AA Co’s 2024 AGM: What was on investors’ minds?

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FUTURE strategic instructions, land acquisition, alternate land use and the prospect of shareholder dividends had been amongst subjects raised by shareholders on the Australian Agricultural Co’s annual normal assembly held in Brisbane this morning.

As reported earlier, AA Co reported an operating profit of $50.5 million for its 12 months ended March, though vital herd valuation downgrades impacted the statutory web revenue after tax outcome, which confirmed a $94.9m loss, down virtually $100m on the earlier yr.

As has been the pattern for the reason that onset of COVID when the primary digital AGMs had been held, most shareholders most well-liked to go browsing to take part on this morning’s occasion. Solely a handful of direct shareholders had been current in particular person – a far cry from the times when AA Co’s AGMs attracted 250 individuals or extra.

Dividends?

As is customary on the AGM yearly, affected person shareholders raised the prospect of a dividend – unseen since 2008.

As soon as once more, the corporate mentioned there can be no 2024 dividend, as an alternative prioritising making capital investments within the firm’s future.

“AA Co’s future strategic route would require new and increasing funding,” board chairman Don McGauchie mentioned.

He used the current growth at AA Co’s Goonoo feedlot in Central Queensland for instance, which can improve provide into international markets. Different funding targets got here below the subjects of sustainability and business initiatives.

“We intend to proceed focussing our assets in direction of these efforts, and rising the worth of belongings inside the firm,” Mr McGauchie mentioned.

Land acquisitions?

One other shareholder requested in regards to the prospect of shopping for extra land belongings for the portfolio.

“Whereas we’re within the means of a strategic assessment of firm operations, the intention is to optimise the worth of the prevailing portfolio, and the belongings inside it. There are not any present intentions to buy extra landholdings, but when a possibility arose to purchase a landholding which additional optimised our provide chain, we might think about this on its deserves,” he mentioned.

Different shareholders requested for extra element in regards to the assessment of strategic instructions, and the value route of Wagyu cattle.

Mr McGauchie mentioned the aim of the assessment was to “construct a greater beef program,” by enhancing on the standard of genetics used, and additional leverage the corporate’s belongings to maximise their worth, and pursue new income streams.

Livingstone beef plant

He mentioned the corporate was additionally assessing choices for the Livingstone Beef processing facility close to Darwin, which closed spectacularly just 12 months after its launch in 2017.

“We’re open minded in regards to the alternatives to realize one of the best strategic worth for this asset, and are additionally taking a look at alternatives to strategically put money into, with key companions, to construct our market-leading positions and combine for the longer term. We’re all very thrilling about these alternatives.”

Relating to the value motion of Wagyu cattle, Mr McGauchie mentioned exterior experience was used to worth the herd every year, referencing costs acquired for cattle which had been much like these run within the AA Co herd.

Nevertheless there was solely restricted public information obtainable on the value of Wagyu cattle, and he was unable to supply particular worth actions on any components of the herd for the reason that finish of economic yr 2023-24.

He famous the fluctuations in broader market indicators just like the EYCI throughout 2024.

“The uncontrollable and unpredictable nature of market valuations for our cattle is why we give attention to working revenue as one of the best measure of cattle efficiency. The vast majority of our herd is focussed on manufacturing of top of the range Wagyu beef in the long run, and the worth of our Wagyu animals normally won’t normally be realised within the gross sales of reside animals,” he mentioned.

Questions from the ground requested about progress in alternate land use past beef manufacturing, raised in short ultimately yr’s AGM.

“The huge tracts of land that AA Co owns are fairly outstanding, and we’re actually taking a look at what ever alternatives may be on the market as a part of the strategic assessment being held. There would possibly effectively be some that pop up,” Mr McGauchie mentioned.

“As a part of the continued working of the enterprise, issues like how we sequester carbon – which we might want to do, in addition to containing the carbon (methane) output of the herd, we might must be offsetting a few of that as effectively. There’s alternatives there, and doubtlessly alternatives for promoting carbon credit,” he mentioned.

“However there’s an entire lot of different issues we’d do, and are very a lot taking a look at these as a part of this assessment course of. However having mentioned that, it’s been my intent and chairman, and David Harris’s as CEO, to actually give attention to getting the meat enterprise working in addition to we will get it working.”

“That’s the place the large {dollars} are, however that doesn’t imply excluding alternatives which may exist in another components of the enterprise, and different methods we will do issues.”

Mr McGauchie mentioned diversification had been a characteristic of the corporate for 200 years. AA Co had a monopoly on the coal trade within the 1850s, and constructed the primary railway line in Australia.

“So the corporate has all the time had a view to search for alternatives, and can proceed to do this.”

Nevertheless he identified that as a listed firm, it couldn’t “speak about this stuff” with the market, till there was sufficient substance round them to have the ability to report precisely to shareholders.

“We’re all seeing this greenwashing difficulty now grow to be fairly a major one, and we’re extremely aware of that, in reporting ‘excessive flying’ concepts that won’t come to something.”

“We’re a bit conservative about that, however I suppose that’s why we’ve been round for 200 years.”

Through the AGM, Tavistock consultant Josh levy was voted onto the AA Co board with 99.2pc of shareholders in help, changing retired Tavistock director Shehan Dissanayake.