Good afternoon, everybody. My name is Corrigan Sowman, and I am your Board Chair. I would like to welcome you to this year's AGM and to thank you for being here, whether you are joining us in person or you are tuning in online. Joining me this afternoon is our CE, David Chin, and our CFO, Brent Mealings. I would also like to acknowledge we have seven directors scattered around the audience this afternoon, and to note Sophie Haslem, who has joined us online this afternoon. Sophie is our Independent Director and Chair of Audit and Risk, but unfortunately, Wellington Airport hasn't cooperated with Sophie, and she was unable to make it today. Can I also acknowledge Ben Smith , our Chair of the SRG, and your SRG members here in the audience today.
I would also just like to make a special acknowledgement and thank you to Duncan Coull today. Duncan is stepping down from our board after a three-year tenure at the conclusion of the AGM. Thank you very much, Duncan, for your work and commitment to the cooperative. I also would like to acknowledge our retiring SRG members, Aleisha Broomfield, who has been with us for four years. Wherever you are, thanks very much. Phil Lowe, who has been with us for seven, and Dan Joho, who has been with us for three. If I could just now go to a list of apologies for this afternoon. Dan, as I mentioned, is an apology, who had to head away.
I would also just like to note and apologize our Honoraria Committee and Shirley Trumper, our Chair, who was unable to fly to be here, so we are joined by Gordon Glentworth, wherever you are. Thank you, Gordon, for being here with us today. Apologies to Ellen Bartlett and also George Moss from the Honoraria Committee who couldn't join. I will move on those apologies. Just looking for a seconder. Thanks, Tony. Firstly, just a few housekeeping matters to cover off. If you are joining us online, you should see this screen. Down on the bottom left, you will see the voting button, and on the right is where you can type any questions, and there will be time for a Q&A at the end of the meeting.
If you are joining us in the room today, the bathrooms can be found out the door and to your right, and in the case of an emergency, please make your way to the entrance just out here via the reception and into the car park. Also, just note, cell phones for anyone who has got those, could you please turn those onto silent. The notice of the annual meeting today for LIC shareholders was given on 31 of July 2026, setting out the business for this meeting. It is an opportunity for LIC shareholders to come together and review the financial statements and the performance for the last financial year, to approve remuneration arrangements for our auditors, our SRG, and our directors, and to address the formal elections for directors and SRG members, and then to address any general business relating to performance and the future of our company.
There will be an opportunity to ask relevant questions related to the company's performance and future after the formal resolutions and general business near the end of the meeting. I will just note at this point that there will be a roving microphone available at that point. With the microphone, it is really important that you speak into it because those online can then hear the question. Just before we get underway, I would just like to have a quick look through our agenda. I am going to give some opening remarks today. I will then be welcoming Brent to the stage to go through our financial performance, followed by David to take a strategic outlook at the business. I will then invite Gordon to the stage for the Honoraria report, followed by our meeting resolutions, and then finish with general business.
Before Brent takes you through the numbers, I wanted to spend a few minutes on what your cooperative has been investing in and why. Because a cooperative's balance sheet is more than just our financial position. It is ultimately a story about how collectively we leverage to do things for you that no individual farmer could or would choose to do alone. Ultimately, it is investing in the long game. The cows you mate this season produce calves next winter. Those heifers are mated the following year. They calve down and enter the herd three years after your original decision was made, and you do not see the full results until they have finished their first lactation. That is a long wait for a return, but no one here would stop mating because the payback is three years out.
You do it because it compounds and because today's herd is the product of decisions made by the farmers who came before us. Your board thinks much the same way about capital. The investments we make in genomics, in our laboratories, in our technology, they are decisions where the money goes out now and the value lands over the years to come, not just in the next few quarters. That is the discipline of a cooperative that intends to be here for the next generation of farmers, not just for this one. I think genomics is one of the clearest examples of this. We have invested significantly in building out the genomic platform, the back-end IT infrastructure that runs it, the laboratory capacity behind it, and the products that put it within reach of every farmer rather than just a few.
There was a really critical decision here around price. We brought the cost of an off-peak genomic evaluation down from NZD 50 to NZD 20 for dams and NZD 31.75 for young stock. That was a deliberate choice to leave more value behind the farm gate. When the board approved the consolidated GeneMark Genomics product, the business case actually had a negative net present value for LIC if you looked at it on a standalone basis. However, we approved it because the value to farmers and to the wider sector was very compelling. To put the old barrier in perspective, profiling every dam in a 500-cow herd used to cost more than NZD 11,000, and that limited uptake to a few. Now this product is available to the many. The response from you has been well ahead of what we expected.
New Zealand is now at the forefront of farmer participation and genotype collection anywhere in the world where it is not subsidized by a government. Our farmers are doing this by choice. We now hold over 2 million genotypes in our reference population, and that is growing at half a million a year. That is a huge asset, and it becomes more valuable over time because as those animals start milking, their production data flows back in and predictions get sharper. That is the compounding effect. The investment we made three and four years ago is paying you back now, and the investment we are making today will pay the farmers that come after us. There are three sources of value for you in the cooperative. The first one is more accurate pedigrees. You know which calf came from which cow.
The second is a much better estimate of genetic potential. Parent verification alone gives reliability of 25%-30%. Add the animal's own genotype, and that lifts to 50%-60%. That is the difference between guessing which heifers to keep and actually knowing. The third and more powerful is our genomic selection tool, which means the cooperative can select better bulls at a younger age and put them in the teams you use and be more competitive. The rate of genetic gain now tells that story. Through 2014- 2016, we were averaging around 16 BW a year. From 2021- 2025, that had lifted to around 24 BW per year. That's a 50% increase in the rate of genetic gain over the last decade through the use of genomics in bull selection. That value of that lands on farm.
Across the national herd, the 50% increase is in the order of NZD 200 million per annum to the sector. Investing in the science is one half of it. Delivering it, however, to you reliably is the other half. This part of the investment story does not make headlines, but I suspect it is part that you care about the most, and I know it is what you expect of a cooperative. It is one thing to collect 2 million genotypes, but it's another thing entirely to get the results back to you as a farmer quickly. Back in 2021, we processed nearly 400,000 samples. Turnaround time was six weeks, and we were hitting our own turnaround target only 60% of that time. Now, in 2025, we processed 640,000 samples.
That's a 61% increase in volume, and over that same period, turnaround time came down from six to four weeks, and our achievement against target went from 60% to 94%. That combination matters. We took on 61% more work, and we became faster and more reliable at the same time. That's a real credit to the operations team and also reflects the investment we made upfront. We did this because we know it matters on farm. A genomic result that is late or uncertain makes culling and retention calls harder. If you want to sell your tail-end surplus heifers like me, you know you need that information before weaning. Two weeks off the turnaround is two weeks of decision-making returned to you right in the busiest part of the year.
And 94% reliability means you can plan around us, and that is what we mean when we say operational excellence. I would just like to take a moment to reflect on where we have come from. This sits squarely against the commitments we made to you in our previous strategy work, operational excellence, faster genetic improvement, and software reliability and performance. Operational excellence is the first of those for a reason. It is getting the basics right and delivering for you on time, every time. These are numbers we are, sorry, these are numbers are us being held accountable to that. When you look at these slides together, that is a pattern for how your board chooses to invest. Some of it shows up in short-term profit, and Brent will talk through those numbers shortly, and some of it shows up as better value inside your own farming business.
That is only possible because your cooperative has a strong balance sheet, and no term debt. That strength is what lets us invest through the cycle and still pay a consistent dividend while we do it. I just want to talk you through our investment in building a digital and agri-ecosystem. The investments that I have just described in genomics and in our breeding scheme are investments in what your cooperative does for you directly. This one is slightly different, and it is worth pausing on because it is one of the more consequential decisions your board has made. We have built out the MINDA APIs, and in plain language, that means that we have opened MINDA up so that other companies' technology can talk to it, and data can flow both ways, out to them and back to your herd records.
If you are like me and you are running collars or perhaps Gallagher weigh systems, or you have got drafting gates, you will already be living this. Live weights can come off the scales and land in MINDA without you touching a keyboard. A collar alert can populate a MINDA group and draft the cow at the gate. Animal health treatments now flow through to your processor for compliance. Before we did this, farmers were drowning in admin and trying to get a bit of information from this one place to another. That is time back in the middle of mating, in the middle of calving, and so that is not a small thing. Three seasons ago, around 4% of our herds were sharing data through these sorts of connections. Today, around 70% of MINDA herds are sharing data with more than 9,100 connections. There are now around 20 businesses connected in.
These are collar companies, weighing companies, automation companies, farm software providers, milk processors, and sector organizations. Some of them are large international firms, but some of them are small New Zealand agritech businesses trying to get a start. Every one of them exists to help a New Zealand dairy farmer run a better farm. If they succeed, our farmers do better. If our farmers do better, this cooperative does better. David will pick up the technology backbone in his outlook and explain what we are investing in next to keep it running and to keep it secure. I have chosen just to touch on three examples of strategic investments which support our belief in being a generational cooperative. There are a number of others which I do not have time to profile today.
But you can be assured your board and leadership team have this long-term ambition when we invest your precious capital. Sure, we want to deliver immediate gains on farm in the vat, but we also know the power of the cooperative's investments are those that compound through time. Now it's my pleasure to introduce Brent Mealings, our CFO, to help explain the last 12 months of financial performance. Thank you, Brent.
Thank you, Corrigan. Good afternoon, everybody. Corrigan has taken you through what the cooperative has been investing in and why the board is comfortable in doing it. My job is to show you what that looked like in the financial results for FY 2026, identifying the highlights as well as some of the challenges. The 2026 financial year represented another solid result for the cooperative. With the maintenance of LIC's strong balance sheet with no term debt, the directors had confidence in declaring a dividend at 80% of underlying earnings, alongside an intention to further invest capital into significant initiatives this financial year, including LIC's customer-facing systems, a new diagnostics lab at Newstead campus, and further material investments into further securing our IT systems. Net profit after tax was down 30% compared to last year, primarily due to our investment decision to replace our aging enterprise systems.
The cost to replace our enterprise systems are expensed as incurred rather than capitalized and amortized over future periods. The net profit after tax reduction compared to last year was also due to a smaller relative increase in the bull valuation. The increase in assets is driven by a positive bull team valuation change, albeit smaller than the previous year, and continued investments into other productive assets, including farm software products. LIC's underlying earnings were similar to last year at NZD 21.8 million, being 7.2% return on capital. Although revenue increased by 6.7%, mostly driven by our New Zealand genetics and testing businesses, our underlying earnings result was flat, and this was primarily due to an increase in R&D spend covering our breeding scheme and genomic product assets that supported the uplift in genomics testing.
Our underlying earnings compared to last year was further impacted by a conscious decision to focus resources on improving internal systems rather than further capital software development work. The co-op will continue to focus on delivering consistent financial results to maintain resilience through different stages of the commodity cycle. The strength of underlying cash generation and the balance sheet enables the reinvestment into the business, into technology enablement, and R&D. Balance sheet strength and cash generation also provides the optionality to pay a consistent dividend to our farmer shareholders. And finally, before I hand over to David, due to the uncertainty of fuel costs as we work through the AB season and the potential impact of El Niño weather patterns, LIC has not provided FY 2027 earnings guidance at this point in time.
We will continue this financial year investing into replacing and enhancing our enterprise and customer-facing systems, and we are also committed to further investments to enhance our digital resilience. We do anticipate guidance to be provided alongside our half-year results in late January. David.
Thank you, Brent, and tena koutou, everyone. You've heard about how LIC has performed over the past year, and I want to talk a wee bit about where we are heading from here, the opportunities we see ahead, where we're investing, and how we're making sure LIC continues to deliver value for you, our farmer shareholders, and importantly, what it means on farm. Let's get started with where we're focused. The purpose of the next couple of slides is to give you a flavor of where we're taking the co-op and the forces that are driving that direction. Technology adoption on farm is moving quickly. Farms are using more systems, more sensors, more data than ever before, and they expect those systems to talk to each other and talk to us.
MINDA is used by more than 90% of dairy herds in New Zealand and has phenotypic, genomic, pedigree, and health data combined, and we are now leveraging that for the benefit of the whole sector. Corrigan has already taken you through the integration numbers, and what I want to do is to add what it means for where we invest next. MINDA only stays useful if the platform underneath it is modern, fast and secure, and that is the work that is in front of us. There are a couple of things that are pulling us forward at once, perhaps in slightly different directions. First is farmer expectations. The bar for digital experiences is set in Silicon Valley, and by the most progressive technology companies globally. Those places and companies wait for no one. Second, the need for digital resilience has changed materially.
Bad actors range from opportunistic people to well-resourced groups, and artificial intelligence is making this cheaper and faster. For a cooperative that holds your herd's data, that risk is very real. So what are we investing in? We are modernizing MINDA and our data and API platform so we can move faster and integrate more easily. We are also investing in new customer-facing enterprise systems, including our online shop, which is expected to be deployed later this financial year. We're also looking to make significant investments in our digital and technology backbone to make us more digitally resilient. Our approach to these investments is to be very clear about where we focus our resources. We need to focus them on keeping critical systems running through peak season, reducing legacy risk, delivering capability farmers can see, and staying within sensible financial limits.
We will sequence these investments so you, our farmers, keep seeing value along the way. Corrigan and Brent have both made the point that the balance sheet is what makes this possible. This is the co-op investing early so that MINDA stays at the hub of New Zealand dairy data, as your information stays secure and available when you need it, and the productivity gains land behind the farm gate when you want it. Corrigan mentioned our investment in genomics, and now I want to give you a little bit more detail. Demand for our testing is growing very fast, both in genomic testing as well as animal health testing, such as BVD and Johne's. We have actually outgrown our current laboratory. On current projections, we will exceed our current laboratory's capacity by financial year 2027, and there is no room to expand.
To that end, we are building a new laboratory on our main campus, which will be commissioned in time for spring next year. The new lab will have all of our genomic testing and animal health testing under one roof. It gives us flexible spaces so we can reconfigure the lab as our testing portfolio changes. This new lab will give us room to grow our testing volumes well into the future, which will benefit both farmers as well as the cooperative's breeding programs. All of our investments terminate on one clear mission, which is to provide you, our cooperative members, with world-class herd improvement. Genetic gain is the engine and the fastest lever, and the way to do that is making sure the right straw goes into the right cow at the right time.
We can do all the genomic testing and breed the best bulls we like, but all that work quickly gets unwound if we keep replacements from the bottom of our herd. Our connected mating initiative turns that principle into something a farmer can actually do on a Tuesday morning in October. The problem we are solving is that too many replacement heifers are being generated from low BW cows. That is the honest position, and we have the data. In 2024, 7.6% of all heifer calves tagged with a birth ID came from the bottom 10% of their herd. In 2025, that reduced slightly to 7.1%. When we looked at sexed semen usage across the national herd, 15% of sexed straws in 2020 went into cows in the bottom 30%. By 2024, that had improved to around 10%. Better, but still too high.
Every one of those matings can produce a replacement heifer from a cow that should not be breeding a replacement. That slows genetic progress in that herd and across the national herd. On the other side of that same coin, those bottoming cows should go to beef if mated in the first three weeks or to short gestation after that. That lifts the value of the surplus calf or adds days in milk. That is what connected mating plans does. Phase one of this project is live now. Farmers can set what percentage of their low BW cows they want to put beef semen into. That plan then lands with the AB tech and DataMATE at the point of insemination. DataMATE flags which cows go to beef and which cows to keep replacements from.
The mating data flows back into MINDA automatically, so the herd record is complete without anyone re-keying anything. The simple act of putting the right straw into the right cow and taking the hassle out of that decision during mating will unlock significant gains for each and every farmer. I want to finish somewhere different. Brent took you through the financial statements earlier, profit, balance sheet and dividend, and that is one place the value of your cooperative shows up, and believe me, it matters. But if that was the only place we measured ourselves, we would be missing a trick. There is a second place value shows up, and it shows up behind the farm gate in the cows you milk twice a day for the better part of each year.
The trouble is, value behind the farm gate does not appear on a single line item in your accounts marked herd improvement. I want to show you where it is, and because we are in Southland, I am going to show it to you with a Southland example. Let us start with what happened in this region since 1998. Some of you, I am sure, were milking then. There were 467 herds in Southland. Today, there is 983. The average herd is now much larger as well. More farms, bigger farms, a lot more milk. That is the story of dairying in Southland over a generation, and you have lived it. But I want to draw your attention to the milk solids percentage, which has also grown from 8.35% to 9.29%. Same liter of milk, nearly a full percentage point more solids in it. That is not a bigger farm. That is not more cows.
That is not more feed. You cannot buy it in a bag. That is the cow herself being fundamentally better at converting what she eats into the thing your process actually pays you for. Most of the other numbers on the slide are about scale, more hectares, more cows, more liters, and scale takes capital, debt, and work. There is one row which is about quality, and it came from the mating decisions that farmers in this region have made season after season for 25 years. So what is that actually worth? Let us take milk volume out of it. Same farm, same 3 million liters in the vat, same tanker up the driveway. The only thing I am going to change is the cow. On one side is today's cow, on the other side, the cow you would have been milking in 1998. Same liters, different animal.
Today's cows gives you 278,000 kg of milk solids on average in the farm. The 1998 cow filling the same vat with the same volume of milk gives you 258,000 L. The difference is approximately 20,000 kg of milk solids off one farm in one season. I want you to do the maths for your own herd. That is not a forecast or a projection. That is money that has already went into your account last season, and it has been going in for years. It has just never appeared on a statement labeled herd improvement. Here is where I finish on this point rather than on a financial statement. Think about the other things we spend money on to lift production: feed, fertilizer, nitrogen, to name a few. They work, but they are gone by the end of the season, and then you buy them again next year. Genetics is not like that.
Genetics is permanent. It lasts for the life of the animal. Genetics is cumulative. It builds on itself. That is not a ceiling. That is where a quarter of a century of compounding genetic gain has got us to, and every generation builds on this. When I say value behind the farm gate, that is what I mean. Those extra milk solids sitting in the vat being picked up every morning by a truck you did not have to think about, that is what your investment in herd improvement has bought. It has happened because farmers in this region keep backing the breeding program season after season, long before anyone could show them a slide like this. The decisions we have talked about this afternoon, genomics, the new laboratory, connected mating, are all the same kind of decision.
Whilst the cost is now, the value shows up in the cows that have not been born yet. That is what it means to run a cooperative on a generational horizon. It is why we exist, and it is why I am absolutely confident about where we are heading. Thank you very much, and I will hand back to Corrigan, who will move us on to the Honoraria report.
Thank you, David. Kaipara breeding, that is awesome. As David has just mentioned, we will now move on to the Honoraria Committee Report, and I would like to invite Gordon Glentworth on behalf of the Honoraria Committee onto the stage now to present the committee's report and their recommendations. Thank you, Gordon.
Good afternoon, Mr. Chairman, and all meeting attendees. It is my role today to present a summary of the Honoraria Committee for the past 12 months period. The Honoraria Committee is tasked with considering and recommending to LIC shareholders the amount of remuneration paid to LIC directors and Shareholder Reference Group members. The Honoraria Committee is made up of four elected shareholders, Shirley Trumper, Ellen Bartlett , George Moss, and myself. The committee met three times this year to consider the remuneration paid to LIC directors and the members of the Shareholder Reference Group. The committee interviewed the Board Chair and a director, and the Chair of the Shareholder Reference Group to understand the duties and responsibilities of the respective groups. This gives a direct perspective of the nature of the role.
In reaching our recommendations to shareholders, the Honoraria Committee has considered, reviewed, and analyzed information provided by Strategic Pay, the Institute of Directors, and the published remuneration data from several organizations in New Zealand, within both the agricultural and wider sectors. The Honoraria Committee has also drawn on its own collective knowledge and experience of the commitment and contribution of individuals serving both behind and beyond the farm gate. It is the committee's view that it is imperative that LIC maintains a high caliber of directors on its board and members in the Shareholder Reference Group. Remuneration needs to continue to reflect the substantial workload and ever-increasing obligations on New Zealand directors.
The Honoraria Committee is acutely aware that as a listed company, the level of compliance and scrutiny on LIC is higher than for a non-listed company, and expects that these demands to remain for directors in the foreseeable future. It is the Honoraria Committee's considered view that the current honoraria paid to LIC directors is not sufficient to maintain relatively remuneration parity with similar organizations. Therefore, our committee recommends the following increases to directors' remuneration to take effect from the conclusion of the 2026 annual meeting. The Board Chair, an increase from NZD 150,000 to NZD 157,500. Each of the directors, an increase from NZD 74,000 to NZD 77,500. The director's discretionary pool, an increase from NZD 70,000 to NZD 90,000. The committee also considered the remuneration paid to the members of the Shareholder Reference Group, recognizing the important contribution they make to LIC and to shareholder representation.
The level of remuneration needs to recognize the time spent away from their own farming operations and their own personal commitment to the cooperative. Therefore, the Honoraria Committee recommends the following increases to the Shareholder Reference Group remuneration to take effect from the conclusion of this 2026 annual meeting. The SRG Chair, an increase from NZD 44,500 to NZD 47,000. The SRG Deputy Chair, an increase from NZD 23,000 to NZD 24,500. Each of the SRG members, an increase from NZD 16,500 to NZD 17,500. There is no recommended change for the daily allowance for time spent on extraordinary duties. It is for these reasons that I've outlined that the committee recommends that shareholders support the proposed increases. Thank you.
Thank you very much, Gordon. That leads us to item 2 and the resolution to approve LIC directors' remuneration, as Gordon has just outlined. The resolution 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 of all nine directors to be a maximum of NZD 867,500 per annum. If you could move, thanks, Gordon.
Yes. I would like to move that, Mr. Chair.
Thank you. Seconder?
Yes.
Thanks, Ben. Item three is the resolution to approve LIC Shareholder Reference Group remuneration, as Gordon has outlined. 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 of all Shareholder Reference Group members being increased to NZD 246,500, and the daily allowance remaining at NZD 500 per day. If I could ask to move that, Gordon.
I would like to move that, Mr. Chair.
Thank you very much, Gordon. Seconder?
Yes.
Thank you, Victoria. Thanks very much for that, Gordon. Okay, item 4, resolution to reappoint KPMG as our external auditor. 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'd like to move that resolution. And a seconder, please.
Yes.
Thanks, Mike. Item 5 today is the resolution to ratify the reappointment of Sophie Haslem to the Board of Directors, and to consider and, if thought fit, to resolve by way of ordinary resolution to ratify the reappointment of Sophie as appointed director to the Board of Directors for a term of three years from the conclusion of this annual meeting. I'll move that, and looking for a seconder.
Yes.
Thank you very much, Duncan. That moves us now to the election part of today's AGM. Item 6 is the election of one elected director for the North Island region. To consider and, if thought fit, elect one candidate representing the North Island region as an elected director to the Board of Directors for a term of three years from the conclusion of this annual meeting. I'd like to move that. And looking for a seconder. Thank you, Tony. Item 7 today is the election of one elected member of the Shareholder Reference Group for the Upper North Island territory. To consider and, if thought fit, elect one candidate from the Upper North Island to the Shareholder Reference Group with effect from the conclusion of this annual meeting. I'll move that. And looking for a seconder. Thank you, Nicola.
Item 8 today is the election of two elected members of the Shareholder Reference Group for the Lower North Island territory. To consider and, if thought fit, elect two candidates from the Lower North Island to the Shareholder Reference Group with effect from conclusion of this annual meeting. I will move that. Looking for a seconder. Thank you, Hamish. Item 9 is the election of two elected members of the Shareholder Reference Group for the Upper South Island territory. To consider and, if thought fit, elect two candidates from the Upper South Island to the Shareholder Reference Group with effect from the conclusion of this annual meeting. I will move that and looking for a seconder. Thank you, Blair. Okay, so that takes us to the conclusion of the formal part of resolutions for today's meeting.
Just while those final votes are being cast, if you would like to ask a question about the company's performance and its future or something covered in our presentation, you are very welcome to raise a hand. A microphone will be brought to you, and if you could please state your name before asking your question. It is just to note, important with the microphones to hold those up to your mouth so those online can hear the questions. So we have got a couple of roving mics. Catherine and Minnie have both got mics. I am quite happy if the team online, if we have got anything online, we could go to the first question. Thank you. I just thought I might sit here and the three of us can answer questions from the desk. Thanks.
Yeah, we have got a couple online. You have talked a lot today about investing for the long- term. What am I actually going to see on farm over the next couple of years?
Okay, thanks, Marise. Can I direct that to you, David?
Yeah.
To Brent, if needed.
Absolutely. We have a number of really exciting things that we will be landing with farmers. As I mentioned, we have just launched our connected matings initiative. Farmers will see a new online shop being delivered. MINDA app will be refreshed and delivered before Christmas, as well as a couple of new beef products. We have an exciting pipeline of things for our farmer members.
Thanks, David. Any other questions, Marise, online?
There is another one here. What is LIC doing to accelerate the rate of genetic gain for NZ farmers?
David, that is a good question. We also have our Chief Scientist in the room, should you need to use him.
One can always call on the Chief Scientist. I will have a crack at doing this. We talked about that a lot in the presentations, and I think these things take a long time to build up. The genomic reference population that we have built is now giving us far more accurate genomic predictions. We are really excited about the ability to select elite females in the national herd with more accuracy and then go and put those to contract matings and accelerate genetic gain that way. We are also working with farmers to ensure the right straw goes into the right cow, and that will also give us a boost in genetic gain as well. We are looking at it on a number of fronts and along with the work that farmers are doing.
Sexed semen continues to grow, and as long as we put that into the top 50% of the herd, that is another tailwind for increasing the rates of genetic gain. We have had some really, really good progress, and I think if there was one fact or soundbite to take away from this year's annual general meeting is that the rate of genetic gain has increased by 50% in recent years, and that is a fantastic tribute to the work that we have done and the response from the co-op from things like the IWG report.
Yeah, that was the independent working group report into the genetics and consideration of how we could have one index. I just note, too, from a farmer's lens that and acknowledge just the success that the wider nation is having in getting cows in calf, and we have seen for the last couple of years improvements in six-week in-calf rate and non-return rates. I guess what we can see is the effort and commitment farmers are making to herd reproduction success in their herds, which is great. Okay. Yes, gentleman here in the room. Thank you.
Yeah, [Hennie Armting]. I got two questions. One, you're looking for the heat tolerant cows. I think we would be quite interested in cold tolerant down here at the moment.
Cold tolerant.
Waterproof cows.
And waterproof, yes. The other thing is the data exchange with DairyNZ. Where is that at?
Do we want to talk to heat tolerance first and the success of that?
Yeah. For heat tolerance, we continue to develop our heat tolerance program. We've got two programs going. One domestically, which is a traditional breeding program, and that is going really well. The heifers that we're producing and testing on the innovation farm in Ruakura are performing very, very well against the other elite heifers that don't have the heat tolerance genes. We're very encouraged by that, and we'll have products in the market in the near future. Hard to say which year exactly. We're also running an international program in partnership with the Gates Foundation with heat tolerant genetics as well, and that is going well, and we've got young animals born from that. Yeah, both of those two programs look very promising. In terms of the data exchange with DairyNZ, there's probably two facets to that.
One, we do have It's now live in terms of our integration with the economic survey, so data can now flow freely from MINDA into DairyNZ's database, so it makes filling in that economic survey very easy. Maybe you're referring to a wee bit about the OneBW project and making sure that we have a consistent BW. That project is well progressed, and we're having really good discussions. There's a bit of work to go with the technical model on that project, but all parties, DairyNZ, LIC, as well as CRV, who's another significant party involved in that, are working hard to get that over the line, and we're getting positive movement to that.
Thank you, David. Any other questions in the room this afternoon? Okay, and what about back online, Marise?
Couple online. Just one asking for progress on facial eczema genetics update.
Okay, so that's breeding value for facial eczema.
This one I actually might defer to Dr. Spelman, our Chief Scientist, to give a more fulsome response.
Thank you. Richard?
Yep. So where we are, actually, we have been working on this here probably since I have been in the business, so 35 years when we are testing animals. Where we have been in the last five or six years, we have been working with herds in the Waikato and Bay of Plenty area, identifying herds that have facial eczema, taking DNA samples from them. We have been calculating breeding values. They have been in the bull catalog over the last two to three years. So we are continuing. It is slow progress. It is a trait that we continue to invest in year on year. We continue to have small numbers of straws of semen sold. It is something that we look ahead. If global change or climate change continues to come through, we expect facial eczema to be more prevalent, so we keep on investing.
It will be a number of years before we expect to see significant selection for it.
Thank you, Richard. Just going to any other questions online, Marise. Thanks.
One more. Some years back, LIC routinely paid interim and final dividends. This was paused during one of the dairy downturns. Has the board considered introducing interim dividends with no debt in the majority of earnings in the first half of the year? This would seem sensible. It may also help with share liquidity.
Okay, thank you, Marise. The question relates in terms of, I guess, the board's view around dividend policy. I think there's one important point to note in this, and that is that the board has also paid a special dividend in the past, and it was about two financial years ago that we-
In the interim.
In the interim. Yeah. And that was at that time. Just in terms of interim, the fundamental is really around cash flow in our business. Whilst, yes, you would look at it and probably consider the business's earnings are in the majority of the front half of the year, it's also where the cash burn is, at the front half of the year, particularly in services. The board's always looking and evaluating whether it's appropriate at half year, but that has not been something that we've considered in this year. Is there anything, Brent, with regard to that that we need to add to?
I think that covers it. Yeah.
Thank you. Any further questions? No, nothing further. Marise, online? What about here in the room this afternoon? No? Okay. Well, thank you very much, everybody. Just return to the lectern. I would really like to thank everyone that has come out this afternoon, both online and here in the room. It has been really important for us as a board, and a management team, and a Shareholder Reference Group to come to Southland this year with the AGM. A lot of us were looking out the plane window yesterday afternoon at the water lying around. It was not just puddles, it was lakes, and in some cases even looked like rivers. Our thoughts certainly with some of the challenging climate that is existing here for Southland farmers and fully acknowledging it is not just an isolated case this spring, but you have had a couple of these in a row.
Our best wishes for some sunshine shortly for you. I would like to now declare the meeting closed, and I will look forward to announcing the voting results later this afternoon. Thank you very much.