following increases to the members of the shareholder reference group. The chair, currently NZD 35,000, increasing to NZD 36,500, plus 4.29%. The deputy chair, currently 16,000, goes to 17,000, an increase of 6%. Members, 12,000- 2,600, a 5% increase. 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 320 increases to NZD 350. The committee recommends an increase to the current level of shareholder reference group remuneration to a total pool of NZD 179,500, and increase the daily allowance to NZD 350.
I would like to close by thanking Melanie Tonkin for her knowledge, effort, and support as secretary of the Honoraria Committee. I would also like to acknowledge and thank my fellow members for their contribution to the efforts on your behalf over the year. Thank you. Thank you, Mr. Chairman.
Thank you, Ian. Righto. We'll move into the resolutions part of the meeting. There are eight resolutions to be considered today, as I already said earlier, and a poll will be taken on each one of those. Resolutions four and six are elections for board of directors and Shareholder Reference Group, as stated earlier. Only shareholders of the South Island can vote on resolution four because that is for a director for the South Island. Only shareholders in the Upper North Island can vote on resolution six. As stated, we use a first-past-the-post voting 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 other resolutions, so that being one, two, three, five, seven, and eight.
These ordinary resolutions then require 50% approval. The results will be announced soon after the conclusion of the meeting once we've been able to assemble those votes. Resolution one is to receive and consider the LIC Honoraria Committee's recommendation as to directors remuneration, and if thought fit to resolve by way of ordinary resolution to approve the total remuneration to all 9 directors to be NZD 664,000 per annum, as outlined just now by Ian Brown. Can I have a mover for that, please? Ian, thank you.
Ian.
a seconder?
Shirley.
Thank you, Shirley. Those participating in the vote, if you could mark your voting papers now, if you haven't already done so. The breakdown should appear on the screen. There it is, for the current and what's recommended. That increase, bear in mind, there hasn't been one for three-four years, given COVID and other things. All right, we'll move to resolution two, which is to receive and consider the LIC Honoraria Committee's recommendation as to the shareholder reference group's remuneration, and if thought fit to resolve by way of ordinary resolution to approve the total remuneration to all shareholder reference group members being increased from NZD 171,000 to NZD 179,500. A mover for that, please. Ian, thank you.
A seconder? Thank you, Shirley. Those participating in the vote, if you could. Actually, I should have asked for any discussion before the last one. Was there any discussion on the director's resolution remuneration? An oversight on my part, I apologize. We've moved on. It's been passed. What's been voted on. All right. We'll move to the shareholder reference group remuneration. We've got a mover and a seconder. Is there any discussion on the shareholder reference group recommendation? Would appear not. There's the breakdown if you would mark your voting papers, please. We move to resolution three. To consider and, if thought fit, to resolve by way of ordinary resolution to reappoint the 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 its remuneration.
I'm happy to move that resolution. Can I have a seconder, please? Thank you, Ben. If you would be kind enough to mark your voting papers if you haven't already done so. Looks like everyone has voted largely. Moving to resolution four. To consider and, if thought fit, to elect one candidate representing the South Island as an elected director to the board of directors with effect from the conclusion of this annual meeting. Note that only shareholders in the South Island are eligible to vote on this resolution. I'll remind you that this is being brought about partly to balance the number of directors in both the North and South as a result of the governance and representation review that we conducted a couple of years ago.
I'm happy to move that resolution, and if I can have a seconder, please. Thanks, Ken.
I second you.
Thank you. Moved and seconded. Those participating in the vote, and I remind you, can only be South Islanders, can mark your voting papers, please. Or online. The candidates, I think, are going to show on the screen. There they are. Siobhan O'Malley from Westland, Corrigan Sowman from Tasman, and Victoria Trayner from Canterbury. I might just add, it's really great to have a good caliber of director candidates coming through and really appreciate that. We'll move through to resolution five. To consider and, if thought fit, to resolve by way of ordinary resolution to ratify the reappointment of Tim Gibson as appointed director for a term expiring at the conclusion of the third annual meeting following this annual meeting, so approximately three years. We say approximately because we can never be exactly sure when the annual meeting will occur.
I'd offer, Tim, your opportunity to speak, if you'd like to say a few words to the audience.
How am I gonna get seen on video?
Well, we'll see how good your presentation is. It's not often we get to put the independent directors on the stage.
Oh, thank you. Actually,
The floor is yours.
I notice I might be wearing the same shirt as when that photograph was taken. Look, it's a real privilege to be an independent director of LIC. It's a company which is so important to dairy farmers and therefore to New Zealand. Part of the privilege for me is being able to work with colleagues on the board, the executive, and in the wider LIC team who are incredibly professional and dedicated to ensuring this company delivers on its promises. Thank you for the opportunity to serve, and Gray, we will miss you.
Thanks, Tim. Tim is effectively the elder statesman of the board, offering wise and sage advice from the wide range of business experience that he's had globally. He's a very valued contributor to the board as one of our three independents. I'm more than happy to move the resolution. Could I ask for a seconder, please?
I'm delighted to second it.
Thank you, Alison. So those voting, if you could make your vote now, that would be appreciated. We then move to resolution six, which is to consider, and have thought fit to elect two candidates from the Upper North Island to the Shareholder Reference Group with effect from the conclusion of this annual meeting. Note that only shareholders in the Upper North Island are eligible to vote on this resolution. So I'm happy to move that resolution. If I can have a seconder. Thank you, Nathan. With a mover and seconder, so if those voting could mark their voting papers accordingly, that would be appreciated. While you're doing that, I think you can see those candidates. There they are. Mark Benz, who is an incumbent, Alicia Broomfield, and Murray Gow.
Once again, it's good to see good caliber of interested and enthusiastic people come. I was gonna say young farmers, but people coming through to LIC who have a genuine interest in what we do. Righto, resolution seven is to consider and have thought fit to resolve by way of ordinary resolution to approve the re-election of Scott Montgomery to the Honoraria Committee with effect from the conclusion of this annual meeting. I'm happy to move that resolution. If I can have a seconder. Ian, thank you. And if you'd be so kind as to make your vote now. In a similar vein, there's Scott there on the screen.
Resolution eight of a similar vein, to consider and if thought fit to resolve by way of ordinary resolution to approve the re-election of Shirley Trumper to the Honoraria Committee with effect from the conclusion of this annual meeting. Happy to move that resolution. If I can have a second. Thank you, Ian. Seconded by Ian Brown. If you'd be good enough to mark your voting papers now. Shirley's present. There you are, Shirley. Yep. Okay. While that's being, those votes are being counted, do we need to take a short break to compile any of the questions? We do. We'll just take a short break while we just compile the questions that are coming through online. Thank you. Talk amongst yourselves for a moment. Don't go too far.
While I go, that got them. We'll move into general business. Are there any questions from the floor of general business? If you just wait for the microphone to circulate would be appreciated. Please state your name and question. Catherine's got the mic. You haven't got a question, Catherine? No? I believe we've got a couple of questions online. While you're thinking about your questions, we'll take one. Maurice?
The first one we've got a couple of days ago. "I currently use AfiCollar collars. Does MINDA integrate with them?
Thank you, Maurice. I'll answer that one. Yes, MINDA does integrate with Afi, and I'm pleased to say that there's a number of collar wearable providers that have API interfaces with MINDA, Afi, the Allflex collars via Protrack, CowManager, Datamars Tru-Test, Snaptech, and Waikato Milking Systems. Yeah, absolutely, we're committed to allowing that data to interoperate with MINDA and look forward to having other collar manufacturers join and use that API.
If you're online and wanting to ask a question, just I remind you to use the Ask a Question button in front of you.
The next one is from Graeme Edwards, and it says, "A result of breeding from better cows and the use of sexed semen is what to do with other calves. Bobby calf collection is fragile and has an uncertain future. LIC did have an arrangement now discontinued with First Light, and there has been talk of other beef breed calf buyback contracts. How does LIC see this space?
Yeah, thank you, and thank you for that question, Graham. Absolutely, we're actively looking in that space to support any third party who has dairy beef solutions that we can help offer to our farmers. As LIC, we're still committed absolutely to developing dairy-beef programs and helping our farmers solve those issues.
It looks like the final question also from Graeme: "Capital expenditure has been high in LIC in recent years. What proportion is maintenance capital, and how much is discretionary and intended to add value?
Yeah, I might pass that one to.
The money man
David Hazlehurst, our CFO, to answer.
Yeah, thanks for the question. The split towards value add from maintenance is approximately 65%-70%. I expect that we'll continue to challenge this percentage, particularly as we move towards more value-added type capital projects, particularly to drive our strategy towards innovation and data and digital, with an absolute clear focus on our animal and also our farmers. Yeah, it's about 65% or 70%, but we've certainly got a big program of work in front of us, towards those key strategic areas. Thanks for the question.
Are there any other questions online? No more have come through. Are there any more questions from the floor? Do I have to pick somebody? Clarence, just grab the microphone if you don't mind, and then, if you wouldn't mind stating your name would be great.
Yeah. My name's Clarence Timberly. Just a question on. It's a sort of question in Māoridom and those sort of things. Has the board sort of detailed their relationship towards name changes and those sort of things? You know, a lot of companies are getting a lot of pressure now from the changes. Where's LIC? Have they discussed that?
As far as Māori culture and integration to a limited extent. What I would say is that we are highly aware of how significant Māori agri business is and emerging and growing. We do know there's a number of significant customers of LIC from the Ngāi Tahu and Tainui, et cetera, who have large farming enterprises, which we work closely with. As far as changing names and things, we haven't gone quite that far as yet. I'm not sure it's a delicate issue or situation, and you've got to be careful that it's done with due respect. Any other questions there?
The final question here is: How's the low methane breeding program going?
Do you want me to pass that?
Do you want to do it?
All right.
As I outlined in the presentation, it's actually looking very, very promising. We found genetic variation within the elite bulls. This year we're partnering with Pāmu to generate heifers from those bulls, from the very low methane bulls and a cohort from the very high-producing ones. We aim to produce 400 heifers and measure the methane outputs of the daughters. We'll be doing that over the next couple of years.
It's a very topical subject, I might add, and one which I think has actually got some future, and I'm really pleased that we actually started that program a few years ago. We've got some runs on the board. Early days, of course. Any further questions from anybody? If not, we'll conclude the meeting. I'm really pleased to see a turnout. Always like to see more. Annual meetings do tend to be a little bit bland and not a big draw card. I suspect we're competing with Groundswell on this occasion. Nevertheless, good to see a different part of the country and offer that opportunity to farmers in the Manawatū. I'll remind you all that directors are available throughout the year to answer any questions or queries.
We operate in a reasonably transparent way, and we certainly respect and appreciate feedback from fellow farmers on matters around the company. It's a good company. It's a good board full of good people and doing good things. Really appreciate that and the support of everybody. Thanks once again for attending the meeting, and with that, I'll declare the meeting closed. There will be a short break, I guess, while I think there's a cup of tea out the back if anyone wants it. In about 10 minutes, we will then be able to compile the votes, and we'll be able to declare the results. At the same time, we declare it to the NZX. If you stick around, you will hear the outcome.
If you don't stick around, the results will be put on the website, pretty well straight away. Certainly, it'll be there tomorrow. All right. Thank you for your attendance. Have a good day. All the best for the rest of the season.