FUTURE strategic directions, land acquisition, alternate land use and the prospect of shareholder dividends were among topics raised by shareholders at the Australian Agricultural Co’s annual general meeting held in Brisbane this morning.

As reported earlier, AA Co reported an operating profit of $50.5 million for its 12 months ended March, although significant herd valuation downgrades impacted the statutory net profit after tax result, which showed a $94.9m loss, down almost $100m on the previous year.

As has been the trend since the onset of COVID when the first virtual AGMs were held, most interested shareholders preferred to log on to participate in this morning’s event. Only a handful of direct shareholders were present in person – a far cry from the days when AA Co’s AGMs attracted 250 people or more.

Dividends?

As is customary at the AGM every year, patient shareholders raised the prospect of a dividend – unseen since 2008.

Once again, the company said there would be no 2024 dividend, instead prioritising making capital investments in the company’s future.

“AA Co’s future strategic direction will require new and expanding investment,” board chairman Don McGauchie said.

He used the recent expansion at AA Co’s Goonoo feedlot in Central Queensland as an example, which will increase supply into global markets. Other investment targets came under the topics of sustainability and commercial initiatives.

“We intend to continue focussing our resources towards these efforts, and growing the value of assets within the company,” Mr McGauchie said.

Land acquisitions?

Another shareholder asked about the prospect of buying more land assets for the portfolio.

“While we are in the process of a strategic review of company operations, the intention is to optimise the value of the existing portfolio, and the assets within it. There are no current intentions to purchase more landholdings, but if an opportunity arose to buy a landholding which further optimised our supply chain, we would consider this on its merits,” he said.

Other shareholders asked for more detail about the review of strategic directions, and the price direction of Wagyu cattle.

Mr McGauchie said the purpose of the review was to “build a better beef program,” by improving on the quality of genetics used, and further leverage the company’s assets to maximise their value, and pursue new revenue streams.

Livingstone beef plant

He said the company was also assessing options for the Livingstone Beef processing facility near Darwin, which closed spectacularly just 12 months after its launch in 2017.

“We are open minded about the opportunities to achieve the best strategic value for this asset, and are also looking at opportunities to strategically invest in, with key partners, to build our market-leading positions and integrate for the future. We’re all very exciting about these opportunities.”

Regarding the price movement of Wagyu cattle, Mr McGauchie said external expertise was used to value the herd each year, referencing prices received for cattle which were similar to those run in the AA Co herd.

However there was only limited public data available on the price of Wagyu cattle, and he was unable to provide specific price movements on any parts of the herd since the end of financial year 2023-24.

He noted the fluctuations in broader market indicators like the EYCI during 2024.

“The uncontrollable and unpredictable nature of market valuations for our cattle is why we focus on operating profit as the best measure of cattle performance. The majority of our herd is focussed on production of high quality Wagyu beef in the long term, and the value of our Wagyu animals in general will not in general be realised in the sales of live animals,” he said.

Questions from the floor asked about progress in alternate land use beyond beef production, raised in brief at last year’s AGM.

“The vast tracts of land that AA Co owns are quite remarkable, and we are certainly looking at what ever opportunities might be out there as part of the strategic review being held. There might well be some that pop up,” Mr McGauchie said.

“As part of the ongoing running of the business, things like how we sequester carbon – which we will need to do, as well as containing the carbon (methane) output of the herd, we may need to be offsetting some of that as well. There’s opportunities there, and potentially opportunities for selling carbon credits,” he said.

“But there’s a whole lot of other things we might do, and are very much looking at those as part of this review process. But having said that, it’s been my intent and chairman, and David Harris’s as CEO, to really focus on getting the beef business working as well as we can get it working.”

“That’s where the big dollars are, but that doesn’t mean excluding opportunities that might exist in some other parts of the business, and other ways we can do things.”

Mr McGauchie said diversification had been a feature of the company for 200 years. AA Co had a monopoly on the coal industry in the 1850s, and built the first railway line in Australia.

“So the company has always had a view to look for opportunities, and will continue to do that.”

However he pointed out that as a listed company, it could not “talk about these things” with the market, until there was enough substance around them  to be able to report accurately to shareholders.

“We’re all seeing this greenwashing issue now become quite a significant one, and we are highly conscious of that, in reporting ‘high flying’ ideas that may not come to anything.”

“We’re a bit conservative about that, but I guess that’s why we’ve been around for 200 years.”

During the AGM, Tavistock representative Josh levy was voted onto the AA Co board with 99.2pc of shareholders in support, replacing retired Tavistock director Shehan Dissanayake.

• AA Co shares closed at $1.37 today, down from a recent high of $1.49 on 4 July.

Tomorrow: Growing focus on sustainability in AA Co’s AGM presentations