Ladies and gentlemen, we'll give it we'll start in five minutes. We've got an online audience, so it will be important that we start at 2:00 P.M., but we'll just give people a few more minutes in case they're still stuck. It's such a terrible day out there. Thank you for coming.
We're just going to do a run-around with hotel and pasta, and anyone that's lost, so.
Thank you. Right, is that everybody? Right, is everybody comfortable? Everyone's made their acquaintances or remade their acquaintances? We'll make a start. Right, we'll make a start. [Foreign Language] I'm Mark Dewdney. I'm the Chairman of New Zealand King Salmon. It's a great, great honor and privilege to be able to lead this meeting today and to welcome you all as shareholders, staff, and other really important partners of our business to our AGM.
For those of you who are particularly focused on the financials, there is the standard well, it's called a disclaimer, but it really simply just outlines the basis upon which we calculate and report our financial results and makes the point that pro forma operating EBITDA is the primary measure that New Zealand King Salmon uses to guide performance. As I say, I'm the Chairman. We've got Carl Carrington with us. Our CEO, Carl, will speak to you in more detail through the course of the meeting around the results and the strategy. You'll see from these photos and how we each look today that salmon's a tough business. It's another year on, and I'm sure we both look a little bit worse for the wear than we did in these photos, but you can't do much about that.
Look, welcome to the Ninth Annual Shareholders Meeting of New Zealand King Salmon Investments Limited. As I say, it's my pleasure to be here today and to address you in my capacity as Chair. I would like to acknowledge our shareholders, Te Tau Ihu, Iwi representatives, and our auditors, and everybody else that is here. Thank you for taking the time to join us today, both in person and online, and particularly thanks for braving what is really terrible weather out there. Some housekeeping. In the case of an emergency, an alarm will sound. If that does happen, please exit the building and assemble at the grass area outside the Rutherford's Nelson entrance, which is the main entrance. If we get an earthquake, standard instructions: drop, cover your head, hold, and stay inside until the shaking has finished. I'd like to introduce my board colleagues.
With us today, we've got Paul Munro. I'll just get everybody to put their hand up. Catriona MacLeod, Yong Tiong, and Victoria Taylor. We also have a number of our senior management team joining us. Carl, obviously, our CEO. Ben Rodgers, our CFO. Graeme Tregidga, our Chief Commercial Officer. Grant Lovell, General Manager of Aquaculture. Monique Hatfull, who's the Head of Relationships and Communication. And other staff who have joined us with specific expertise. Katie Bennett, who heads our Finance and Sustainability. Mark Priest, our Seawater Manager. Dr. Zac Waddington, our Fish Health and Welfare Manager. And Chantelle Te Haara, who is our Corporate Communications Specialist. Once we get into question and answer, if there are any specific questions of a more technical nature that Carl and I feel we're not best placed to answer, then I'll ask the technical experts to help us out there.
We also have Audrey Smith, who is the audit partner from PwC, and Audrey joins us. It's great to have you here, Audrey. It was PwC's first audit this year, and during the question and answer session, shareholders will have a chance to ask Audrey any specific questions that they may have of our auditor. I'll give you now a brief update from the board focusing on reflections from the last financial year and the work ahead. Carl will then present his overview on the company's performance and strategy. We'll then have questions, and we'll cover finally the more procedural ASM requirements at the end of the day. Reflecting on the year that was, our headline achievements in FY2025 as compared to FY2024. Revenues increased from NZD 187.1 million to NZD 210.9 million. That was an increase of 13% in our top-line revenues.
Our net profit after tax decreased from NZD 28.5 million to NZD 13.4 million, which was a 53% decrease in net profit after tax. Pro forma EBITDA, which is the primary measure that we guide to and we measure performance on, increased from NZD 24.5 million to NZD 29.7 million. That is an increase of 21%. As we go through the presentation, we will explain more about why EBITDA went up and net profit after tax went down, which essentially is caused by revaluation of our biological assets. We will get into that in a little more detail as we go. We were pleased with the strong financial performance in the FY2025 year, and it was our best pro forma EBITDA result since we listed. We were really pleased with that. It was a good result.
The increase in pro forma EBITDA and a decrease in net profit after tax appears counterintuitive, but the way we relate to it is that the pro forma EBITDA result reflects the cash flows and the cash earnings of the business within that financial year, whereas the net profit starts to have a view on the future profitability of the business because it takes into account the fair value of our fish at the end of the year. Over this last year, the value of our fish inventories at year-end went down, and that reduction in value flowed through to our net profit after tax. That was FY2025. We were really pleased with that. Unfortunately, this financial year, though, has not started as we would have hoped that it would.
We had higher-than-expected mortality coupled with lower-than-anticipated growth rates in the first three months of this year, January, or sort of February, March, and into April. Those factors saw us provide our first guidance to the market for FY2026, and we guided a range of NZD 15 million-NZD 24 million of pro forma EBITDA. And remember that compared to our NZD 29.7 million last year. We were forecasting that our result in the FY2026 year would go down, and that was based on harvest volumes, which we expected at the time to be between 5,900 and 6,300 tons. We then found in May that we needed to revise our guidance range down again, and that happened when it became apparent to us that our fish growth rates had not recovered through the second half of the summer as they have historically and as we had expected that they would.
Quite normal for fish in the peak of the summer when the waters are very warm to consume less feed and to therefore put on less weight. Historically, what we've seen is quite a quick bounce back, and this year we haven't experienced we didn't experience the bounce back in feed levels and fish growth rates as early as we have in past years. That put us in a position where we needed to reforecast and reflect the fact that we needed to do something different to ensure that we were able to sell to the market fish of a certain size. We made what was a really challenging decision in late May to slow up our harvest.
In other words, take less fish out of the water each week for a period of four months to give the fish longer in the water to gain more weight so that when we did harvest them, we would sell a bigger fish to our market, which is what consumers of ours generally want. That was a really, really important decision for us to make because it was about protecting the medium to long term of the business, building biomass, making sure we were providing our customers with product that they really wanted, but it means we have got less fish to sell in this financial year. We revised our full year forecast for FY2026 down to between 5,200 and 5,400 tons, which is about a 17% reduction in volume, and that then flows through to an updated EBITDA guidance of between $6 million and $12 million.
That is in the market. We put that in the market in May, and there was no change to that at this point in time. As I said, it was not a decision that the board made lightly, as it does impact our operations for this year and it impacts our customers. Without that step, our view was that the future harvests and the future results would be compromised and negatively affected. We wanted to essentially try to quarantine the impact into this financial year. I'll get Carl to talk more about the underlying causes of the challenges that we faced and what we are doing about it. On behalf of the board, I just wanted to focus on three key reflections that have come out of the start we have had to this year.
The first of those is that we really, as I said, need to build our future biomass. We have to build fish volumes, and we have to build fish size. The only way to really do that is to leave fish in the water for a longer period of time, have them eat more, and then that will put us in the best medium to long term position, we believe. We also need to ensure that we maintain at all point a stable core business. We have, as Carl will talk about and as we've talked about in the past, a number of initiatives that we are working through that are designed to grow the business, increase our biomass, build resilience, improve productivity over time.
We are working on those, but we've still got to maintain as strong a core business as we possibly can as we go through those new initiatives. The obvious reflection to everyone who has been in the aquaculture business for some period of time is that it is cyclical. Like all agriculture, things go up, things go down. Weather, economies, climate affect our business, and we have to take a long-term view. We have to be very deliberate in terms of being able to see through and maintain capability, resources, and maintain our strategy through periods of volatility that are thrown on us by markets, by biological challenges to the fish that we farm, by climate, etc. We've been in this business for a long time.
We tend to be in the business for a lot longer in the future, and so we have to have a bias of taking decisions that are good for the long term over maximizing short-term results. On the upside, our balance sheet remains very strong with cash on hand at the end of FY2025 of NZD 50.7 million, and that balance sheet strength provides us with a platform to invest and continue to strengthen our existing operations and fund the Blue Endeavor project and everything else that is associated with that. We've got significant capital expenditure ahead of us this year, forecast being approximately NZD 21 million, of which approximately NZD 12 million will be spent on various Blue Endeavor initiatives and approximately NZD 9 million for our what we call stay-in-business capital.
All of the things that we need to do within the year to continue to improve and strengthen our existing business. Then on top of that, we have an increase in working capital required for the pilot Blue Endeavor farm of approximately NZD 5 million. We have quite a lot of capital and investment to make in our program, which is a key reason why we have set about ensuring that our balance sheet remains strong and we have resisted taking on any debt in the period since we had to undertake the capital raise.
In line with that and that view of the board that the strategy of the company is to invest and carefully grow, the board has again reconfirmed that dividends will remain on hold for the foreseeable future, and we will use the cash flows we have got and the balance sheet we have got to continue to strengthen and develop the business for the long term. To summarize our assessment and outlook, the board, we remain satisfied with our financial performance for FY2025. We are disappointed by the challenging start to FY2026 and are working through a whole lot of initiatives to try to strengthen up and make the best we can of the year that we are currently in, but we are confident that the actions we are taking give us optimism for the future. I will just leave you with three further observations.
The first, again, on volatility, that we remain exposed to the vagaries of nature, and during the recent summer period, we had some of the hottest marine temperatures on record, which contributed to the reduced growth rates and an elevation in mortalities, showed that we must continue to be vigilant, invest in risk assessment and mitigation, and to continue to focus on our fish R&D and fish health and fish breeding to ensure that we have fish that are more resilient. We have a strong strategy for growth. The New Zealand King Salmon sector has a huge amount of latent potential for growth, and our company has the privilege of being the first in the world to farm our species in the open ocean environment. Our Blue Endeavor project, once fully developed, could add up to NZD 350 million in annual export revenues, and it's becoming a reality.
The pilot pens are in the water. The mooring grid starts this week, and the fish are there. It will be the catalyst for many other significant decisions and investments that we make and will have, we believe, positive impacts for the local region. The Blue Endeavor growth strategy enabled us to partner with the New Zealand government in our recently launched Future Farming project. Earlier this year, we announced a significant multi-year partnership with the New Zealand government under the Sustainable Food and Fibre Futures called SFF Fund. Carl will talk more about this, but we would like to acknowledge the co-funding of this project by the Ministry for Primary Industries, Sustainable Food and Fibre Futures Fund.
We hope that piloting the open ocean technologies at Blue Endeavor will not only be a catalyst for significant growth for our company but also for the wider salmon industry, enabling us all to build scale over time. My final observation is that we have the most important ingredient of all for success, and that is our people. You cannot become a world-leading company without a world-leading team behind you. We're privileged to have over 450 talented, motivated, and experienced team members who make up our New Zealand King Salmon farm now. In conclusion, with a strong growth strategy, a strong team to deliver it, and a continuous focus on building resilience and mitigating risks, the board believe our future is looking strong.
On that note, I will pass the microphone over to Carl, our CEO, and he will take you through the rest of the presentation in a lot more detail. Thank you.
Excellent. Thanks, Mark. [Foreign language] My name's Carl Carrington. I'm the CE, and it's my privilege to be here today for my second annual shareholders meeting. Today, I'll be taking you through highlights for the last financial year, a strategic reset, a business update, and finishing with the outlook for the coming year. Results for the year ended 31 January tell two stories. Like all stories, you need to spend a bit of time to understand the bigger picture behind them. Firstly, the positive pro forma EBITDA at NZD 29.7 million was a record result.
The NZD 29.7 million was at the midpoint of our original guidance of NZD 26million-32 million, which was subsequently revised to NZD 26million-30 million at the half-year mark. That is actually a good result reflecting continued improvement at the end of January. Now, this is a capital-intensive business, so it is important to understand depreciation and a stay-in-business capital program. Depreciation runs at around NZD 8 million per annum, and a typical stay-in-business CapEx for nets, boats, pen maintenance, factory equipment, etc., typically runs around NZD 10 million. This year will be a little bit less on the business-as-usual CapEx, which is slightly ahead of depreciation, which reflects inflation on capital items.
Cash on hand increased from NZD 24.2 million at the end of January 2024 to NZD 50.7 million, driven by cash earnings in the business and improvement in working capital, primarily related to an increased focus on reducing inventories on hand and improving the debtor's ledger. That is a very strong cash generation for the business over that year. We head into the second part of our results story. From late February through to early May, we experienced higher-than-expected mortalities and, just as impactful, in fact, possibly more impactful, lower growth rates. These months are generally when the water temperatures are warmer, and over this time, we experienced elevated water temperature, which increases stress and reduces fish resistance to bacteria and other pathogens. The mortality and slower growth impacted the forecast harvest for FY2026 and, consequently, the fair value of biomass on hand at the end of FY2025.
The fair value under the agriculture accounting standard IAS 41 is based on forward-looking forecasts of biomass expected to be grown and harvested. This, combined with adjustments relating to historic early closeout of forex contracts from FY2021 and FY2022, resulted in an impact of NZD 13.4 million, which is down 53% from the prior year. The impact of lower growth rates continued through to April and mid-May, resulting in a decision by the board to further reduce the harvest to between approximately 5,200-5,400 tons. As Mark mentioned earlier, I'll now talk through some of the strategies that we're employing to address the fish performance. On to fish performance.
Aquaculture is a tough business, and this is the third year since implementing the adapted farming strategy, where we largely exited the warmer waters in the Pelorus and Queen Charlotte Sounds over the summer period and concentrated our farming activity in the cooler Tory Channel. Now, I want to stress that Pelorus and Queen Charlotte farms have excellent farming conditions for around nine months of the year, but it is a prudent strategy to reduce farming in these locations over the summer period. We are, of course, disappointed that this year's adapted farming strategy was not quite as successful as the prior two years. It is important to note, though, that our FY2025 mortality was within the planned range, which, given the high summer temperatures in Pelorus, shows that the decisions we made three years ago have helped prevent the issues experienced over the FY2022/FY2023 summer period from occurring again.
FY2026, unfortunately, started with reduced feed demand, which has impacted growth, coupled with some elevated mortality, which has consequently impacted our total harvest forecast. Mark already has taken us through the financial consequences of this earlier, but I want to point out that this reflects the reality of operating leverage in our business as it is currently sized. This is a business with high fixed costs and a large proportion of semi-fixed variable costs. Therefore, any downgrades to harvest outlook have an amplified impact on earnings, and vice versa, an improvement in harvest underpins stronger earnings. Now, on to reduced feed outs. As mentioned, this has had more of an impact than mortality. The line graph here puts the year we have just had in context.
You'll see the black line, which is this calendar year, indicating how lower feed rates actually got compared to prior years and how much slower they have been to recover. The reason for the reduced feed outs and corresponding growth rates, as with anything fish performance related, is multifactorial, with a dominant correlation occurring with the warmer water months. This can lead to increased stress and exacerbate fish health and performance challenges, which can suppress fish appetite and the associated growth. We want to highlight this is not a fish welfare issue, as reduced feed outs over summer are a normal occurrence. However, this year, the feed outs were more subdued than anticipated and have taken longer to recover to the expected levels. There is always more to work on to do to further improve fish health and fish performance.
I'll now spend some time taking you through the short, medium, and long-term strategies we have in place to tackle these fish health, resilience, and performance challenges. Our first focus area is thermotolerance. We know from trials at the Cawthron Institute that we have several families that display higher thermotolerance traits, and we also know this is a highly heritable trait. Selective breeding for thermotolerance has been successfully implemented in Atlantic salmon and also in many other primary sectors. Over the past summer, we conducted further trials in sea pens to assess how well these identified families perform in the real world, where there are other factors at play beyond just temperature. We are also determining whether thermotolerance in tank-based trials also links to greater survivability in sea pens. The hypothesis, based on international experience, is that it does.
Once validated through the application of genomics technologies, we will refine our selective breeding programs to accelerate the gains of this trait. Now, a note to make clear is that genomics is not genetic modification. Genomics is the mapping of genome sequences that allows us to identify precisely which family members have the most genetic potential for an identified trait. Our second focus area is diet. We know that diet has a big influence on fish health, and with refinements to diet, we believe we can further improve fish health, particularly during the more challenging periods such as summer. Over the past 12 months, we completed the construction of trial pens at our Ruakaka site.
These pens, which you can see on the slide, enable us to carry out benchmarked evaluations of different feeds on a large enough scale to be statistically significant while not compromising the performance of a commercial-scale pen of up to 100,000 fish at a time. Working closely with our primary feed supplier, our first completed trial identified promising summer diet improvements that will be implemented to commercial pens later this year. We are optimistic that implementing this diet we have just trialed over the more challenging period will help us mitigate some of the feed out issues we experienced. Work in this area is ongoing. A third focus is vaccine development. Part of growing a fish in the natural system is that the environment is dynamic and can pose challenges to our salmon. These challenges will only be exacerbated in a changing climate.
This was definitely a part of the mix of the multifactorial challenges that we experienced this year. Talking about the risks around pathogens and bacteria is not the most glamorous topic, but without a proper problem definition, the current and future solutions we need to discuss will not make sense. This is part and parcel of being a primary producer. As a company, we are unapologetically focused on our fish, which means ensuring we have the necessary tools available, including preventative, such as the best available vaccines and other interventions in our future toolbox. On to one of these tools, vaccination. All are small to vaccinate before going to sea. The challenge is that a vaccine is effective for around six months, and our fish are typically at sea for 16 months or slightly longer.
Vaccine development is an expensive activity, and currently, the New Zealand industry lacks the scale for international vaccine developers to invest resources for the development of vaccines for king salmon and New Zealand pathogens in-country. However, small gains may offer meaningful upside. I'm about to show you a video of what it looks like when we do vaccinate our fish. This machine is at our Tentburn hatchery, which is vaccinating smolt, which are around 80 grams in size and have been anaesthetized prior to entering the machine. This helps provide resilience to the specific issues our fish experience once out at sea. Apologies, there's no sound with that particular video, but it's an incredible advancement to be able to vaccinate the fish in this way. Previously, that was done manually, by hand. A team of vaccinators on the table vaccinating each individual fish.
You can imagine the amount of labor and time and effort that went into doing the numbers of fish that we have. So that machine, although it's small, it's had a massive impact on our business. Turning now to our markets, we have three strategic growth markets being North America, Australia, and China, supported by a strong domestic position. North America remains our primary market, and that is unlikely to change anytime soon. The species is well understood, and our brands, especially Ora King, are well known and appreciated by top chefs across the country. Expanding into higher-end retail channels is a massive opportunity that will be enabled by Blue Endeavor expansion. With respect to tariffs, to date, we have not seen a material slowdown in demand. In fact, we've seen no slowdown.
If substitution to other proteins does occur, then volumes falling out of the U.S.A. will be directed to other growth markets where we are constrained for supply. A few months into this new world of tariffs, we are not seeing any downward impact on our business in the U.S.A. For New Zealand, we expect to see continued modest growth, slightly ahead of per capita growth, as our retail partners continue to grow the salmon category and as the food service channel recovers. A larger opportunity exists in Australia, where the food service channel has plenty of opportunity for expansion, and retailers are increasingly looking for a consistent supply of a premium alternative to range alongside Tasmanian Atlantic salmon. Although China represents only 2% of our sales currently, the future opportunity is clear.
We are very underweight in our exposure to this market, and in large part, this is a historical hangover from a lack of supply to support market development. I'd like to use this opportunity to speak a little more about our strategic brand development in China to ensure we have a deep and diverse future market opportunity. We are committed to developing the premium market. We are pleased with our progress to date and look forward to our growth over time here. In the interim, while we remain somewhat constrained by supply, we are focused on establishing the brand in the right way. Our first task is to establish recognition of the king salmon species and establishing that it is worth paying considerably more for than other species. Secondly, establishing awareness and adoption of Regal as the premium king salmon offer.
The best time to develop a premium position in a market is when there is no volume pressure for sales. We are able to focus on securing the right distribution, such as premium retail environments shown here with Ole, City Super, Hema, and establishing the price points with consumers. Once we know that once consumers try king salmon, they appreciate the difference and the quality, and we are well supported in market by our distribution partner, China Resources and Rungkong Processing. We've recently launched a new purpose statement towards a healthier tomorrow. You may notice a slight wording tweak from our previous Creating a Healthier World, which we presented at last year's ASM, but the intent remains the same.
This is a broad and aspirational purpose that acknowledges health is at the core of our company and a key driver from the health of our fish and teams to our customers, communities, and environment. We also intentionally use the word healthier to reflect the direction of travel. Sustainability and ESG have become a bit of a minefield, with overuse and greenwashing having watered down their impact. We have chosen to define our own vision of success, one which focuses on balanced progress across the five key dimensions of healthy economies, healthy environments, healthy communities, healthy relationships, and healthy Kai. Beginning with healthy economies, we are proud to be a significant contributor to both regional and national economy, with future plans that will further grow this impact.
Our Blue Endeavor pilot is currently our biggest ticket investment and most significant program of work, and one that will create a strong economic future for our company. Our Blue Endeavor project, once fully developed, could add up to NZD 350 million in export revenue annually, which aligns strongly with the central government's focus on an export-led economic recovery and double export growth agenda. It is great to be able to share with you some of the progress made since our last ASM. Just note that this is in financial years, and the red line shows where we are today. Our baseline monitoring is nearly completed. Our two pilot pens have been assembled and successfully towed out to Waihinau, where they are awaiting the nets, which will be attached shortly. The first Blue Endeavor pilot fish have been transferred to the inshore nursery site and are doing very well.
The mooring grid installation work is underway. It is scheduled to start tomorrow on Thursday. Weather dependent, but the weather's looking good, and will take up to three weeks. Our Blue Endeavor fish are scheduled to be towed to the Blue Endeavor site in late October. The service vessel, Whekenui, is currently under construction in Vietnam and will be expected to be delivered in September. I just want to share that we've been gifted the name Whekenui from a significant iwi partner, Ngāti Kuia. We have a special relationship with Ngāti Kuia, and Blue Endeavor has been a catalyst for us forming stronger shared interests through both the cultural monitoring on our farm, but also in other opportunities such as the naming of our service vessel. The name Whekenui is a derivative of Te Wheke-a- Muturangi. We have been gifted this korero to share from Ngāti Kuia.
Kupe came to Aotearoa, land of the long white cloud, on the Matahourua waka or canoe with Ngāke in the Tāwhirirangi waka, chasing Te Wheke-a-Muturangi, which is a giant octopus from Hawaiki. He caught up and defeated Te Wheke-a-Muturangi at Totara nui, Queen Charlotte Sound, and many of the places at Totaranui are from this event and his explorations of the area. I'm now going to share a quick video which shows the pen build, entry, and tow out to Waihinau. Now, this is very exciting to be able to see the manifestation of a decade's worth of work, including research and development, consenting, monitoring, contracting, now taking shape in the sea. This has truly been a cross-collaborative effort for our company and has involved dozens of other suppliers domestically and internationally.
Blue Endeavor is having a positive, healthy impact beyond just our company and will continue to do so as it scales up. That was the pens out at Waihinau, where the nets will then get attached and the fish, the small, at sea at Waihinau, and they will be transferred into the pens and then towed out to the site in October. It is coming together. It is actually happening. Healthy environments. Onto the environment. We depend on a healthy environment for our fish to thrive. Minimizing our environmental footprint and working with the natural world is core to our business. We are acutely aware that the health of our fish and ultimately our company is directly tied to the health of the ecosystems we operate within, making the natural environment a vital foundation for our success.
Operating in New Zealand's unique marine and freshwater environments is both a privilege and a responsibility we have to take seriously. Here are a few ways in which we've demonstrated this responsibility. New Zealand King Salmon base year of carbon emissions for scope 1, 2, and 3 have been established at just over 81,000 tons of carbon dioxide. New Zealand King Salmon's second climate-related disclosures for FY2025 has been released in May 2025, with emissions slightly up at 84,900 tons. Pleasingly, our GNG intensity measure has reduced to 12.53 tons of CO2 equivalent per ton of GNG harvested, down from 13.03 in FY2024. This effectively shows that we have been more efficient with our carbon emissions this year.
Now, I'm unapologetic that our carbon emissions in total will increase as we grow more salmon, which is actually a very good thing for the world because it is a low-carbon form of protein, a very healthy, nutritious protein. We are focused instead not on the absolute number, but on the intensity, making sure we become more efficient per kilo or per ton of GNG we harvest. We have made some progress in the last year on that front. We have carried out work with third party to explore further reduction opportunities in our scope 1 and 2 emissions. We have completed New Zealand's first in-house aquaculture finfish and silage plant, which is shown here, transforming byproducts and diverting organic waste from landfill. The picture on the slide is exactly that facility in Picton. We have undertaken comprehensive hydrology mapping to better understand the climate risks at our freshwater sites.
I'm referring to drought risk and flood risk at those sites. We became a partner of the Aotearoa Circle with involvement in developing the seafood, nature, climate, and Taiao māori scenarios, and we have submitted our fourth modern slavery report. New Zealand King Salmon participated in the most recent XLAB program, which served as the catalyst for the high-value protein recovery project. This new process captures and uses the kidney line protein as a key ingredient in nutrient-rich fish meal for non-salmon applications. This last one is particularly interesting and demonstrates how we have achieved high-value protein recovery from what was previously seen as an organic waste stream. It diverts waste, saves us money on disposal costs, and is now earning us money by having found a home for this very valuable resource. We will continue to invest in and develop this kind of circularity thinking. Healthy relationships.
We have an ecosystem of important relationships which we are dependent upon for success, and we will continue to strengthen and invest in our relationships to achieve a healthy future. We've been investing significantly in the relationship function of our business this year as critical to ensuring we have a long-term healthy future. Some of the strategic focus areas this year have been with shareholders, iwi, national and international salmon industry, customers, science institutes, education providers, and of course, local and central government. Our value proposition and our growth trajectory positions us strongly to lean into the government's priorities. Aquaculture, and in particular, open ocean aquaculture, is a primary sector industry that maintains a strategic priority focus for the government, as outlined in recently produced New Zealand Aquaculture Development Plan. This alignment has enabled us to enter into a significant multi-year partnership with the New Zealand government.
This program is expected to cost around NZD 29.3 million in total, with an investment by the government of up to NZD 11.7 million. Across its five-year duration, the Future Farming Program will pilot technologies that will provide the blueprint for substantive and sustainable salmon farming in New Zealand, especially within the open ocean environments. This program encompasses three workstreams that will prove the technologies necessary for any significant industry growth. Firstly, the Blue Endeavor pilot, which is in relation to open ocean aquaculture. Secondly, Recirculating Aquaculture Systems or RAS pilot, which is in relation to freshwater hatchery technologies. Thirdly, novel breeding strategies leveraging genomics to improve fish resilience and breeding accuracy. The successful deployment of these technologies in a pilot, but commercially relevant scale, will demonstrate their utility to the wider New Zealand farming sector.
It will provide the business confidence for other companies to deploy similar technologies to unlock significant growth, while also supporting long-term viability of the industry against climate change exacerbated challenges. New Zealand King Salmon acknowledges the co-funding of this project by MPI and are very appreciative for their support. Another critical milestone since the last ASM was the passing of the Resource Management Amendment Bill in August. Now, in some instances, that would mean you're paying for the first round. This landmark outcome has ensured our continued tenure at our inshore farms and is an overwhelmingly positive vote of confidence for the aquaculture sector focused on building a healthier future for New Zealand. Critically, it gives us the certainty of tenure to continue farming at our current inshore farms, which play a critical role in our entry into offshore environments such as Blue Endeavor.
We've been part of the fabric of Te Tau Ihu for over 35 years, and we value our team members and communities in the region and beyond who are woven into our company. Our people are the foundation of our company, and our team of over 450 is truly our greatest asset. The level of unique expertise required to run the world's largest vertically integrated king salmon company is quite phenomenal, and our ability to attract and retain talent is both the envy of many and an extremely high priority. We demonstrate this commitment through a range of initiatives, including a new emerging leader program, life skills program, performance management system, health, safety, and wellness safety focus, and scholarships at NMIT. We're proud to grow a product that is recognized as a healthy nutritious form of protein.
King salmon is a good source of omega-3 and packed full of nutrients essential for overall health and well-being. We've invested significantly as a company to ensure healthy kai is optimized through strong brand recognition and differentiation. Our brands are highly sought after domestically and globally, and it's great to be in such high demand. However, it can be a double-edged sword when you don't have the supply to meet that demand. For example, with our current limited Ora King volume, demand still far exceeds supply. The focus in the build-up to Blue Endeavor will be on strengthening our brand equity and premiumizing the Ora King brand to supply high-end food service channels, as well as strengthening the Regal brand in export markets for the retail channel. Our ambassador program continues to grow in popularity, attracting more MICHELIN stars and renowned chefs globally.
It is an integral part of our brand and continues to be a focus of ours. Now, I'm going to show you a quick video clip featuring our ambassador chef, Liwe i Liao, in Las Vegas, showcasing our dry-aged Ōra King and Ōra King Tyee for top chefs, again demonstrating the strength of this brand. Onto the outlook. Aquaculture can be a tough business. Often, we take two steps forward, then face a new or slightly varied headwind that takes us back a half step or perhaps a little more. Directionally, we continue to make steady progress, building more resilience into the business year by year. Blue Endeavor is a pathway to transformational growth and earnings. However, its scalability will be dependent on sequencing a range of other activities and investments, which you can see on this slide.
Our focus is currently on operationalizing the Blue Endeavor pilot farm, building the pilot RAS at Tentburn, and advancing our breeding program, the three workstreams that are tied into the Future Farming Partnership. We also know we cannot achieve future scale without our factory capacity expansion, which involves extensive site option analysis and future purchasing. Then turning our focus to the larger infrastructure requirements on the water, such as a wellboat. On top of this all, we cannot lose focus on maintaining a smooth and stable core business. As always, we will continue with our prudent approach of exercising patience and caution as we prove out Blue Endeavor and continue to establish a strong platform and shareholder confidence for the future investments we need to make.
That brings us to the end of my presentation, and we've covered quite a bit of territory today, but we look forward to answering any questions you may have. I think we start with any from the room, and then we'll move to any received online.
I'll kick it off. Can you hear me okay up the back there? Just for the online people. Okay. Yeah.
Perhaps Paul, just before you start, if anyone has questions, we'll hand them a microphone and just get you to say your name.
So Paul Steere. Tonight, Koi Carl and Mark. The share price right now is NZD 0.21. With 500,000,000 shares issued, that's about NZD 113 million. Our balance sheet price is a lot more than that, NZD 197 million at the end of January, and it's no doubt gone up since then.
That's got a share value of about NZD 0.38. We have a disconnect between the two, and I'm not sure how you change that, but it does need some disruption. One of the things that I now see from the other side of the fence, as it were, as an investor, as my friends here are as well, is knowledge about the company and what it's doing. You've answered some of the things here today, but in the investor announcements in the website, there are the obligatory half-yearly and annual reports, and only one other notice to the market, and that was the notice two weeks ago about restraining harvest, which was hardly reassuring to investors, and you've answered and spoke about that here since.
It comes to mind, there's quite a few things that have happened in the course of the year that were worthy of skiting about and to give investors a bit more reassurance. You've mentioned again some of them here as well, but for instance, the automatic renewal of our licenses and resource consents was worth a considerable amount of money to the company. Without that, we'd have had to go out and hire Queen Street lawyers. We'd had to go and negotiate with the naysayers out there and show them how stupid they were. We'd had to go and get lawyers involved in putting them all together, and it could have run into the millions of dollars. More than that, there's a huge distraction for management in going through that process, and that's a very costly one as well.
That was worth telling the investors that it had been hand, and it affected our company as well. I know some of it's in the media, but not all the media these days is available to everyone. It's often behind paywalls and the like, and it would pay telling that to investors. Another one is the appointment of Mark Asman as a consultant, and I imagine that's following Stewart Hawthorn, who's well known to investors, appointment to run Akaroa Salmon. But Mark Asman is well known to the company. He's one of the world's top aquaculturists. He's probably been in the game as long as Mark Priest in the back there that we have as our guru in terms of longevity. I think, again, that was a worthy thing to tell the market. You mentioned, Carl, about North America.
We know as investors, nearly half our business originates from there, and Trumpian tariffs have been a challenge. What a lot of people might not have known is that America does not actually grow much salmon. Less than 3% of its salmon is grown or captured locally, and 97% comes in. If they want salmon, they are going to have to pay what it takes to get it there and the like. I thought that was a bit worthy of that. The ensilage, yes, that was in the press in Christchurch, but again, behind a paywall, difficult to see, and not in the other mainstream, the Stuff news or the Herald. In fact, I picked it up on an overseas website. What else was there? There are about four or five things that I thought really were worth sharing with investors and improving those.
I know everyone's under the pump, looking at you, Monique, but it really is, I think, worthwhile to make sure that our abilities, our strengths can be out there in the marketplace. Thank you very much for your presentations and for keeping the company in good heart, but on to better things. Thank you.
Thank you, Paul. I think there's some really good observations and I think a good challenge for us there. We obviously talk to the business community through the share brokers, the share brokers that cover us. We talk obviously to major shareholders as when we have material announcements. Carl, you spend a fair bit of time talking to shareholder association meetings. The share brokers that cover us now. Jarden are the share broker that covers us. Yes, it is. And they're essentially.
It would be nice to get more coverage from share brokers, but as you are aware, our liquidity is very low in our shares. Number of shares traded is very low, so we generate very small fees for the share brokers, and as a relatively small company, they do not cover us as a rule. I think, Monique, while we are talking about that, would you mind just giving a bit of an overview in terms of what we are doing around social media? Yeah, because there are different ways to communicate now, and I am not.
Yeah. No, absolutely. Paul, can you even hear me? Thank you. Yes. Yeah. There we go. Thank you. Yeah. Points well made, Paul. Unfortunately, often the media only want to hear about your stories when they are negative, which is often what happens. I do take your.
I'm going to interrupt, but that's the reason to send it out to the investors' announcements, because we all get an email saying there's a new announcement coming.
Yes, and that's a really good point, actually. Take that on board. We do also have Chantelle Te Haara, who's come on as Corporate Communications Specialist, so we can lean into that to telling our plenty, as you say, good news stories that we have as well. Yeah, points made. Thank you.
Please .
I know some of the feedback we get from the investor roadshows that we do is that, this is not a comment from those roadshows, so it's precursor, but it seems to me the share price doesn't move when we have exceptionally good news, whether it be record even with our result.
It doesn't seem to move it particularly much up, and equally, when we announce a dreadful downgrade in earnings guidance, it didn't seem to move a hell of a lot either. Some of the feedback we get is we may have a bit of a disconnect in what is our investment proposition at the moment, because right now we're not a yield stock because we're not paying dividends. We're hoarding the cash for investment and what we think will be a far bigger return. We're not a growth story yet either because we haven't yet proven up Blue Endeavor, and that's the whole purpose of the pilot trial.
Without wanting to sort of lead speculation on share prices and what have you, I'm particularly excited about the fact the pens are now in the water and they're going out, and by the time we get through next summer, we'll actually have a good look at the quality of the fish, have they performed over the first summer, as we expect they will, and then we get to have our first harvest from those pens August next year. We are starting to prove the investment proposition, and then we become truly a growth story with a transformational growth pathway. Perhaps there's a bit of patience on the share price as well. Notwithstanding that, we take your point about perhaps making more of the good news stories when we have them available.
Thank you. Just before I go to additional questions, if I may.
I think the point that the previous speaker sitting close to me here was making was that we got a lot of negative stuff this year. We did not get much positive. Now, I was very impressed looking at those pens being constructed at Shakespeare Bay. I would love to have seen something like that on the television, and it would have helped probably the image of the company. Now, the other thing I want to ask is this government money, this NZD 11 million, it has probably got hooks to it. What are the hooks? What have you got to do to justify that money? We do not talk about hooks in salmon, right? Right.
That is an excellent question. Carl, I will get you just to talk through what comes with the money that comes from the government.
Yeah, yeah, yeah. That is a fair call.
There's no such thing as free money, especially from the government. The obligations on us is that we have undertaken to share with the wider New Zealand salmon industry insights, learnings from the programs in which the government is co-investing with us. What have we learned about open ocean aquaculture and how to farm out in the open ocean? What have we learned about RAS that may be of use for subsequent companies to develop their own RAS? What are the learnings from genomic breeding? We need to share learnings with the rest of the industry. Now, that's not teaching the rest of the industry how to farm salmon. There's an expectation that they're already in the business. They already know how to farm salmon. This is about telling them, was this better or worse? Did this work or not work?
We're very clear about what IP is New Zealand King Salmon's IP and what is new IP that we're able to share with the rest of the industry. You might say, why would you want to share anything with the rest of the industry? There is a little bit of a rising tide floats all boats in this business. Scale is something we all lack, and we know that there is enormous demand out there for the market for King Salmon is far greater than what Blue Endeavor will provide. Not worried about other companies eventually getting into open ocean as well. They have significant hurdles to get through in terms of how they're going to develop their own infrastructure to get there as well. I don't see anyone else getting into open ocean anytime soon.
I'm happy to take the NZD 11.7 million and recognize that there are some quid pro quos that go along with it. The other thing is, of course, good to have the government with skin in the game because they're happy to lean into some of the challenges we face and help support us to really develop the industry beyond just the Blue Endeavor stuff. Thank you.
Thank you. Before we take more questions, I admitted when I was introducing the rest of the board to put in apologies from Jack Porus. Jack is one of our directors. He's up in Europe at the moment. And Carol Chen, who is an employee of China Resources, sits on our board.
Carol has, within the last month or so, had a baby daughter, and so she can't travel, but she will address us by way of video link as part of her re-election. I just apologize to those two for not introducing them at the start. Now, questions. John.
I'm John Wilson. I'm here representing the New Zealand Shareholders Association, but I'm also a shareholder in my own right, and this is a personal question. Can somebody talk a bit about the design and supply of the cages and the confidence in their ability to withstand the conditions?
Okay. Carl, do you want to handle that, Carl, or would you like Grant and Mark to?
I'm going to hand that to the experts over there, but I will say that is engineering, and I have confidence that engineering is something we can control.
But who wants to cover that, Grant or Mark?
Mark Priest will cover this.
Hello, everyone. Yeah, Mark Priest, Manager of Seawater Operations. We've engaged ScaleAQ. It's a Norwegian company. They're at the forefront of conventional aquaculture systems when it's moved in an offshore environment. Really important that, as Carl mentioned, it's just engineering, so it's simple maths, or it's probably quite technical maths, but they do a lot of ground truthing of these systems. They're involved in the oil and gas industry in Norway. They do engineering work for that. The systems have all been modeled and tank trialed, and they've also been trialed offshore. There are farms in the likes of, say, Orkney in Scotland where they are farming in these exposed environments similar to what we're going to have in Blue Endeavor, and they've been tested there.
We've had a bit of a luxury, I guess. We've been on this journey since I think it was 2017 we started. We've been able to watch all these companies prove up this technology, watch what happens overseas. We're not bleeding edge, so to say, but we're a fast follower, so we're going to benefit from that. We're pretty confident. The engineers are very confident that these systems are going to withstand what's out at that site. Actually, just as a little extra as well, we had a monitoring buoy on site that measures the currents, the wave heights, all of that sort of information. That's what we feed into the models that they look at. It's within the parameters of what Mother Nature throws at the site, and yeah, we're very confident.
Mark, is it correct to say that the particular site of ours has less wave kind of height and challenge than a number of other sites but has quite a strong current?
Yes. Yes, that's a good point. The pens themselves are rated to above the wave height that they can obviously withstand. As Mark mentioned, it does have quite a strong current out at that site. 1.47 centimeters a second, so it's just south of three knots, so it is pretty strong. It's going to be challenging, but ScaleAQ, the manufacturer that we've chosen, they've gone through the engineering work. They're confident that their system is going to withstand that. That's, again, why we're piloting, not just going and upscaling.
Thanks for that. That's great.
Thank you. Other questions? Do we have any questions online? One question online.
Hi, I have a question.
I'm asking on behalf of Mr. Noble. What are the main New Zealand pathogens, and will these be the same or differ at Blue Endeavor?
That sounds like a question for Dr. Zac Waddington.
All righty. So we've got two different species of Rickettsia in our region. In the country, there's actually three, but luckily, we only have two. One thing worth noting, this past summer, historically, they've been kind of regionally separated. This last summer, they actually co-occurred in the same region. It's one of the reasons for the slightly increased mortality. The long answer short is yes, eventually, Blue Endeavor, we can fully expect that despite all of our best efforts, they will eventually find their way out there. I imagine that we might enjoy a small honeymoon period when we first take fish out there.
Long may it last, but we are certainly hoping for the best but planning for status quo. I will not say the worst, but we are planning for status quo. All the mitigations that are in place is to prolong that honeymoon period as long as possible with biosecurity, but assume that we still need to mitigate this risk long term.
Thank you, Zac. Nothing else online. Are there any final questions from the floor? Paul Steere?
I would like to ask for your observations on RAS onshore. It seems to me that that has been growing at pace and now is quite a critical mass, especially in Northern Europe. Even China has got one of the largest fish ships. They are growing fish, Atlantic salmon, immediately on ships and moving around. Our provenance might not make much difference in 20 years' time.
Look, I think our total provenance story will remain one of our key advantages relative to growing salmon on boats in China. I think we must not lose sight of the New Zealand location, the isolation, the whole image of New Zealand. We have an advantage in terms of knowing how to farm the king salmon species, which, as Paul, you know better than probably almost everyone, is a lot more challenging to farm than an Atlantic salmon. I'm not sure that trying to farm it in a RAS is going to make that a whole lot easier. The other interesting thing, and I'll perhaps get Grant to talk to this, is how we are looking to use RAS versus some of the offshore models where they're trying to farm big fish in a RAS. Yeah.
Grant, the RAS for us will play a particular role in our whole life cycle, but we're not intending to grow fish out for sale out of a RAS.
No.
Yeah, correct. Land-based grow at RAS, the technology is definitely coming along, but to make it economically viable, incredibly challenging still. Cost of these systems is astronomical. For every story you hear in the good news story here overseas at the moment, there's probably about five or six bad news stories that are associated with RAS at the moment. If anyone follows Atlantic Sapphire, which is probably the most high-profile one, we can only see the issues and challenges that they've had over many, many years. From ourselves, for RAS, we're looking at very much hatch reproduction, increasing our small supply in the long run, probably looking into brood stock as well.
As we grow, we're going to need a lot more freshwater space. In fact, as the country in New Zealand grows, freshwater space and freshwater for both smolt and brood stock is going to become important. It's one thing that all salmon farmers have in common is that we are all freshwater farmers, and we all require to have smolt, and we all require to have brood stock to be able to get those eggs. Our duty for RAS is going to be proving out a couple of points. One, obviously, understanding the technology, the biofuels, ensuring that our species can grow and develop and be strong in that, but also utilizing photoperiod manipulation and potentially salinity to assist in some of the health challenges, biotic modification, and so forth. In the long run, and if I was to go, what is my ideal picture?
That would be to have a RAS right by the water so that I can put my fish down a pipe onto a boat out to our farms into the future, but not so keen on trying to grow them out to 4 kilos.
Should also significantly reduce our total freshwater use.
Absolutely. The pilot RAS is 98.5% reuse, so it is only 1.5% of the water being flow-through,
which is a critical environmental benefit. Okay. If there are no other questions from the room today, we will have an opportunity after the meeting to ask questions of directors or management. Thank you for those questions, and thank you for the support of our team. I will go to the ordinary resolutions in business.
We have for today, the first resolution for shareholders to vote on is that the board be authorized to fix the auditor's remuneration for the next financial year, the year ending 31 January 2026. As you know, PwC have taken the audit on for New Zealand King Salmon and completed their first audit this year, which was an excellent process and excellent to get a new sort of fresh set of auditors' eyes over our processes and our results. We have Audrey Smith with us. If any shareholders have any questions you would like to ask Audrey regarding the audit, now is the time to do that. I'll just quickly check. Does anybody have any questions specifically of our auditor? Looks like not, Audrey. Again, thank you to you and your team. The board unanimously recommends that shareholders vote in favor of resolution one. Resolution two.
We have three directors who are retiring by rotation and all restanding for election. The board unanimously, again, recommends that shareholders vote in favor of the appointment of all three. First is Yong Tiong. What I will do is I'll just ask each director to come up and just share a few words with shareholders. Yong, you get the opportunity to go first.
Good afternoon. Thank you for joining us at the annual shareholders meeting and for the opportunity to say a few words today. My name is Yong Tiong, and I'm really proud to have served on the board of New Zealand King Salmon as a director since 2019. For those who don't know, my background is in timber industries and property development companies.
I am Managing Director of TimberGrow Limited and Maritime Land Development Limited, Director of New Corporation Limited, and Executive Director of Oregon Group Limited. My family, like Oregon Group, has been a committed shareholder of New Zealand King Salmon for close to 30 years. We are very proud of our long-standing relationship. I'm a firm believer that every business investment decision should have a long-term focus. There's no room for shortcuts and no substitute for hard work. A career highlight for me in recent years has been serving on a local private school's major projects committee, overseeing two building projects totaling NZD 70 million in value over the COVID lockdown periods. During that time, both projects were implemented and completed on budget and on time. Reflecting on my long association with New Zealand King Salmon, I'm proud of how the company has managed to regroup and pivot post-equity raise.
I'm excited about the New Zealand King Salmon growth trajectory, and I have full confidence in the management team to deliver on our strategic objectives. It's a privilege to stand for re-election today. Thank you.
Yong, I'll just see if there are any questions that anybody has of Yong. Looks like you're oh, thank you, Yong. The second director up for re-election is Carol Chen. Carol, as I mentioned at the start, is an employee of China Resources, our second largest shareholder. The board unanimously recommends that shareholders vote in favor of the reappointment of Carol. What we're going to do Carol's up in Shenzhen at the moment with her new baby. We've asked her to send a video down.
My name is Carol Chen, and I serve as the Deputy General Manager of the Corporate Strategy and Development Department at China Resources Enterprise.
Please accept my apologies for not being able to attend in person as my daughter was born recently. China Resources Enterprise is the second largest shareholder of New Zealand King Salmon. We are deeply committed to supporting the company's growth and its expansion into the Chinese market by leveraging our resources, industry expertise, and sales network. We aim to create meaningful opportunities for mutual success. Thank you. I look forward to working closely with New Zealand King Salmon's management team to advance the company's visions and values in the years to come.
Carol. Resolution four, again, Victoria Taylor. Victoria or Vicky is—we always refer to you as—and Vicky's an independent director up for re-election, so.
Hello, everyone. My background is principally in the fast-moving consumer goods food industry in New Zealand, and I have more than 20 years' governance experience.
I really believe in the vision of New Zealand King Salmon as a global leader in King Salmon, in our growth plans, and in the talented team that we have who are working on executing those plans. I'm delighted to stand for re-appointment. In my first term, I've really focused on strategic clarity, commercial decision-making, and governance disciplines. I'm very committed to the future in terms of stewarding our results, our growth plans, our performance with regards to relationships with stakeholders, both in the local area here, but also with government, with the investment that we're receiving from them. Our stewardship of the environment that, as Carl has mentioned, is so important to the performance of the business, but also to all of our stakeholders who are in this local area and working with our team. I'm very pleased to stand for re-election. Thank you.
Let me just check and see if there are any questions from anybody. No? Thank you. The board unanimously recommends that shareholders vote in favor of the re-appointment of all three. I would like to express my own gratitude and thanks to all the directors on the board. There has been a lot of work that has gone on over the last 12 months, and directors unfailingly have always been available, committed, engaged, and hugely supportive of the business. I am very, very happy with the way the board is performing. We will leave you to vote. Voting is processed there. Do we need to? Here we go. For shareholders wishing to vote in person, the results will be put up this afternoon.
Once these votes have been collected, they'll all go and get counted, and the results of the four resolutions will be posted. That's everybody. I just want one to go.
[Foreign language]
Thank you for that. Ladies and gentlemen, that brings the ASM to a close. Again, on behalf of the board and on behalf of all exec, thank you all for coming today. Thank you all for your continued support. As Carl has outlined so clearly, we have a large program of work to carry out ahead of us.
We're all excited about the future of the business. We recognize that there is a lot of work that needs to be done across a lot of fronts and that it will take time. This is a business for the long term, and we are there for the duration, and we sincerely hope that shareholders are as well. Again, thank you for your support. Thank you for coming today. We are now going to have some drinks and some nibbles at the back, so please join us and feel free to ask any questions that you may have that were not covered today. Thank you very much.