Ricegrowers Limited (7H0.F) Earnings Call Transcript

Good morning, everyone. I'd like to welcome you to today's Annual General Meeting. It's 10:30 a.m. I have been advised by the Company's Secretary that we have a quorum and declare the meeting open. Today marks the 71st Annual General Meeting of Ricegrowers Limited. As many of you will know, we had hoped to return to a physical meeting in Jerilderie June this year. However, given the escalation of COVID-19 cases, we've been required to hold today's meeting online only. I have spoken to many of our A and B Class shareholders over the past few weeks. I want to thank you all again for both your understanding and your participation. For those of you who haven't met me, my name is Laurie Arthur, your Chairman, and I'm joining you today from Leeton, New South Wales. Our senior executive executives will join us from Sydney, where we've put in place appropriate social distancing. Please welcome Rob Gordon, our Chief Executive Officer and a Director; Kate Cooper, our Company's Secretary; and Dimitri Courtelis, our Group Chief Financial Officer. And I note we have independent nonexecutive directors, Dr. Andy Crane; and Mr. Ian Glasson, also joining us via video link. Andy is standing for reelection today, and Ian is the Chairman of the Remuneration Committee. Joining us online today are your remaining directors. We have John Bradford, Luisa Catanzaro, Gillian Kirkup, Ian Mason, Jeremy Morton, Leigh Vial and Julian Zanatta. Joining us by phone, we have Mark Dow, our auditor and a partner of PricewaterhouseCoopers. I'd also like to welcome Quentin Digby, our legal adviser from Herbert Smith Freehills, who will act as our moderator today. We'll answer as many of your questions as possible. Just as we would have in Jerilderie, and we will work through the details of how to do this shortly. In terms of today's agenda, Kate will go through procedural matters next before I give my Chairman's address. Rob will then deliver his CEO presentation, and we will take your questions before conducting the formal business of the meeting. There will also be time for general business. Once the results of the AGM are known, that will be announced on the ASX and the SunRice website. Given this is a virtual meeting, and you are able to vote now, I declare the poll on each of the resolutions open. I confirm that I am holding undirected proxies in my capacity as Chairman of the meeting, and I will vote those proxies in favor of each resolution. I will vote all directed proxies in accordance with the directions provided by the shareholders. I'd now like to hand over to the Company Secretary, Kate Cooper, who will explain how to vote and ask questions during the meeting. Kate?

Thank you, Chairman. Voting today will be by way of poll. The resolutions in the Notice of Annual General Meeting are only able to be voted on by A class shareholders. The vote on Resolution 1 is advisory only. Resolution 2 requires a simple majority of votes to proceed. Resolutions 3 and 4 are special resolutions, which require a 75% majority of votes cast to proceed. In line with standard corporate practice in Australia, we will share with you the proxy and direct voting results of each resolution before you vote. Please note voting will close 5 minutes after the AGM ends. A class shareholders attending the meeting online are able to cast their votes using the electronic voting card available to them after registering as shown on screen now. Please note, you will need to enter your SRN or HIN, along with the post code of your shareholding to access your voting card. If you have already submitted a direct vote and wish to change it, you can revoke your direct vote and resubmit a new vote. As the Chairman noted, there will be time for questions from both A and B Class shareholders. However, as with all shareholder meeting practice, I ask you to confine your questions or comments to the matters under consideration today. There are 2 ways to ask questions this year. [Operator Instructions]. I note we will group the questions by agenda item, and we'll respond to them when we come to each item of business. A class shareholders who wish to comment on a specific resolution are also invited to do so through the Ask a Question function. B Class shareholders who wish to comment or ask questions about the management of SunRice, the conduct of the audit or preparation and content of the auditor's report are also invited to do so through the Ask a Question function. Again, please submit your questions or comments now if you can. You don't need to wait until the item is under discussion. This year, we have also introduced new functionality to allow shareholders to dial in and listen to the AGM by phone and to ask questions orally. As communicated in the online guide to utilize this teleconference facility, shareholders must use a unique pin provided to them by Link Market Services. If you don't have a pin and would like to ask a question by phone today, please contact Link on 180-99-0363 now to get your pin. [Operator Instructions] The Chairman also reserves the right to rule questions as not pertaining to the AGM out of order and to take questions on notice just as we would at a physical meeting. Questions or comments submitted online will be addressed first. We will then take live questions from shareholders by phone. On your screen, you can download the Notice of Meeting, the 2021 annual report and the virtual meeting help guide, all of which have been provided to shareholders in advance of today's meeting. A copy of the Chairman and CEO presentations were also lodged on the ASX market announcements platform prior to the commencement of the AGM. If at any point you experience technical issues or need help, please call the Link Market Services number on screen, support staff are on standby to help. If we do experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders being affected. If this occurs, the Chairman will advise you accordingly. I will now hand back to the Chairman to present his address.

Thank you, Kate. After a difficult period for the business with consecutive years of low rice production in the Riverina driven by drought, low water availability, high water prices and the impact of water reform, it's good to be here today to be able to focus on recovery. Despite the challenges in our Australian rice business, it is pleasing that we have been able to leverage our strong balance sheet to pursue our growth strategy without yet needing to access capital via the ASX following our listing in 2019. Our unique business structure has meant that we've been able to weather the dual challenges of COVID-19 and low Australian production while ensuring we have maintained a sustainable company still controlled by growers. As we stand here today with a close to 10-fold recovery in Riverina rice production in the last crop we've just harvested and positive conditions coupled with strong interest from our growers as we look ahead to planning for the 2022 crop, there is cause for optimism. There is no escaping the impact the low production in the Riverina has had on our business. In 2019 and 2020, we harvested crops of 54,000 and 45,000 tonnes, respectively. Meaning that in the last financial year, just 5% of our global rice needs were able to be met by supply from Australia. When we drop back to a minimal crop in Australia due to drought and the increasing vagaries of water reform, it is not without cost in these international markets. The fact is that Australian water reform process has turned all Murray-Darling Basin irrigators into high-cost producers. The early indications are that the impacts of climate change will be focused on annual croppers despite guarantees from government that this would not be the case. Well, profit -- sorry, I just had a bit of a blip here with my teleprompt. We could accept this as the new normal, but that is not the SunRice way. So what are we doing about it? Firstly, management has developed a multiple supply chain strategy to ensure we could continue to meet demand despite the extremely low Australian production. This has proved effective and allowed the company to still deliver a profit and declare a fully franked dividend to our B class investors while paying record high rice prices $750 a tonne for our Riverina growers in financial year 2021. While profitability was impacted, it is a credit to management that they have been able to navigate the challenges of the agricultural production cycle, foreign exchange fluctuations and the multitude of COVID-19-related issues, including disruption to our global shipping. It also speaks to the success of our diversified and complementary business structure. The company is also actively pursuing strategies to reduce the impact of future drought in Australia: including seeking new market opportunities and establishing new supply chains, continually pursuing efficiencies in our Riverina manufacturing operations, partnering with our growers, government and other organizations to invest heavily into research and development, to increase the amount of tonnes of rice that can produce with each megaliter of water used, advocating the severe and unintended consequences of water form on Australian rice growth and other annual irrigators to government in close partnership with the Ricegrowers' Association of Australia and developing programs like GrowRice that facilitate rice production. Of course, the Riverina rice industry is already the most water-efficient rice industry in the world, but we continue to improve on this front to cope with the seemingly increasing volatility of water availability. But as we look forward towards planning for the 2022 crop in October this year, it's pleasing that the company is able to respond to the strong desire out there to grow rice. Conditions are favorable for a 2022 crop that exceeds the 417,000 tonne crop harvested last year with improving water availability, lower water pricing and a positive outlook for the next few months of increased rainfall and inflows. The increased production from 2021 and positive outlook for 2022 and has allowed us to move out of the band-aid mode and focus on getting back to what we do best, selling high-quality branded Australian products to consumers and customers in our most premium markets. The company was pleased to announce recently that we will again offer fixed price contracts to our Riverina growers and also open a pool. There was a strong response from growers to the contract offer, which closed on the 23rd of August, and we look forward to opening seed orders in the coming weeks for the 2022 pool. We have been working closely with our partners to charter a future direction for research, development and extension in the Australian rice industry to coordinate our efforts for maximum effect. Growers will learn more about this over the coming year. It is particularly pleasing that we will be in a position to offer a new variety for the 2022 season, a bold new medium grain called VO71, at this point, which has been under development for many years. The development of this variety is an outcome of the commercialization of our ongoing investment in research and development. which, as I outlined earlier, is of fundamental importance to the future of the Australian rice industry. Keeping a strong connection to our growers and A-class shareholders while ensuring that we continue to maintain alignment with and create value for our B Class shareholders, is fundamental to the ongoing success of SunRice. That is why we are putting forward a resolution today to make amendments to the A class share criteria which the Board believes will achieve the following important objectives. Firstly, encourage more consistent Riverina supply to maximize benefits to the company; secondly, reduce the Board's discretion in managing the A class share register and finally stabilized the A class share register. The recent droughts and emerging impacts of water reform have demonstrated that the current criteria are no longer fit for purpose with the Board required to exercise its discretion to not redeem A Class shares in 3 of the past 5 years. We are also seeking support of A class shareholders to fully implement a key recommendation from the 2019 review of the Board to reduce the number of directors from 10 to 9. At the 2020 AGM, A class shareholders voted overwhelmingly in favor of a resolution to reduce the size of the SunRice Board from 11 to 10 directors. The resolution at this year's AGM will fully implement the recommendations from the 2019 review. The Board remains strongly of the view that there should always be a majority of Grower Directors and welcome support from A class shareholders for this change. Lastly, I note that Dr. Andrew Crane is seeking reelection as an independent Non-Executive Director for a further 3-year term. As the former Chief Executive of the CBH Group and as a senior executive with more than 30 years' experience, Andy is a strong contributor to the SunRice Board and I welcome his intention to continue as one of our directors. As we look forward, COVID is clearly back with a vengeance, not only here in Australia but also in many of the countries around the world that we have operations and sell products. The pleasing thing is that we have demonstrated the capacity to manage these impacts through the last couple of years. I'm confident the company's ability to do so going forward. One of the unique features of the Australian rice industry, which allows it to successfully navigate highly complex international rice markets are the New South Wales government's vesting or single desk marketing arrangements. These arrangements ensure a coordinated approach to market access and allow SunRice as the sole exporter of rice grown in New South Wales to deliver significant export price premiums and freight scale advantages to growers through higher farm-gate prices. The New South Wales government is currently reviewing these vesting arrangements but the view to making the decision about whether they continue or not into the future. SunRice has been working closely with the government to highlight that vesting arrangements remain the most effective and appropriate way for Riverina rice industry to compete in world markets. And we welcome the strong support for the continuation of these arrangements from the Ricegrowers' Association on behalf of their grower members. In conclusion, a core principle of our company is to continue supplying growth and returns to our investors, while at the same time providing a strong paddy price for our Australian growers. I am confident as I reflect on the past few years and look ahead at the future that the strong international business that we have built, underpinned by the qualities of Australian rice, we'll continue to achieve these goals. There remains strong synergies and alignment between Australian rice growers and investors, which continues to ensure our company is robust. I thank my fellow directors, our growers, shareholders and the Ricegrowers' Association of Australia, the Rice Marketing Board and our dedicated employees for ensuring the company's continued success. I look forward to working with you all in the coming year. Thank you for your time today, and I now invite our CEO, Rob Gordon, to give his presentation. Thanks, Rob.

Thank you, Laurie, and good morning to everyone who has joined us today. When we held our AGM virtually last year for the first time ever due to the impact of the COVID-19 pandemic, I didn't believe that in 12 months' time, we'd be here again. And yet, here we are with even worse conditions than we had last year. The COVID-19 pandemic continues to impact our lives not only here in Australia but in all of the markets where we operate and has presented a range of challenges for your company, which I'll outline today. Of course, SunRice was not only impacted by COVID-19 in financial year 2021, but also the second consecutive year of drought, low water availability and high water prices in the Riverina, which led to our second smallest crop on record. Throughout the management of these dual crises, our focus has been on a number of important priorities. Firstly, keeping our people safe and our operations running so that we can continue to supply our essential food products to our customers and consumers around the world. Managing the increased volatility and risk associated with COVID-19, leveraging our strong balance sheet to continue pursuing our growth strategy, albeit with that pursuit slowed in some cases or having to come up with new ways of delivering our goals. Continuing to build our international rice supply capability and utilizing that capability to meet growing demand for our global rice products of in excess of 1 million paddy tonnes while keeping markets open for our Australian rice products given the low production in the Riverina. And closely managing costs while maintaining key skills, particularly in our Australian Rice Pool business, while positioning that segment for a recovery in production. I'll use this address today to address the key factors underpinning performance in financial year 2021, including exploring in more detail some of the impacts of COVID-19 on the business, providing an update on delivery of our growth strategy, including key developments in the execution of our sustainability strategy. highlighting the recovery in Riverina rice production and our plans for the Australian Rice Pool business and commenting on our outlook for financial year 2022 and beyond. Our focus over the past year allowed us to continue creating value for both classes of shareholders and has positioned your company for improved performance in financial year 2022 and strong growth into the future. Despite the challenges of the last financial year, we still launched new products, maintained core skills in the Riverina and executed an ambitious acquisitions agenda. This effort led to a creditable net profit after tax, which allowed us to pay a fully franked dividend in line with the prior year while maintaining the strength of our balance sheet. We also paid record high rice prices in the Riverina of between $750 and $1,500 per tonne. These results demonstrate true resilience delivered in a year when in contrast, many other companies were forced to reduce the headcount, cancel dividends or fall into loss-making territory. Our top line revenue was $1.03 billion, down 9% on the prior corresponding period. Net profit after tax of $18.3 million was delivered down 19% with EBITDA of $49.1 million, down 25%. A fully franked dividend of $0.33 per share was declared, and this is the sixth consecutive year at this level, equivalent to a 5% dividend yield, and $66 million was invested in strategic acquisitions, the highest in recent history. This slide briefly shows the results of each of our segments. If shareholders would like more detail on individual segment performance, this presentation and our more detailed financial year 2021 results presentation are both available on the ASX and on our website. We have spent the past 10 years executing a deliberate strategy to build our international rice supply chain capability to prepare for the exact scenario we faced during the past 2 years of near record low production in Australia. This included establishing our successful Ricegrowers Singapore trading business, stepping out into Vietnam with the acquisition of our mill in 2018, increasing capability in our SunFoods facility in California and entering into significant supply arrangements from countries, including China and India. In fact, as this slide shows, we sourced rice from 12 countries in the last financial year. This strategy was effective, allowing us to continue to meet growing global demand for our rice products despite only 5% of total supply being available from Australia. This capability enabled us to maintain supply to key markets so that we could return them to Australian rice when supply improved. And pleasingly, we've now started processing the 2021 Australian rice crop with some 417,000 paddy tonnes into branded products for sale into our most premium of markets. So while we are returning Australian rice to our key markets, we won't just switch off our international supply capability. In fact, we continue to build it out further. The variety of high-quality origins of rice across our international supply network now provides an opportunity to not only maintain positions in premium markets for Australian rice, but to meet demand in the future for bulk and branded products targeted at different price points in different markets. And we'll continue to maintain our capability in multi-origin, multiprice international rice sourcing as this improved capability makes our business model stronger. COVID-19 continued to present a myriad of challenges for the business, many of which are still present as we work through financial year 2022. And these included incredible disruption to global shipping lines, in a year when as discussed, we are leveraging our significant international sourcing capability to move rice products from 12 different source countries and complex supply chains to meet demand in approximately 50 markets. We had unprecedented challenges for our people with differing regulatory requirements, restrictions on movement and other complexities across the countries where we have operations around the world. We saw continuing limits on travel, which made it difficult for our teams to maintain relationships and build new partnerships face-to-face, although they've done an admirable job of this through virtual means. We also saw economies and sales channels in key markets, particularly those reliant on tourism being decimated by the impacts of COVID-19. And of course, the personal challenges faced by our employees, many of whom have spent months in lockdown or have continued working in our facilities to manufacture essential products or found new ways of working and communicating from afar while juggling home schooling and countless other challenges. I appreciate that the ongoing impacts of the pandemic have been immensely challenging for our people, and I appreciate all of their ongoing efforts. Now I presented this data on a number of occasions, but I think it's still an incredibly powerful illustration of the impact of COVID-19 on our Pacific markets and therefore, a lack of tourism. I'm using Hawaii as the reference point given that it has good data. And indeed, as this shows, there's been a stunning drop-off in international arrivals to that market, which is the largest for our SunFoods business in California. Now while pleasingly, in recent months, visitation numbers have started to recover in Hawaii, very recently that trend has slumped again, and the rest of the Pacific has yet to recover. The economies of some of our key Pacific markets, which rely on tourism, therefore, remains severely impacted. I mentioned the impact on shipping lines earlier, but I wanted to delve a little deeper as this is a significant impact on our business. We are in the midst of what I believe are unprecedented sector-wide impacts to global shipping lines with COVID-related demand increases and supply constraints. These impacts include significant upward pressure on prices with spot freight rates increasing by around 500% year-on-year. Productivity of key ports impacted by COVID and associated labor issues and congestion at ports resulting in major delays and slow recoveries and the global shortage of shipping containers especially for the specific 20-foot food-grade containers we require to move rice products. And this slide is particularly telling showing the incredible surge in spot freight rates. Now while this is for 40-foot containers, it is indicative of the similar upward pressure on rates for all containers worldwide. And the 20-foot food-grade containers used by SunRice are even more scarce supply. As you can see, since August 2019, rates have increased from around USD 1,500 per 40-foot container to over USD 9,000 last month. And if we were to ship right at these rates, it would mean a more than USD 200 per tonne cost just for the shipping. Now these are not past tense impacts. Just 6 days ago, the Sydney Morning Herald reported a terminal at one of China's main container ports and the world's third largest cargo port was shut down after a worker tested positive, and it remains closed causing congestion across China's other ports and impacting flows of goods across the Pacific. We've been harnessing our strong relationships with global shipping lines and developing a number of mitigation strategies to minimize these impacts on the business and on our financial performance. Despite managing the dual challenges of COVID-19 and drought in the last year, we did not take our eye of executing our growth strategy, leveraging the strengths of our balance sheet to deliver a number of strategic projects, investments and acquisitions. And while delivery of the strategy has been slow due to the low Australian production and more recently COVID-19, the Board confirmed that the core fundamentals remain appropriate and has extended the time frame for delivery from 2022 to 2024. Given that, we once again have a decent -- given that we have once again a decent Australian crop to be marketed this year, and the outlook for next year is extremely positive, there's a need to make up lost ground implementing our rice strategy. As a consequence, we've increased resourcing, and I'm delighted to welcome Bel Tumbers, who has joined the corporate management team as Chief Executive Officer of a new business unit, Global Rice. All facets of our rice business globally will be reporting into Bel with the exception of our Trukai business in Papua Guinea. Now Bel joins the business from her former role as Managing Director, Asia, Middle East and Africa Snacks with Kellogg's. And prior to this, she was Managing Director of Kellogg's in Australia and New Zealand and has lived and worked in Australia, the United States, New Zealand and Singapore. And as we move from strategy to execution in CopRice, we're also delighted to have attracted the services of Ganesh Kashyap, who will make the most of our recent acquisitions and prepare the business for the next phase of growth. Ganesh started his career in strategy consulting and spent close to 10 years working from Mondelez, leading the rollout of its e-commerce strategy across the Asia Pacific region and more recently, heading up its Japan business as Managing Director. These important steps ensure the company has the correct organizational structure and leadership to take us into the future and as we seek to deliver on our 2024 growth strategy. While COVID-19 and drought have slowed our pursuit of some strategic initiatives in the rice business, I'm proud of the significant progress we've made in other parts of the business. As this slide shows, in recent years, we've been leveraging our strong balance sheet to acquire value-accretive businesses and make strategic capital investments aligned to our growth strategy. This included acquiring the Fehlbergs pickled vegetable and Roza's Gourmet businesses in our Riviana Foods segment, purchasing and upgrading our Lap Vo rice processing mill in Southern Vietnam and building a bran stabilization facility in Leeton and acquiring Feedrite's facility in Wangaratta for our CopRice segment. And in the last year, we invested $66 million in acquiring 3 businesses focused on building scale, diversification and consistency of earnings, particularly in our Riviana Foods and CopRice segments. Our largest single investment was in acquiring the branded food importer KJ&Co Brands for $51 million in December 2020, which is a transformative and scale-building addition to our Riviana Foods segment. And this acquisition is already delivering benefits in the current financial year and is expected to be earnings per share accretive in the first full year of ownership. We've also extended CopRice's footprint into strategically important dairy regions of Victoria and New Zealand. And in September 2020, we purchased the beef and dairy business of Riverbank Stockfeeds in Gippsland for $5 million, while in March this year, we acquired a new dairy nutrition business in New Zealand for $11 million. And this marked the operational expansion of CopRice into its first overseas market. Now while CopRice is currently at the low point of its cycle due to good pasture conditions, we've deliberately used our strong balance sheet to make these acquisitions in preparation for an upturn in this sector. During the year, we continued to progress a range of other strategic and organic growth initiatives, including continued investments in our facilities, like the $4.5 million upgrade of our microwave rice facility in Leeton, and the signing of a significant agreement to guarantee a 3-year supply of high-quality medium grain rice for our SunFoods business in California, representing a threefold increase in the pool size for that business. We also launched the Riviana Basmati microwave rice range, Brown Rice Chips and Rice Cracker Chips in multiple international markets and a new, more affordable Asian-sourced rice brand SunGold, into the Australian food service market. Another key focus during the year was on sustainability initiatives, including defining the 6 priority issues and ambitions that support our sustainability framework and contribute to the United Nations sustainable development goals. This work was about defining those areas where we have strong capabilities and can make a difference, like water efficiency of rice, climate resilience and food safety, security and quality. Our team are now working in this financial year to develop the milestones and goals for these priority areas. We also undertook further work in financial year 2021 to respond to the task force on climate-related financial disclosures recommendations, and we released our inaugural Modern Slavery statement. In 2019 and 2020, rice production in the Riverina was severely impacted by drought, low water availability and incredibly high water prices exacerbated by water reform, which resulted in crops of just 54,000 tonnes and 45,000 tonnes, respectively. Now with rainfall and conditions improving in late 2020, our growers responded, planting a crop that ended up being 417,000 tonnes. And this despite increased water allocations coming only late in the planting window and yield impacts from one of the coldest summers in many years. As we look forward to the October 2021 planting window, which is for the 2022 Riverina rice crop, rice growing conditions are continuing to improve with promising water availability, lower water prices and a positive weather outlook for further inflows in coming months. We recently offered fixed price contracts and have been delighted with the overwhelming demand with a substantial volume taken up by growers. And what this shows us is that with improved water availability and lower water prices, growers were keen to take contract volume early to underpin their summer program. Based on that strong uptake, we're confident that production for the next crop should be higher again than the last 1 harvested earlier in the year, and we look forward to welcoming grows to the 2022 pool when seed orders open in the coming weeks. Now given the ongoing volatility and the factors that influence pool returns, we are unable at this stage to provide an estimated price range for the 2022 pool that will be planted in October, harvested in April next year, and then processed from that point until early 2023. The factors influencing that range will be foreign exchange rates, world rice prices, conditions in end markets, ongoing disruption and volatility in global shipping supply chains, overhead recovery in the Riverina, milling yields and on-farm production yields and crop size. However, we will provide an uptake to growers on the estimated range for the 2021 pool currently being marketed at the time of the planting window opening in October 2021. Now we've taken the opportunity during the last 2 years to examine our cost base and identify the most cost-efficient milling footprint for our Riverina operations as they ramped back up to process larger crops. This will see us invest further in our Deniliquin site to reduce conversion costs as well as our value-added rice processing assets in Leeton. It's imperative that every aspect of our supply chain is optimized so that we can return the highest possible returns to our Riverina growers. This slide shows the importance of that work as there are now a number of good quality and affordable medium grains from other origins now competing with Australian rice. There's also a limit on the amount of Australian rice that can be sold at a premium and those markets are changing. A number of the countries that used to be able to afford the premiums required for Australian rice are now no longer able to given the significant deterioration in their economies. The resulting reduction in conversion costs and improved overhead recovery due to the extra volume we're anticipating, will help us offset the lower market return as we extend into less premium markets. With the increased Riverina production and realization of benefits from other strategic and organic growth initiatives, we are expecting earnings to improve across most segments in financial year 2022. The Australian Rice Pool business will, therefore, not record a loss and will recover its fair share of overheads while supporting earnings improvement across other segments that use Riverina rice as an input in their production cycle. And notwithstanding the improved production in Australia, our Ricegrowers Singapore trading business is expected to remain a strong contributor to group financial results continuing to leverage its capability in multi-origin, multi-price international rice sourcing. The variety of high-quality rice from a range of origins across SunRice's international supply network should also -- demand to be met for bulk and branded products targeted at different price points for different markets. Our recent acquisitions continue to be integrated and are contributing positively to earnings. And SunRice will focus on accelerating delivery of its 2024 growth strategy throughout financial year 2022 and is looking to continue leveraging its strong balance sheet to explore value-accretive acquisition opportunities. However, there are a number of factors weighing on this improved earnings performance outlook, including COVID-19 related lockdowns and restrictions, the overhang of inventory in markets due to the delay in delivery of the end of last year's crop and increased sea freight costs. as well as, of course, strong pasture conditions persisting in Eastern Australia, placing downward pressure on demand for particular livestock products. Now as I look ahead to the next year, I'm reminded of the extraordinary efforts of our staff around the world in weathering the dual storms of the past couple of years of drought in Australia and the COVID-19 pandemic. The flexibility, innovation and sheer resilience of our people has been remarkable, and it is in large part why our company has been so successful in managing these challenges. While we're still battling the headwinds of COVID, it's incredibly pleasing to be out of drought in Australia and to be focusing on accelerating growth as we look forward to improve conditions ahead. I look forward to working with all of our important stakeholders to continue delivering value in the year ahead. Thank you all for your time today, and I'll now hand back to the Chairman.

Thank you, Rob, for a very comprehensive review of the business. Kate, have we received any questions from shareholders in relation to my presentation or Rob's?

Yes, Chairman, we have received 1 question online, and that is from [ Melissa De Bortoli ]. Her question is in light of the ongoing challenges that businesses face in current times, it is pleasing to see SunRice successfully execute a number of other acquisitions during the year that support company growth. With that said, what are some of the opportunities and/or challenges for the year ahead.

I would like to thank Melissa for that question. I'll pass that question straight through to Rob Gordon. Thank you, Rob.

Thank you, Chair, and thanks, Melissa, for the question. And also your comments with regard to the acquisitions. We certainly are pleased to have been able to build out the Riviana segment with the acquisition of KJ&Co and to have been able to expand geographically into the 2 key dairy regions mentioned a moment ago. I think the biggest challenge this year is going to be the ongoing impact of COVID. It's creating enormous volatility across a number of factors in our business, ranging from foreign exchange to supply, demand in various markets. And it's not just the fact that there are challenges, it is the fact that they changed so very rapidly and the volatility that's caused by it. If I give a bit of color, we actually launched a new price fighter brand based on Asian sourcing into the food service market in Australia. It was going gangbusters until we had a lockdown in major cities around Australia, and of course, that stock sits there now waiting for the food service channels to reopen. Similarly, our mill in Vietnam is in the part of Vietnam that is in very, very strict lockdown. And we're supplying fragrant rice for various promotions in some markets. And we're struggling to get shipping out of that market and had to switch into other origins. And as I mentioned earlier, this year inflation impacts in our shipping freight rates have meant that markets that we had intended to sell into are now no longer profitable for us purely because of the increase in shipping rates. So there's been a number of issues that are changing very, very rapidly. I'm delighted to say that our team has demonstrated that they are very nimble, they're incredibly dynamic. And I remain, despite all of those challenges, very optimistic about the year ahead. And the fact is that people are managing those challenges often from their home office or bedroom on Zoom calls all day long, whilst home schooling or having their partner also on other calls. So it really is a credit to the team that they've been able to be so flexible and that there's a real optimism around the business about this year ahead, particularly with Australian rice to market.

Thanks, Rob. And I'd like to congratulate Melissa on her farm. Her local farm hosted the grower of the year, so well done on that. Do we have any further questions, Kate?

Chairman, no further questions online at this point. Operator, do we have any questions or comments by phone?

There are no questions on the phone.

Thank you, everyone. We'll now move on to the agenda items. All members have been provided with the annual report including the financial report, Directors' report and independent audit report for the year ended 30th of April 2021. You've heard from both Rob and myself. Kate, are there any comments and questions from shareholders on those documents.

There are no online questions, Chairman. Operator, do we have any questions or comments by phone?

There are no questions on the phone.

Thank you. We'll now move on to the next item of business. All members have been provided with the remuneration report for the year ended 30th of April 2021. As outlined in the notice of Annual General Meeting, the remuneration report forms part of the director's report. The vote on this resolution is advisory only and will not bind the directors or the company. However, the Board will take the outcome of the vote into consideration when reviewing the remuneration practices and policies of the company. As described in the notice of meeting, a voting exclusion statement applies to this resolution. I would like to clarify that the intention of this resolution is to endorse the remuneration report for the prior financial year. I would now like to invite the Chairman of the Remuneration Committee, Independent Director, Ian Glasson, to introduce the remuneration report.

Thank you, Chairman. SunRice very carefully assesses remuneration of its executives in line with both peers and market trends. So the outcomes in this remuneration report reflect the strong performance of the management delivering against the agreed objectives in the face of what were very difficult circumstances during the last financial year. In addition to the challenge of the extremely low crop, this year was disrupted by lockdowns, restrained resourcing to control costs and ongoing market challenges, which were amplified by restriction on travel. And against this backdrop, the group's management team demonstrated enormous effort in achieving most of the agreed objectives and targets, deliver value for both A and B class shareholders. This included sourcing rice from 12 countries to meet demand in around 50 markets, paying record price for rice at the farm gate in Riverina and delivering $18 million in net profit after tax, which allowed the company to clear a fully franked dividend in line with the prior year. In addition, despite significant uncertainty, the team retained a sharp focus on executing SunRice's growth strategy which allowed us to capitalize on multiple opportunities. So together, these achievements position SunRice not only for this year but for the longer term. Thank you, Chairman.

Thank you, Ian. Kate, are there any comments or questions from shareholders?