Skellerup Holdings Aktie

All right. Good morning, everyone. Close enough to 10:00, so we'll get underway. Thanks for joining us for this presentation on Skellerup's First Half FY '26 Results. For those of you that don't know, I'm Graham Leaming, the CEO; and with me is Tim Runnalls, our CFO.

As per normal, Tim and I will provide an overview of our business, and then we'll take questions at the conclusion of the presentation. Please do keep your microphone on mute until [Technical Difficulty] Okay. I think we're good again. We might have just temporarily moved into mute mode there. We'll move to Slide 2. And as reported earlier today, very pleased to report record revenue, operating earnings, net profit after-tax, and cash flow for the first half of FY '26. EBIT was up 16% on the pcp, which was also the prior record. And as the graph shows, over the past 7 years, we've achieved a compounded annual growth rate of 11%.

NPAT was up 20% on the pcp, which again was the prior record. And as the graph shows, over the past 7 years, we've achieved a compound annual growth rate of 12%. Cash flow was also up 20% on pcp and a record first half result. Our record earnings and cash flow means we've again increased the interim dividend up to $0.10, up $0.01 per share, or 11% on the prior comparative period.

At the close of the first half at December 31, 2025, net debt stood at $17.5 million. That's just 5% of the value of the total assets employed in our business, or 7% of the net assets. As our results suggest, our business is very well placed. I think our team are doing an excellent job focusing on the things we can control, executing on current business well, and that provides the platform to win new opportunities.

Of course, the geopolitical uncertainty persists and that makes forecasting difficult. However, based on year-to-date results and our prospects ahead of us, we've increased our FY '26 earnings guidance for net profit after tax to be in the range of $57 million to $62 million.

Before we get into more detail at the divisional level, Tim will discuss the key drivers of net profit after tax change and the key financials for the first half of FY '26. Tim?

Thanks, Graham. The waterfall chart with which most of you will now be familiar, reflects the key drivers of the 20% increase in reported NPAT for the first half of FY '26.

Moving from left to right on the chart, I'll start with the Industrial division, where more than 60% of this division's revenue is derived from the key potable and wastewater applications, as well as the roofing and construction application. We're pleased to report good growth in both of these product applications this half year.

Firstly, in potable water, we've seen a strong increase in demand and market share gains in the U.S. infrastructural pipe fitting market and a positive return to more normal levels of demand from a key U.S. tapware customer. Revenues from the sale of our vacuum systems in the U.S., primarily used in wastewater, continue to grow through market share gains and new product development and launches.

We've seen a return in demand for roofing products. Primarily roofing washes into the Asian market as well as indications of a rebound in the Australian residential construction sector, which has been subdued for several years now. Demand for solar roof flashing products has continued to provide a key driver of growth, particularly in the U.K.

Pleasingly, we've seen solid growth in all other industrial applications, except for automotive, impacted by weaker demand in the European gas automotive market, and in health and hygiene, where a key customer paused production or paused their production to relocate their operations for most of the first half of '26. Supply has now recommenced to this customer with volumes consistent with prior levels.

Moving to the Agri division. Dairy has benefited from a strong demand from international customers, both from OEMs and from our own high-performance dairy rubberware products sold under both the Skellerup brand as well as our own Conewango brand in the U.S. New products, customers, and markets have contributed to this growth, something that Graham will touch on in a bit more detail.

Pleasingly, we've seen significant growth in sales of our silicon tubing manufactured in the U.K., particularly in the U.S. market, and to a lesser extent, growing sales of our Ambic-branded animal hygiene products.

Across our dairy manufacturing operations, the stronger demand flowed through to production volumes, which, together with our ongoing focus on equipment and productivity improvements, meant a lift in gross margins.

Demand for our specialty rubber footwear has been solid with revenue growth in New Zealand and the U.S. Increases in raw material costs and lower overhead recoveries from a deliberate slowdown in Q1 production volumes to manage inventory levels have negatively impacted margins in our footwear group for the half year.

The unfavorable FX result for the period was largely a factor of settlement of currency hedges at rates unfavorable to market spot rate. The benefit of the lower spot rates on the underlying operating earnings is reflected within the product applications on the chart. A reminder that as a group, we have a fairly strong natural hedge, so our net exposure is relatively small when compared with top line sales. We remain well hedged for the second half of FY '26 at rates comparable to market spot rates currently.

You will note that across the 2 divisions, we estimate the impact of U.S. trade tariffs on the first half to be around $1 million, $700,000 falling within the Industrial division and $300,000 falling within the Agri division. This is the net impact after taking account of the mitigations put in place to reduce this cost.

Moving to Slide 4, which reflects the group's key financials over the past 7.5 years. Revenue growth has been broad-based across divisions, markets, and applications, resulting in an 11% increase against the prior comparative period. Gross margins have improved for the Industrial division through the introduction of new products at better margins and a focus on operating improvements. Agri division margins grew favorably in dairy, but as previously mentioned, footwear margins somewhat eroded the impact.

Indirect costs were well controlled, up 8% on the comparative period and below the growth in both revenue and gross margin. Around half of this increase is due to the impact of the weaker New Zealand dollar on the translation of foreign operations. However, ongoing investments have been made in additional head count within sales and development to drive revenue growth and product innovation.

Lower financing costs and a lower effective tax rate against the prior period have meant NPAT finished 20% above the comparative period. As Graham mentioned earlier, operating cash flow is a record for the first half and, in fact, any half year with the increase in after-tax earnings and prudent management of working capital, where inventories have reduced following some pretariff build to more manageable levels, although still elevated to mitigate the impact of tariffs, supply chain disruptions, and to meet increasing customer demand.

Net debt at $17.5 million reflects a continued low level of gearing despite an increase in the FY '25 final dividend paid in October '25 and an increase in capital expenditure to around $8.9 million. This increase reflects the timing of investment activities in modernizing production equipment, primarily in the Agri division. It's important to note that this is not the new run rate of the group's CapEx, rather reflects the timing of those cash flows relative to the execution of the projects.

With that, Graham will cover more detail on the individual divisions specifically.

Okay. Moving to Slide 5, and again, this will be a chart you're familiar with. We're just waiting for -- I'm sorry, there we go. So group revenue by market geography. And as this shows and as we've talked about many times, more than 80% of our revenue in the first half of the year was generated from international markets. We are a global business. North America continues to be the largest share of our market with an increase there from 35% in the prior comparative period to 39% in the first half of this year.

As Tim has mentioned, we've increased sales into the key dairy, potable, and wastewater applications when Tim discussed the earnings bridge. New Zealand remains the next largest market, and whilst down 1 percentage point on the pcp, absolute revenue was up just over $1 million, or 3% primarily from increased sales into the dairy sector. European revenue ticked up 1 percentage point, principally due to the growth in dairy applications in the first half of FY '26. The Australian market was down with some growth in roofing and construction, offset by the timing of project-related sales for mining applications. We expect this to recover in the second half of the year. We have a good, strong order book for sales of products in the mining applications.

Asian revenue share was flat with growth from sales into roofing and construction, and dairy, partially offset by the lower sales into the health and hygiene sector, as Tim mentioned, where a large customer paused production for a period whilst they relocated their assembly operation. Business resumed at the very end of the first half, and we expect that will be at normal levels for the second half of this year.

U.K. and Ireland share of revenue was maintained with sales into roofing and construction, and in particular, the solar application continuing to grow compared to the first half of last year.

We'll move to Slide 6. And Slide 6 provides revenue cut a different way, split this by market application. And we continue to focus overall our development and manufacturing activities and investments on products for -- we talked about this a lot -- high-performance and high-conformance applications. In the first half, more than 50% of our revenue came from sales used in the transportation of milk and water. Sales into dairy applications grew to 27% of group revenue and sales in potable and wastewater applications paced the overall revenue growth of the group, comprising 25% of group revenue.

As we noted, roofing and construction revenue moved up 1 percentage point with growth in sales in Asia, the U.K., and Australia. Health and hygiene was down, as mentioned, the customer pause, resulting in a fall of about USD 850,000 in the first half of FY '26 compared to the prior year. Mining was also slightly down due to timing. The percentage sale of sales into footwear and all other industrial applications remained in line with the prior comparative period.

Moving to Slide 7, which is a bit more of a focus on the Industrial division. We've touched on some of these factors. But if we look at things on a constant currency basis, headline revenue up 6%, earnings up 12%. If we adjust for currency movements and express it in a manner consistent with the prior comparative period, EBIT was still up 9%. And that compound annual growth rate of EBIT over the past 7.5 years sits at 11%.

As we touched on, potable water and wastewater growth was strong, up 17% on the prior comparative period. The largest contributor for us was in the U.S. market where we had good growth, we believe, in share into the pipe market where we sell gaskets and some recovery from some of our tapware customers contributing to that increase. Also, we continue to do well in the Australian market with some good growth into the pipe gasket market there as well.

Demand for our vacuum systems, which are used in wastewater applications again increased, reflecting the position that we hold in the market there with a high-quality product very well delivered to our customer base.

Roofing and construction growth up, as I noted there in all of our key markets with the exception of the U.S. where we had a very strong finish to the end of FY '25 and as a consequence, slightly softer first half for our roofing sales into the U.S. Health and hygiene sales impacted by customer production pause as we've noted.

On the back of that revenue growth, we've also improved gross margin, and that really does reflect 3 factors: pricing improvements we were able to make in the market, the mix of products we sell, and productivity gains, and very pleased to achieve these despite the impact of tariffs in particular, in the first half, as Tim noted on the preceding slide, incrementally around about $700,000 of additional cost to us, net of the changes we made and mitigants that we implemented, compared to the first half of last year.

Equally importantly, we have a healthy pipeline of opportunities for both OEM customers and our own branded products. There's a couple of images on the page there. On the right-hand side in the middle there, the sectioned image of a dual check valve used in smart metering applications in Australia, something we've talked about before as an area where we think we'll get good growth in the coming years. We expect that growth to begin to materialize in the second half of this year based on the forecast and orders we're getting from customers and to be a good incremental revenue growth for us over the ensuing 2 and 3 years.

On the left is an example -- sorry, is an image of product we manufacture that's used in a water tempering valve. That product includes, again, a couple of check valves, which is used to moderate the flow and the mixing of hot and cold water in behind the wall in large residential and commercial buildings. So that's a new product that we've developed that not only services new valves going in, but also as a replacement product into existing valve installations and a nice feature of that product is -- it doesn't show on this picture because it doesn't present very well, but a sleeve we supplied and allows for easy installation as an example of some of the innovation we bring.

So there's just a couple of examples. We do have a very healthy pipeline of opportunities for the Industrial division. And I think the quality of that pipeline is better than I've seen for a number of years. So we're in good shape there.

Moving to Slide 8 and the Agri division. Obviously, an excellent result for the first half year for Agri with revenue up 21%, earnings up 20%. Just noting there that the Agri division, which has the largest net currency exposure and therefore, was impacted by the hedging arrangements put in place. If we adjust for that, EBIT was actually up 24% on pcp on a constant currency basis. That performance means that the compound annual growth rate for EBIT over the last 7.5 half-year periods now sits at 10%.

The dairy growth, as we've already touched on, was broad-based. And importantly, there's a strong contribution from new products. There's a couple of images there again in the middle of the presentation. Those of you who have sat in our presentations at recent times recognize on the left-hand side, there's a Thriver calf feeding teat. That was one of the contributors to revenue growth in the first half. First half revenue from sales of this product were a little over NZD 1 million and that quadrupled the revenue we achieved from that product in the prior half year period.

We've also had good growth for sales of our own branded liners and strong growth through the OEM customers that we service as well. The image alongside the Thriver teat there is a high-performance liner that we've been selling and growing very strongly within the U.S. market for the past 18 months. And actually, just this month or next month, we'll begin to sell that liner in a single-use shell, which is what's shown in that picture here. We have been supplying a silicone liner and lower volumes in a single-use shell over the first half of the year.

Just an outstanding results for the Agri division. There was a small boost or a contribution to that growth from a change in customer incoterms with a couple of customers, which grew revenue by 4%. So again, if we normalize that out, our revenue growth would have been around about 70% for the Agri division, still a very good number. And as we've talked about in the past, the opportunity for growth is most significantly in the international market. The international sales for the first half of the year were up 29% on the prior comparative period, but the New Zealand domestic market was also robust, as you might expect, given the overall environment for dairy up 16%, and it also includes some improvement from the range of products that we sell.

The increased production volumes have been delivered with improved productivity. You've seen the capital investment we've been making over the past couple of years to modernize our capability in our facilities, and that's continued in the first half of this year.

As Tim touched on, footwear revenue up in the first half. New Zealand domestic revenue up slightly, and we have a significant market share in this market. So the opportunity for growth from our existing product range is somewhat capped, but we had good growth in the international market and in particular, for our specialty footwear into the U.S., used in the U.S. utility applications.

We're continuing to make investments in our development capability and our manufacturing platforms and the positions -- sorry, the business is well placed for growth. Just from a footwear point of view, I mentioned there the strong market share we have in New Zealand that caps the opportunity from existing products in Q4, you will see us launch a new product in what we're calling our lifestyle range, which will be a really exciting step forward for Skellerup. I'm not allowed to show you any images of that yet, but you'll get to see that in the very near future. So we're pretty excited about that as well.

Okay. Moving to really a final slide. And again, this is a page you've seen before. We're keeping to the core principles of our business strategy, and that is utilizing and investing in the deep technical expertise that we have to make predominantly polymer-based products for high-performance and high-conformance applications.

Our development activities continue to be customer focused to ensure we understand their requirements and deliver what they need. We are a global business. At the end of December, almost 60% of our just over 800 people were based outside of New Zealand. Over the past 6 months, we've added additional sales resource in the U.S. and Asia to ensure we can capitalize on the opportunities for growth we see.

We have made further investment, as I said, to boost capacity and productivity in our manufacturing facilities, both Agri and Industrial. And we continue to evaluate further investment in international markets. Alongside these focus and priorities, our business model with accountability and resources, where we make and sell products, i.e., in the markets that we're in, remains a cornerstone of our business now and in the future.

Thanks for your time. Let's take some questions. So I can see 3 hands up already, and we probably could have predicted those. We'll start with you, Guy.

Well done on a really strong result, very impressive. I think I guess the first one for me just around the dairy side. That growth, particularly, as you said, from the international markets, North America and Europe, has really accelerated. How should we think about that annualizing? I know you called out a little bit of the contributions from new products, but it appears that there's some pretty reasonable underlying share gains. Is that fair?

Yes, I think you have to conclude that we won some market share. The difficult thing is always there's a number of nodes in the supply chain. So how far through can you see those, and is there any inventory build happening somewhere in the chain. But notwithstanding that, we have definitely won market share in the U.S., and we believe we've won market share in Europe.

We're beginning to win some new business in markets we've been focusing on in Europe. France is a market where we haven't had much in the way of sales in the past, and we picked up a new customer there. And also we are beginning to sell some product into customers in Eastern Europe as well, which has been a focus and a priority of ours.

And we did have the boost from a change in incoterms in the first half as well. But even allowing for that, a really strong performance from us in the first half. It does reflect and I guess validate the work we've been putting into investing in our product development team. And my observation is we are able to complete development projects a lot more quickly than we would have, say, 3, even 2 years ago -- 3, 4 years ago. So that gives us an opportunity to grow at a faster tempo than we did in the past.

Okay. And just given that growth in Agri, like how should we think about the seasonality of earnings going forward? if I look historically, I think seasonality of NPAT was always second half weighted. But if you take the midpoint of guidance, we're closer to a 50-50 assumption this year. How much of that is this change in earnings mix maybe in favor of Agri versus general conservatism around geopolitics and supply chain disruption?

Yes. I think we're right to be cautious about the second half. Obviously, if you take the midpoint of our guidance range, that's a modest increase over what we achieved in the second half of FY '25. geopolitical is something that we're mindful of and what impact that could have on demand. We have got a slight incremental increase in tariff costs. So we talked about, compared to the first half of last year, there's about $1 million of additional cost, net of the mitigants we've undertaken in the first half result.

We're still continuing to make inroads on that cost, but one of the benefits that we enjoyed in the first half was the inventory investment we've made. That's largely worked its way through now. So we expect about an additional $0.5 million of tariff costs in the second half of the year. You might recall when this thing first broke about a year ago, we said we think we can get back to an annualized incremental cost of about $5 million. We're probably now back at an incremental annualized cost of $3 million, and I expect by the time we get to the end of FY '26, we will have made further dent on that. And I'd like to think we're back to an incremental cost annually going forward, assuming no other changes, of $2 million. So continue to shrink it.

I guess the other thing in the second half of the year, something to be a little bit cautious of is New Zealand dollar has strengthened a little bit. A lot of our earnings are overseas. Yes, we do hedge our transactional exposures, but the currency is a little bit stronger. So we're mindful of that. We're certainly protected from a transactional point of view, but there could be some translational headwind there.

And we're continuing to invest for growth. Tim and I mentioned, we've made some investments in some additional people. And whilst those aren't massive, but in the last 3 months, we've added in 3 personnel at the front end in the U.S. and also employed someone to head up our growth initiatives for dairy in China. So we're adding in costs. Whilst I think we'll get a pretty rapid payback, I'm not sure that we'll necessarily recover all of that cost in the second half. So yes, we're being cautious with the guidance we provide, but we think it's appropriate given all the factors out there.

Yes. And first half, second half split, traditionally, I would think that we would continue to have a stronger second half than we did in the first half. You might recall during the COVID time that got disrupted a little bit, and we've gone back to a slightly more normal pattern. I think I did say last year that the weighting for the second half was probably a little bit stronger than we might expect going forward, and we expect that gap to narrow a little bit. But generally speaking, with the seasonality of some of our business, whilst that has less of an impact now than it once did, if you think about the first half of the year includes a Northern Hemisphere summer, particularly in Europe, things slow down for a period. And then Thanksgiving and the Christmas period, typically, our second half is a little bit stronger than the first half of the year.

And then I guess just one last one for me. You talked about the additional investments you've made. There's also, I guess, a reasonable step-up in CapEx as you flagged previously. Can you talk a little bit about expectations for the full year for that number, but also maybe just where some of that additional investment is going?

Yes. So I think last -- in the preceding couple of years, we're around that $8 million, $9 million, $10 million mark. And I said I think for the foreseeable future going forward, you'd expect to see us spending an extra $2 million to $3 million. We have -- because of the success in the results that we've had with some of the investment we've made in modernizing the equipment capacity, particularly at our larger facility in Wigram, we've probably started to move a little bit faster with investing in more of that. So there is some timing of payments going on.

We expect full year CapEx for this year might be $13 million to $14 million range. Then in ensuing years, I think perhaps we come back closer to $12 million to $13 million, but you certainly wouldn't want to take the CapEx we've incurred in the first half of this year and double it. I think that was a new normal. It's more that $12 million to $14 million range I see for the near term because we're seeing the benefits of the investments we're making in terms of providing us with the additional capacity we need to meet the growth in demand, both for Agri and Industrial, and doing it in a more efficient and effective manner. We'll move to you, [ Rob ].

Congratulations on a great result. To kick off with, so I believe you said that you did 10% year-on-year NPAT growth in the first quarter '26 and then you've delivered 20% for the first half. So there's obviously been a pretty strong acceleration in the second quarter. Can you speak to what drove that? Is it like revenue or...?

Yes. So traditionally, the second quarter is our weakest quarter of the year. So we're always somewhat cautious on that. And certainly, it was our weakest quarter in the year last year. The second quarter has been stronger for us this year. If you look at the delta between Q1 and Q2, it is much smaller in the second quarter of this year, and there's a bunch of factors driving that.

We have had stronger demand than we were anticipating, continued strong demand than we were anticipating 3 months ago for our potable water products, particularly in the pipe gasket market in the U.S., and we continue to see strong demand for our dairy rubberware products. They are the 2 biggest contributors to that result in the second quarter. And as I say, when we look at the profile of our earnings typically over many years, the second quarter normally shows a stronger dip than what we've seen this year.

But just to be clear, so -- yes. But a year-on-year basis would take out that quarter-on-quarter strength. So I guess what I'm saying is that revenue was very good for the half, 11%, but that might have accelerated in the second quarter.

Yes, certainly, compared to the second quarter of the preceding year, there was a greater -- if you look at the quarter-by-quarter, the growth rate in Q2 of FY '26 compared to Q2 of FY '25 was larger than it was for the Q1 comparative.

And just on the guidance, so you're guiding to second half NPAT of about $31 million at the midpoint, and that's up 1%. But obviously, there's tariff impacts. So if I think there was $1 million tariff impact in the first half, and you said you'll expect an extra $0.5 million, so long story short, taking out the tariff impact in the second half, it implies underlying growth of 4% NPAT. What is driving that? Because it's a pretty significant slowdown from the 20% and the revenue is accelerating in the second quarter. So what's driving that slowdown in the second half?

I think it's the -- I guess the slowdown hasn't occurred yet, [ Rob ], but I think it's caution -- if you look at the strength of the Agri result, particularly dairy in the first half of the year, we are always mindful of could there be some timing with the demand from some of our international customers. Remember for a lot of these customers, we sell product on a delivered basis. We have had some changes moving to FOB, which gives us greater certainty over when we book the revenue. But with the dairy revenue so strong in the first half, we're cautious over whether this year we might have brought forward some demand from the second half into the first half results.

So that's certainly one of the reasons. And then I touched on a few of the other ones. Yes, there's a small impact from the tariff. We have added in some additional costs, which we think is good for our growth relatively immediately, but certainly moving into '27 and '28. And we've taken a cautious view on where the FX rate may sit in the second half of this year compared to where it sat in the first half of this year and indeed in the second half of last year, I guess.

So yes, we've been cautious, but I think that's appropriate at this point in time given where we are. We're not backing away from our ambition for the business and the opportunities that we have. But I think it's prudent that we consider all those factors when we provide some future guidance for the near term.

No, that all sounds good. And because obviously, there's been a bit of volatility with stocking and destocking in Agri, so good to be cautious there. But just to be clear then, because it's obviously stellar growth in Agri division. That's historically been about 4% revenue growth. But up to date in the second half, are you seeing any indications that there's been stocking into the channel in Agri?

No. Obviously, we're 1 month into the second half. So our January result was good. Fractionally above our expectations. So we've made a good start to the second half. But we don't have a long visibility really for much of our business. Whilst we have the pattern of demand we have over time suggests we have customers with pretty robust businesses and therefore, pretty robust demand for us.

In terms of open orders on the books, other than for sales of products which are going to be on a delivered basis, which is some of the Agri and dairy sales as we talked about, we don't have a long visibility on an order book. So we can't see too far into the future.

Congratulations again, guys.

Rohan.

I just turned my camera one. It's turned off, again. Sorry.

There you go.

Sorry to go on and on about guidance. But through that presentation, you said mining will be up in the second half. Health and hygiene is restarting, so that's up in the second half. Tapware is more normal. So I assume that it wasn't that good in the second half of '25, so that will be better. You've got new Agri products, which are doing $4 million to $5 million incremental revenue. Calf feeding is 4x. You probably didn't have that second half last year. You used to talk about tariffs being a $5 million headwind full year run rate. And I know that's probably phased in over this year, but that's now $3 million, so there's a $2 million upgrade. Smart metering comes in second half, productivity and margin benefit run rates build because you've been installing the CapEx over the half. So I'm assuming that gets better in the halves ahead, hopefully. Footwear is in the fourth quarter, and incoterms, I'm not sure whether that repeats or not, like you said, but there's a possible benefit there. Like are you just being way too conservative?

No, I don't think so, Rob (sic) [ Rohan ]. I think if we break down -- we will tick off and address all of those things. But I'll say, Rob -- sorry, Rob. Sorry, Rohan.

You're close.

He's been called worse.

That's right. Just going back to the calf feeding piece for a moment. Yes, we did have reasonable sales in the second half of last year. So that's a little bit of an unknown for us in terms of what level of market penetration or growth we might achieve in the second half of this year. We are trialing on U.S. farms, and we're into our third round of trials now, but we don't expect that to be a material contributor to the second half performance of the group. But we will have the normal seasonal demand in the New Zealand market, which is most of our calf feeding Thriver sales at the moment.

So yes, we expect to get some incremental growth in the second half of the year. We -- I think we're right to be cautious on liner sales because the numbers we achieved in the first half exceeded our expectations. The incoterm boost will not repeat in the second half of the year. That was -- we picked up all of that benefit because essentially what it meant was we got some both delivered sales and then switching to FOB, the timing of recognition became sooner. So that won't repeat in the second half of the year.

Thinking about on the Industrial side with pipe gasket sales, they were very strong in the first half. I think we called out potable and wastewater sales were up 17%. They were also pretty strong in the second half of last year. You'll remember last year, I think our first half impact splits were 24% and 30%. And some of that improvement is driven about by a lift in potable water sales into North America. So again, we're a little bit cautious that we won't necessarily see that continue. It's always difficult to -- no matter how many conversations you have with some of those customers and they tell you, yes, it's true demand, then all of a sudden, you find that it's not true demand and they've got a little bit of inventory.

So we had some caution around that. And then smart metering, that was really just a hint for the future. This year, I don't want to overstate the contribution of this, but it's a good business to have in Australia. Our sales in Australia next year we expect to grow to in excess of AUD 1 million and then ensuing year up to AUD 1.5 million. This year, it will be less than AUD 0.5 million. So these are good jumps for a business in that market. But we're not talking $2 million or $3 million incremental jumps from a product set like that.

And then just mentioning there also your question on the absence of the Gojo product in the first half. We expect the second half to be in line -- we expect the second half to be in line with what we achieved last year. So we'll wait and see how that plays out. So no, we don't obviously provide a range for a reason. And we will be providing our best endeavors to achieve, obviously, the best we possibly can. But we think given the factors that I talked about, that's a sensible range for us to project for the year.

And just on the product suite going forward and the market entries that you've done. I believe foam in Europe, you were hoping to get to breakeven relatively quickly. Can you give us an update on how you're going there? And also the other Agri products, the calf feeding clusters and those things in terms of timing of market launch and expectations?

Yes. So foam in Europe, it's a good one. First half was broadly in line with our expectations. We're not going to get -- whilst we've got a fantastic pipeline of opportunity, the conversion is a little bit slower than we thought. So achieving that sort of, if you like, breakeven point has probably moved out to the end of the fiscal year rather than the midpoint of the fiscal year where we are now. So it's a small headwind against their expectations in the second half of the year. But at the moment, it's a relatively small business. So it's not a massive headwind or contributor to the group overall. So that's where we're at with that.

Your other question was on some of the developments in the dairy side. So as I noted, we -- in the image on the page there, we are about to launch the rubber liner, which we sold in very high volumes, the high-performance liner, about to launch that in a single-use preloaded shell. So I was actually speaking to the guy who runs our business in the U.S. this morning on the way it'd work, and see how he's feeling about it. And he's notoriously conservative, but he's pretty optimistic and he said he's had a few customers that, first of all, said to him, no, we wouldn't want that saying they now want to talk about it.

So yes, that's a good opportunity for us. It's not that selling it in the shell creates a significant large increment in revenue capture for each product sale, but it gives them another reason to sell our product. So capturing more liner sales is a motivation on providing a product like that to provide the customer with that benefit of a faster change out.

In terms of the development of classes and what have you, that's at an earlier stage. So we're not in the market [indiscernible] yet. We've got some prototype products and some early trials happening at farms, but that won't be a contributor to the second half results.

What we have done quite well, I think, Rohan, is we also talked about wanting to grow our share in some of the more developing markets. And the 2 that we're primarily focused on is what we call Eastern Europe, but also slightly a wider part of Western Europe that we weren't accessing. And I called out France as a small example there. But also in China, we have existing business in China, but we've now put someone in place over there to provide us with the opportunity to capitalize on what we think is a pretty significant medium-term opportunity to have a more direct relationship with some of the big players over there.

Excellent.

Is there any other questions? We can't see any other hands up, but anyone else got any questions? I can see. I can just quickly check the chat as well. Nothing in there. Okay. If there's nothing else, we'll close it out. Thank you very much for joining us this morning. As I said at the start, obviously, we're very pleased with the result and very appreciative of the contribution that our team make across the world. So I'm sure there'll be a few of them on this call. So thank you guys. You've made a great contribution, and we're in a good place and look forward to future success. Thank you.

Thank you.

Good afternoon, everybody. My name is John Strowger. I'm the Chairman of Skellerup Holdings Limited. Thanks for joining us today, in particular, for those of you that have braved the elements here in Christchurch. We've met -- made office warnings to stay home unless absolutely necessary. Well, this clearly is absolutely necessary. We're delighted you can join us here in Christchurch and to the rest of the on video, also welcome.

The Notice of Meeting and the 2025 annual report have been circulated and made available to all shareholders. You can also access these at any time via our website. As noted, today's meeting is being held as a hybrid meeting here at Te Pae Christchurch Convention Center and online by the Computershare Online Meeting Platform.

Before we commence the formal business, I should advise those present in the event of emergency, please take care and follow the clearly marked signs to exit the building safely. I'm pleased to advise that there being a quorum of shareholders present, I declare the annual meeting open.

To begin, I'd like to take the opportunity to introduce those people alongside me. On my immediate right, this is gentlemen well known, he is Graham Leaming, our Chief Executive Officer. Alongside Graham is Tim Runnalls, Chief Financial Officer; alongside Tim, Alan Isaac, an Independent Director; Alongside Alan is Rachel Farrant an Independent Director. On my left is David Cushing, an Independent Director. Alongside David is David Mair, a Non-Executive Director; and alongside David is Paul Shearer an Independent Director.

At this stage, I was going to note and record the attendance of our auditors Ernst & Young in the audience, but they are casualty of the strong ones and haven't made it down to Auckland and similarly [indiscernible]. But I would like to welcome to the meeting today, my father and also one of the loyalest shareholders that Skellerup has ever had [ Salind ] , who's graced our presence many, many times with something to entertaining interchanges with [ Salind Cushing ] over the years and often. It's great to see you here [ Salind ] and yes, the bar is open after the meeting.

Dealing with order of events, the order of events for today will be as follows: First, I'll give an overview of Skellerup today, our recent performance and future prospects. I will then hand over to Graham to give the presentation as Skellerup's Chief Executive. Given we're here in Christchurch, which is the foundation of the Agri business, we will also have a presentation from Dino Kudrass, the Executive General Manager or Head of our Agri division.

I will provide an opportunity for questions after conclusion of these presentations. I will then put the resolutions outlined in the notice of meeting. We will cover each resolution in turn and invite questions specific to those resolutions. Finally, there will be an opportunity for any general questions by shareholders on Skellerup business and performance.

[Operator Instructions] Please note that while you may submit questions at any time, I will not address these until the relevant time in the meeting. Please note that your questions may be moderated or if we receive multiple questions on one topic amalgamated together. Finally, due to time constraints, we may run out of time to answer all questions. And if that happens, we will answer them in due course by e-mail.

The voting. Voting today will be conducted by a poll on all items of business. For those in attendance, you should have a voting paper, which was given to you when you registered. If you do not, can you please indicate that now by raising your hand and a member of the friendly Computershare team will assist you. We're all franchised. For those online, I now declare voting open on all items of business. To vote, simply select your voting direction from the options shown on the screen. You can vote for all resolutions at once or by each resolution in turn.

We now turn to my address. And just to repeat, it's a pleasure to be here in Christchurch, Skellerup's spiritual home. The city has played a central role in our story, and it's great to be back here after quite some time. In fact, our routes there go all the way back to 1910, when George [ World Mir ] Skellerup, the Danish immigrant opened a shop at 175 Manchester Street, not far from here. We can see them behind me here, I think. Selling imported rubber products, so yes, rubber has been in our DNA always. And growing up in Christchurch is in the 1970s as I did, you couldn't miss the Para Rubber brand. I love that. I love this photo. We had it in stock, we'll give it or does it de of rubber, fantastic.

And also the foreboding factories out in Woolston. We've come a long way since those times. Today, Skellerup is a truly global business, but it is genuinely nice to bring the annual meeting roadshow back here to where it all began. But let's turn to the present. In 2025, we delivered record results again. Net profit after tax was $54.5 million. Revenue reached $353.5 million and EBIT came in at $78 million. These are outstanding numbers, especially considering the challenging and unpredictable environment we've been operating in, it's a credit to our team and the way we do business.

Now let's talk about the 2 divisions, Agri and Industrial. Their contribution shifted slightly this year. Agri found it's rythm again in, with result significantly up. That came down to hard work renewed customer relationships and some exciting new product lines that we're optimistic about for 2026 and beyond.

You'll hear more about that from Graham shortly. And always work on the our incremental manufacturing improvements continued steadily. I want to acknowledge the quiet consistent work that goes on behind the scenes in that regard. It's not glamorous, but it's essential. We have a leadership team in Agri, which combines market awareness with deep technical expertise, a rare and valuable combination. But you'll hear -- and you'll hear more from Dino a little later on.

On the Industrial side, growth continued, they're not at the same pace as Agri. Some OEM projects were delayed due to market uncertainty and geopolitical tensions caused a few customers to pause investment decisions. Still, our team pushed forward, found new opportunities and grew the business despite the headwinds. In both divisions, our technical expertise in product development has proven to be a real competitive advantage. We are encouraging early involvement from our development team and customer marketing initiatives, and that's paying off.

Also, and as you know, we have a significant third-party manufacturing partner in Vietnam and our technical people need to be up there regularly monitoring production and product development. All of this adds up to a lot of travel, and that isn't glamorous either. While we still distinguish between Agri and Industrial in our minds, collaboration between them -- between the 2 and our product development centers is increasing, and that's a healthy development, our Board is very supportive of this trend.

Last year, I spoke about the need to build more in-market capability to get closer to our customers geographically. We've made progress here developing local resources in key markets. The Board acknowledges though there are steps, the steps so far have been modest, which feels appropriate given the fluidity, if I can put it that way, of the commercial environment in places like the United States. Our caution has been vindicated to date, but the luxury of a do-nothing approach may not continue forever.

As we shared with the market in July, around 37% of our revenue comes from the U.S. indeed, it's increased even more since then. About 85% of that is from products manufactured in New Zealand, China and Vietnam. Because we built significant inventories in the U.S. ahead of in position of tariffs, Liberation Day and subsequent variations on that theme doesn't materially affect 2025, but they will increase costs in future years.

If the current rates hold, we believe we can offset most of the impact through civil mitigants, which include one, pricing where we passed the costs on. As usual, it's about who pays. 2, sales growth, where we absorbed costs were competitive versus U.S. domestic competitors mainly have to build -- and build total revenues through sales growth or finally, through manufacturing initiatives, including manufacturing and assembly in the U.S. with the result, of course, no tariff supply.

That status we all know, the final outcomes of the China U.S. negotiations is still unclear, and the situation seems to change weekly. What works this week might not work next week. For example, like you, we worked up a couple of Saturday mornings ago, to learn that the Trump administration had reignited trade wars with an announced intention to impose an additional 100% tariff on all goods out of China from 1 November. Within a few hours, USD 2 billion belied off the value of U.S. shares. So in response for their free will posted on social media don't worry about China, it will all be fine and that the Chinese President, who is highly respected had just had a bad moment.

Like many commentators, we believe that a reasonable compromise will emerge. We believe the tariff regime we are now operating under is unlikely to change materially and adversely. But we'll respond appropriately when you have certainty using the full range of tools at our disposal. I've spoken before about our disciplined approach to investment. We invest only when there is a high conviction betting projects, where we can see a strong strategic foundation. We're conservative by nature, and that served us well. But some of the initiatives we're considering, especially around in-market capability will be more significant, both financially and operationally.

Also, as we do develop new end market manufacturing capability and so satisfy local demand locally, that will create capacity in existing facilities. The management team is already working on this seeking out a presence in markets in which we do not currently have a significant presence and should have. In fact, in all of these ways, the next 12 to 36 months could be a watershed period for Skellerup. We are reconfiguring the business for the future, and that is a real sense of excitement about that. And of course, we'll remain disciplined with capital deployment.

Our strong balance sheet helps. Net debt as at 30 June was $12.4 million, a $3 million reduction on 2024. That's enabled us to declare dividends totaling $0.255 per share for 2025, another record. This represents a distribution of 92% of net profit after tax and reflects the Board's confidence in our future. Now I want to be clear, while these record results are outstanding, they won't continue indefinitely. Accounting shareholders against expectations of growth every year particularly if and when at the time of our choosing, we move into the next phase of development I mentioned earlier.

So for the record, I registered that caution again. But of course, we're not planning to fail. Skellerup doesn't stand still. Encouraging new initiatives, whether in process product or market are presented to the Board almost monthly. There's real energy to the management team, and this bodes incredibly well for the future. You'll also notice expanded climate reporting in this year's annual report. Our investments help lead to a reduction of greenhouse gas emissions intensity. We've completed our first transition plan and an emissions reduction plan for our Wigram facility. And preleasing these actions will bring both environmental and commercial benefits for Skellerup.

A quick mention of your Board. I believe, by the way, that we have an excellent Board all over sounds somewhat self-congratulatory. Certainly, we work together very constructively in an environment encouraging and uninhibited exchange of views, which I think is essential to a Board's proper functional. It's fair to say that several of us are rather long in the tooth in tenure and some quarters that has traditionally been viewed as an issue. Our friends at the proxy solicitation firms continue to take that stance. But we are now also receiving feedback from institutional shareholders and representatives of shareholder groups that value some longevity. They recognize that with tenure comes a depth of knowledge about the business.

Surely, it is about common sense. In this regard, I hope that my colleague, David Mair, who has served on the Board for almost 19 years and is therefore, guilty of what the proxy solicitation firms term excess of tenure and has provided such outstanding service to Skellerup over a long period, I do hope he gets reelected today. I am quite confident.

It's not just about leadership. Success comes from the collective efforts of all of our people. So on behalf of the Board, I want to sincerely thank every member of the Skellerup team for their contribution to the 2025 result. And to our shareholders, can I just say thank you for your continued support. We're proud of what we've achieved, and we're excited about what's ahead. Thank you.

[indiscernible] to that pointer anyway. Let's see if you can match that Graham. We now move to Graham's address.

I'll do my best. Thank you, John. As John noted, we're delighted to bring [indiscernible] ASM in to Christchurch. I wasn't sure whether we'd had an ASM here before, but I was chatting to Tony Jones, a former Skellerup employee before the meeting, and he assured me it was 2012, but I don't know, it might have been 2011. But anyway, it's a good time and some time that we're here and it's great to have the meeting here.

I'm going to give you a summary of our business, our strategy, a bit of a recap on FY '25 results, discuss the outlook for the current year and introduce you to some of the people and for me to invoke what we've achieved and importantly, critical to delivering future growth and success.

At last year's ASM, which was held in Auckland, I spoke a lot about the 4 key elements of how we do business at Skellerup. I'd like to briefly recap on that, as collectively, we think doing these things is critical to our success. Firstly, we focus on products and applications that demand high performance and/or high conformance. To capitalize on the deep expertise we have in our organization, we seek opportunities to deliver real value, such as designing and manufacturing milking systems that improve productivity and improve animal health, we're integrating multiple materials to reduce discrete parts and complexity for customers and for example, portable water and hygiene applications.

Secondly, our development efforts are customer focused. This may sound globe or simple, but it's a cornerstone of profitable growth. Practically, this means when working with original equipment manufacturing customers. We work rapidly to deliver prototypes to prove the solution works and indicate the commitment of the financial contribution to the development costs and/or and irrevocable commitment to product.

The same customer-focused principle applies, when we manufacture our own branded products, whether it would be for theory, footwear, roofing, sport and laser applications. Our product development follows a robust testing of market opportunity and a committed customer for market launch. In short, by working hard to understand customer needs, we boost our opportunity to create strong value for the customers and in turn, capture a fair share of the value we create for Skellerup and for shareholders.

The third element is our business model. We are a global business, 80% of our revenue is derived from international markets. We have people and facilities in market in New Zealand, Australia, China, Europe, the U.K. and the U.S.A. This on-the-ground presence has been and will continue to be critical to growth. Our manufacturing footprint, as John touched on, is also global and a mix of our own end contract manufacturing facility, providing us with both scale and scale -- sorry, by scale and flexibility. This model alongside our customer engagement that I spoke about earlier, means that capital investment requirements are not excessive, and the product design and tooling intellectual property that we create is retained.

Our largest operations are in New Zealand, China and with a partner in Vietnam. We continue to evaluate options to expand what's currently smaller manufacturing capability in our largest markets, including the USA. Our priority has been to develop the necessary internal capability and versatility to deploy and market manufacturing. The focus has been successful, and we feel well prepared.

As with everything we do, any investment and the timing of it will be robustly evaluated and underpinned by growth in demand. The fourth element is accountability of business unit level. We organized Skellerup 2 divisions -- within 2 divisions, industrial and Agri and within their business units. These business units generally align with the location and an application focus. They are accountable for growth and performance and this is matched with authority that enables them to make the decisions with customer requirements, supply choices, resources and people needs are best understood.

We have a small head office of 7 people. These business units call on the technical expertise provided by our development centers, the largest of which are here in Christchurch and in Auckland. This structure has been and will continue to be a key plank to deliver growth and enables robust rig evaluation and prioritizing our strategic initiatives and decisions around larger investments or commitment and equipment and people.

With that background, the measure of success is, of course, sustained growth and profitability and cash flow. In FY '25, we delivered a record EBIT of $78 million, an increase of 7% over the prior corresponding period. This was the 9th successive year of EBIT growth. Net profit after tax of $54.5 million was also a record, up 9% on the prior comparative period. As John and I are both native, and we see segment Skellerup into 2 divisions, Industrial and Agri.

The Industrial division recorded its 5th successive record EBIT results of $48.4 million, an increase of 3% on the prior report. Sales of engineered polymer products and vesting systems for potable water, wastewater and industrial control applications were up in the U.S. and Australia. Roofing Construction sales also grew, spurred by the installation of solar systems, believe it or not, in the U.K., more than offsetting the impact of a soft Australasian construction market.

Marine foam sales under the U.S. began to strengthen in the second half of the year after a prolonged period of low demand and inventory adjustment for our customers. As John noted, the Agri division bounce back from a softer result in FY '25 to a record FY '25 EBIT of $35.3 million, up 15% on the prior year, an increase of 4% on the previous record result achieved in FY '23.

Demand for essential consumables for the global dairy industry, predominantly manufactured here in Christchurch was consistently strong throughout the year, in contrast to the prior year, where the first half was impacted by customer destocking. Products for the global dairy industry account for the majority of Agri division revenue, and the balance comes from footwear, including products, farming, urban, and specialty safety applications for international and domestic customers.

Of course, earnings are very important, but cash flow remains a critical measure for any business. A former boss of mine once told me that cash was more important than your mother. Strong cash flows, enable investment in growth and flexibility to manage through disruption. In FY '25, operating cash flow was $66.5 million, a strong result despite a deliberate increase in inventory to provide some relief from the expected imposition of tariffs by the U.S.

As John noted, net debt remains very low at $12.4 million at the end of FY '25, we're able to invest in the future growth of Skellerup and sustain high dividend payouts. Looking forward, we are investing and developing products, people and manufacturing capabilities so that we can continue to deliver earnings growth in the future. Agri is one of the cornerstones of Skellerup and the demand for protein globally continues to grow. Our focus is to support the long-standing relationships we have, develop innovative products for features that deliver productivity gains for farmers and capture new opportunities in emerging markets.

Over the past 18 months, we have successfully launched a new -- sorry, successfully launched new high-performing multi-liners and the first products from our throwback cow feeding range. We've also been investing in modernizing our manufacturing capability, which has reduced engineered and production waste, energy consumption, improved productivity and provides that platform for possible future deployment and other markets.

Dino Kudrass, the Executive GM for the Agri division is going to talk a little more on the growth opportunities for the Agri Division shortly. Potable and wastewater is another cornerstone application for Skellerup, the thing that potable products and milk product in common is they have very demanding standards around the materials you can have in the products. We supply products critical to the security of water infrastructure and performance of tech ware across the world. The U.S. is our largest market. And in recent years, we've achieved good growth in Australia with the supply of check valves for new smart meter applications and gaskets for the fast-growing polypropylene pipe market.

Another recent example is the development of a new gasket for high-pressure water systems in New Zealand. Our proprietary fiber infused rubber gasket provides water authorities and installers with a high-performance compliance and easy-to-install solution replacing negative products Crohn's leakage. It sounds like a marketing slogan, but it's true.

A common element across their activities at Skellerup is material, almost 90% of what we sell includes molded or extruded polymer, be it black rubber, silicon rubber, liquid silicon rubber, engineered plastic, high performance foam. Our MESCO vacuum pump systems are the exception as they are not polymer based. However, the waste water applications they use then and the philosophy of integrating elements to provide customers with a more valuable solution, most certainly are common to how we do business across the Skellerup Group.

We fund organic growth opportunities and capability investments from consistently strong cash flow I referred to earlier. This cash flow and the very low level of debt we carry offers possibilities for acquisitions as well. We look for businesses that complement our existing capability, expertise, market application and geographic footprint. We also look for businesses that may provide us with an opportunity to accelerate our growth plans in markets where we have a smaller position and consider will expand more rapidly in the future.

So our focus remains tight, and we will not deviate from our guiding parameters and return expectations. We have conviction in our team for growth in FY '26 has started well. Earlier today, we reported Q1 earnings for FY '26 were up 10% on the same period last year. Demand across the range of applications our products are used and has been reasonably robust with theory, and infrastructural pipe, the most notable contributors to growth.

Whilst we are pleased with the start, uncertainty of further changes in costs to exit our largest market in the U.S. remains in the possible impact of such costs on market demand, make forecasting future results difficult.

Last week's announcement on possible increase in tariffs between the U.S. and China, as John mentioned, is evidence of this uncertainty. However, based on the Q1 earnings and our current expectations and assuming no significant changes in trading conditions, we expect FY '26 net profit after tax to be in the range of NZD 55 million to NZD 60 million.

I've discussed our business strategy and structure, recent results and the immediate outlook in the future. Our results and future success very clearly depending on the skill, tenacity and contribution of many people. We have a pretty large group here today. And I'd like to introduce some of them there. I won't introduce everyone because it will take too long. But maybe as I do, you can just raise your hand or stand up and give them on a wave.

Dino, who you're going to meet shortly. Dino Kudrass is the Executive GM of our Agri division. Alongside Dino there, the man we call, [indiscernible], runs the [indiscernible] business here in Wigram Christchurch and [ indiscernible] plastics. Alongside Dino, Logan MacKenzie, who looks after our [indiscernible] systems business and alongside Logan is John [indiscernible], who heads up our Product Development Center in Auckland.

And the second row we will work again from the far end, we've got Jane Boyd, who's responsible for customer experience, marketing and digital systems for our business here in Christchurch. We have one of the [indiscernible] engineer on our team here in Wigram in Christchurch. [indiscernible] both working in the facility here in Christchurch in the manufacturing area.

[ Adam Waterhouse ] recently joined us as Head of Development for the Agri business and [indiscernible] Manufacturing manager here at Wigram in Christchurch. And then on the next row, I'll keep you on back. I will introduce everyone. We've got Dina Cuba, who's our Financial Controller here at Christchurch. Aaron working in Dina's team. And then we've got Rebecca and Kim working in our business here in Christchurch in sales and marketing roles.

And then last but not least, we've got a few Australians in behind here. Patrick Crotty is the head of Gulf Rubber Australia and also the head of our Global Growth phone business, which is sales under the Ultralon brand. Alongside him is Adam Copper, Adam has been working for us for Ultralon in Australia for 7 years. And just this week has been appointed, he's decided to jump the ditch and he's going to come and run the Ultralon business here in New Zealand. So welcome Adam.

And then lastly but not least, sitting behind Adam, we've got [ Ezrat Zavala ] and Ezrat is integral to our DEKS Roofing business, Construction business in Victoria in Australia. Down the back, we've got Tim, who's doing the monitoring and probably picking questions through lately. And Laura, who is EA of many years and often does compete job. I've just noticed hiding down the back is Tory Valentine, who's response for commercial operations here in Christchurch. So there's a lot of people here take the opportunity. I can see Jackie, sitting in the middle, still I can see Rob. There's lots of people here as well as former Skellerup employees, loving to see you all, take this opportunity to share afterwards.

Back to the script, I am excited about the ambition of these people here and the capability and initiative to embrace change to improve and grow our business. To close, I express my appreciation to all of our Skellerup team, our Board and our shareholders. Our global team of around 800 people brings a diverse and financial perspective. The application of their expertise and diligence for the design and manufacture of the many critical products we provide to our customers is first-class and underpins the 9 consecutive years of operating earnings growth for our shareholders.

Before I start, John mentioned our team will govern and you the shareholders are represented by an excellent Board, who bring commission now his experience, leadership, energy and robust discussion to every direction we have. Dino joined our Board meeting for a time today, and he remarked me before he said it's good to see some divergence and opinion a good robust discussion in these meetings, and that is a healthy thing. As John see, some of our Board has served Skellerup for firms more than not approaching what some commentators and proxy advisers consider the optimum maximum.

Their elevation of term ahead of competence and results is very frustrating. The sustained good performance of Skellerup does not happen without a very effective Board and should far outweigh some arbitrary assessment based on the years directors are served. Engagement in our Board is invaluable and always available, and is not limited to scheduled Board meetings. So again, thanks for attending today, both in person and virtual. We're grateful for your interest in investment in Skellerup. We're committed to continuing to apply ourselves to deliver critical products to customers, prolonging the long history of Skellerup and to deliver sustained excellent returns for you. Thank you.

I think now Dino, the floor is yours.

Thank you very much. Second the floor is definitely bigger than the first. I see if I can now do that again. All right. Good afternoon, dear shareholders. It is quite an honor to me to be given the segment here today, and so I shall try to make efficient use at this time. This presentation is about future growth prospects of our Dairy business segment and how we plan to deliver on these opportunities. I'm allowed back up here next year, I promise to cover some global footwear opportunities as well, which I can assure you are equally exciting.

Fundamentally, I see 2 dimensions in which this segment of our business can grow. Firstly, I believe that the consumable products that we manufacture for dairy farms in various markets are still undervalued. And there is significant room for growing a more differentiated value proposition in our products. Similarly to car tires, which govern system performance is they are not -- sorry, they are the only point of contact has had with the world, working liners are the only component of a complex milking machine, which contacts the most sensitive part of the animal. Well-performing liners make a tangible difference to the productivity of a farm and poor quality or early failure can have incremental impact on not only productivity, but also the health of the herd.

To draw a comparison to value, NZ dairy farmers spend about 50 to 100x more on fertilizers each year than rubber liners. And still most farmers consider rubber liners as the commodity, where purchasing decisions are set be made primarily on price. Changing this perspective isn't easy. But in my view, harping on about the value of frequent line of changes is not going to achieve the step change needed. There are several global trends in the dairy farming industry, which present interesting opportunities for us to recalibrate the value proposition of our products.

Firstly, farms are growing into larger and more commercially focused operations. Also farmers are younger, and they are more data-driven decision makers. And there are also quite a number of new challenges like changing climate, as you can see outside, fast-spreading diseases, labor shortages and also more processed dairy products. And our current team here at Skellerup carries the necessary expertise in polymer materials, manufacturing processes and product development to take a world-leading role in delivering solutions for these problems.

The second dimension of growth for our Dairy business is that the total addressable market is growing as industrialized farming practices emerge in some of the world's largest dairy producing countries. Many experts quote that the global head sizes are not growing but in my view that is missing a point entirely. The global rate of dairy production and consumption is growing by about 1% to 2% per year. But far more importantly, the way in which milk is being produced is changing drastically. The U.S. production, the U.S. dairy production is arguably the most industrialized in the world, with a total herd size of about 9.5 million cows producing about 100 million metric tons of milk per year.

For contrast, India is a country produces more than twice that, at approximately 240 million tonnes, but with a whopping 60 million cow herd and a total both on population of 300 million animals, many of which are lactating also. That's approximately 1/5 of the U.S. production efficiency per animal. India is the largest, but by no means the only large dairy producer where herds are consolidating, and there was a clear change towards more efficient industrialized milk production.

Countries in Eastern Europe, South America, Southeast Asia and Africa follow the same trajectory. This vastly increases the size of our total addressable market for high-performing looking systems. These growth opportunities clearly exist for our own brands, but they also benefit our OEM relationships. More than ever, we party partner with our OEM customers on product development, sharing market intel, and we collaborate on achieving the common goal of elevating the value of our products in market. Just like Ferrari works with Pirelli to develop tires, we are increasingly seen as competent partners to deliver systems that outcompete any alternatives.

As Graham just mentioned in his speech, the second key element contributing to our success as a group is the customer-focused development effort. To understand how some of the future development of the global dairy production is going to change, it is useful to take a closer look at the forecast of changes in global consumption by region. This graph behind me here shows that per capita consumption of dairy and kilograms of milk solids per person according to different regions in the world.

Cost at the regions of the world over a 10-year outlook from 2024 to 2034. It takes a little while to have rapid hit around, but it's got a lot of interesting information in that graph. According to this forecast, global consumption will increase by 15% over the coming decade. China, on the left-hand side, increased by 19%. Despite the relatively low per capita consumption of less than 5 kilograms per person, China still offers a very interesting opportunity for us as not only carries a large population, but more importantly, both a very highly industrialized production industry with a very high value appreciation for well-performing liners.

Consumption in South America is only projected to grow by about 6%. But here, environmental pressures, cost inflation, labor shortage, and other factors are driving an industrialization trend, which increases the size of the addressable market disproportionately to their growth in demand consumption. The U.S. and Europe show an interesting trend where the consumption of fresh dairy products continues to decrease. However, this is largely offset by an increased consumption in processed dairy products, such as cheese and whey powder.

And this finally brings us to what is perhaps the most interesting part of the strategies. Not only is dairy production industrializing in India and Pakistan for similar reasons to South America, the rate of consumption have also predicted to increase by 35% and 15% for India and Pakistan, respectively. The primary drivers behind this change is growing wealth. India and Pakistan have diary consumption deeply embedded in their culture. Dairy is a stable ingredient to their cuisine and social customs. So as their prosperity grows, so does the consumption of dairy. So this forms an interesting contrast to China with a similar population size, but much lower per capita rate of consumption.

So in conclusion. We see great opportunity to not only expand the scope of what we do, but also where we do it. The global demand for highly engineered rubber consumables for the dairy industry is growing. We are well positioned in solving the technical challenges involved in meeting this demand. Thank you.

Thank you, Graham, and thank you, Dino. Before we move to consider the resolutions before the meeting, we'll open the floor and to online participants for any questions on the presentations provided by Graham, Dino and myself. Reminder to please state your name and whether you are a shareholder or proxy holder.

I'll take questions from the floor first.

My name is [indiscernible]. I'm a shareholder and a proxy holder. And actually gave me the proxies for my shares from the New Zealand shareholders. I've got n number of questions. I want to ask you all at the same stage.

At a time would be useful.

Yes. Okay. So Yes. I guess you talked several times about the organizations criticizing about the age of the Board. Probably and so this age is just one-off, please?

It' important to all. He's past the folly of focusing overly on aging tenure to expertise and knowledge.

Yes. So I guess what I would like to see possible today, otherwise, maybe in the next meeting or so. What would be just planned? What the Board's strategy is to renew? So it's not is now for -- I don't know you are 19 years or something like that on the Board. But just is there some strategy how to renew individual people to just make sure that there is not such terrible time and half of you disappear and nobody knows what's going...

Yes. That is a fair comment. I won't share my thoughts with you now because I haven't shared them with the rest of the Board, but we are alert to the need to obviously transition these things over time.

Yes, one other thing, I guess, you used the Graham -- the smaller watershed moment. And I guess I'm wondering whether 1 of you could maybe add a little bit more water to that. I know what the watershed moment could be -- so what does it mean for Skellerup? So what opportune do you see what's really changing in the next...

Well, there is the tariff position, and actually COVID frankly started the dialogue then with some of our customers. We wanted us closer to them and the notion of being in market and being able to supply effectively just in time from a contiguous or nearby facility, joined the discussion, I guess, about 4 or 5 years ago in the context of COVID, but it's become even more compelling with the tariff position.

Obviously, if we were to manufacture in the U.S., we would have avoided the tariff cost. So we're actively considering. We have nothing in front of us. And as I said, by nature, we're conservative, so we'll take it slowly. And we want to be clear too about the exact landscape we're playing against because it moves as I said in my speech similar every week.

But one proposition could see Skellerup looking to establish some sort of total or foothold of -- put presence in the -- in particular, in the U.S. market to supply some of key customers from goods originating in the U.S. market. Now that's not an insignificant step for this company, both from a financial and operational terms, but that would be a significant change for us. So that's hence the watery comment.

Okay. So that's mainly looking into the U.S. market?

U.S. is where my focus is going to be. Graham I sense you want to say something?

I do, just maybe to add to that, you talk about the growth opportunity we see in Diary business in emerging markets, Asia, Eastern Europe. So we see a future, where the demand is much higher than what it is now. And if we have that demand coming on parallel to maintaining the existing strong position we have in existing markets, we have the opportunity to think about where we manufacture some of that product and reposition we manufacture some of that product. So we had some existing limited manufacturing capability in North America not for Dairy rubberware for example, we have a small manufacturing part in Wisconsin, making liquid silicon rubber products, mainly for Industrial applications.

But it's been on -- we've talked about this for many years that an option that we want to develop is to be able to establish some manufacturing end market, whether that's in North America, which probably is a more likely priority than in Europe. But these advantages, manufacturing product at a distance from market in terms of development and more have you. But going forward, what John alluding to there is sometime in the next 36 months, as we talked about, there could be some more significant investment we make in manufacturing capability, for example, in North America. But it's also matched by the fact we're expecting to realize increased demand for our products in some of these emerging markets.

Case you don't want one without the other. You've got to sort of correct so you get the cadence to run.

Okay. So I guess I'm still looking for something concrete.

There is nothing concrete right now. I'd emphasize, but this is something we see as potentially near term -- not having to do, but certainly, to continue the growth pattern that this group's enjoyed, we do see this is something that we will likely need to explore in the next 12 to 36 months.

Okay. Yes, maybe one last thing. Yes, I can today, but earlier due to the what was the event and whatever answer. So I had a little bit time to look into the rest of the annual report so much just the financial stuff and to discover that something like 25% of it is environmental record. And I guess, I read a lot of high-level things. But I'm wondering whether one of you could sort of in 1 minute. So to summarize, what exactly you're describing and what exact things you plan to do to improve your environment improvement?

We have no alternative but to comply with -- there are certain statutory reporting requirements that we have courtesy at this time reporting legislation, but it would be unfair of me not to give some of the opportunity speak to us because I know enjoys us so much.

Obviously there's a mandatory requirement for us to prepare those disclosures. We've taken what we think is a practical and pragmatic approach to it. We've got good value from the risk and opportunity identification that we've done, and we continue to embed that in the organization.

From an emissions reduction perspective, we've piloted a program at the Wigram site, which is our biggest facility to reduce our emissions in line with the 1.5-degree target from the Paris accord. We believe we will achieve that with the commercial investments that we will make over the next 5 to 15 years. So that's what we are endeavoring to describe in that report. We obviously are forward-looking, so we cannot give explicit detail on exactly what they are, but there are detailed and modeled initiatives that we're putting in place.

You wouldn't be the first person to question the utility of the sort of the volume of that sort of reporting. And then the Governments respond to that in the last few days, isn't it at some -- it's increased the thresholds before which these obligations will apply to companies from, I think, $50 million wasn't it to $60 million to market capability. And so it'll be these reports won't go away, but there will be -- there we'll lose people publishing them. We hope to continue to have to publish them, by the way, because we plan to be well over $1 billion market cap for the enduring future.

Nothing else from the floor, Kim, our Group Financial Controller is our Moderator, Kim are there any questions online?

Yes, we do have a few questions online. The first comes from Paul [ Hedleygrand ]. So Paul has asked how can Skellerup break into the Australian market more and there is no tariffs on us and it's just 13% to Skellerup revenue in 2025 year?

We've got 2 businesses situated in Australia. We have a business in Sydney, which is focused on technical OEM products for customers significantly in the potable water industry. And also out of that business, we convert and distribute foam products, principally marine foam products and to customers throughout Australia. Our real emphasis for that business base in Sydney has been building the strength of our relationships in the same demanding applications we talked about before, potable water.

So Patrick, he's here in the audience today, has led that business. We've won new business in the pipe infrastructure market. So we supply assets, which are essential to the joining of this infrastructure and keeping water in. And we also supply gaskets, which are used in wastewater pipe, which is obviously not potable water, but equally importantly, you keep the water in. And then emerging applications like smart meters, which are used in some major water usage on properties as well as other utilities. So that's a priority for that part of the business.

We have a team in place and certainly that's focused on those high-value, highly technical products for a range of applications. And then in Melbourne, we have our distribution business, which is around Roofing Construction products. The Australian construction industry, not unlike New Zealand has been through a pretty tough phase over the past couple of years. And so our focus has been very much maintaining the value of our brand and not falling into a pricing war.

And so -- that business is more subject to the vagaries of market demand. So our priority remains pretty clear in terms of a clear focus on the applications we're on building strong relationships with customers as we talked about before, making sure that the new products we develop are carefully considered and developed with customers so that we've got a strong conviction on materializing. So that's a point for Australia.

Okay. would you like to add anything?

Paul has also asked, at what markets can the health and hygiene component of Skellerup increased in a large?

Health and Hygiene sector, we're in this -- there's a couple of products we sell into what you characterize as this application area these foam products that we sell that are used in orthotic type applications. But most significantly, the growth in that area has been with the assembly of integrating plastic and rubber components into hygiene manufacturers for hand sanitizers. So some of you here may recognize the Pyrrol brand, for example.

So there was an opportunity that came about for us really from referral, which is a big try to win business. A person and that firm had moved from another customer of ours and the customer had a problem. And when I say we, the real we was -- we still in place, he has been solve that problem for the customer, which opened up a new avenue of revenue for us with this customer. And we still see further product opportunities with this customer.

So it is an area, a relatively small application area for us. We do see good opportunities for growth, but the stronger opportunities for growth on the industrial side that we're focused on is the key big areas that we're currently in, potable water, wastewater, roofing, construction, some of the foam opportunities. But certainly, we have continued growth opportunities with a significant customer in the hygiene space.

There's one final question on line from [indiscernible] and so he's asks [indiscernible] about Skellerup approach to debt and its careful approach to the international markets. As a general comment, agent experience can be invaluable, especially if there is a tension development and succession planning for those alone. Please share more details about the changes at Wigram that are resulting in environmental and financial improvement?

There's quite a lot in that question. In terms of building bits and capabilities is something we're talking about at the ball meeting today before this meeting, we've got some of the people introduced before are relatively new in the role. So Dino is the head of our Agri division, of which the largest business is based here in Wigram and Christchurch. We also have businesses in the U.K. and the U.S. that form part of the Agri Division.

Over the past 2 to 3 years, we've put a pretty substantial development in building up our product development capability so that we are able to pursue the opportunities that Dino talked about with some of the innovation and some of the additional markets that we're in. So we have a strengthened team from a manufacturing point of view, a strengthened team from an engineering point of view.

We've invested a lot in our customer and marketing facing activities as well. One thing we haven't talked a lot about today is footwear. And that certainly, our iconic brand as everyone here would know. So the investment in people has been reasonably significant to -- because you cannot achieve growth without putting the people in place.

From environmental point of view, I think Tim really covered that off before with Wigram being our largest facility, that's where we've put our energies into -- as a first pass and the first priority to working out where we can make sensible commercial investment to generate the machine production.

There are no further questions on line.

Thank you. All right. Well, we'll now move to the formal business component of the meeting, so strap yourself in, following which there will be an opportunity for you to ask questions of me, Graham and other directors and executives about the business and performance of your company.

We have 3 resolutions to be voted on today. The first 2 relating to the reelection of Rachel Farrant and David Mair as directors, and the third being vote of speech. I should give an opportunity for discussion on each resolution, and we shall also monitor the online platform for questions.

[Operator Instructions] As noted earlier, in accordance with the NZX listing rules, voting will be by poll. Those here at Te Pae, should all now have a voting table, which was given to you when you registered. As noted before, online attendees can vote at any time. Number of shareholders have cast a postal vote or have appointed proxies to cast their vote ahead of today's meeting. I advise that the Board is holding discretionary proxies, which will be voted in favor of all resolutions.

So we move to resolution #1, which is the reelection of Rachel Farrant. In accordance with the company's constitution, Rachel Farrant retires at this meeting and being eligible offers herself for reelection. The Board recommends Rachel to you as a Director of Skellerup and unanimously supports her reelection. Before we consider the resolution I'd like to invite Rachel, to briefly talk in support of her election, Rachel.

Good afternoon. I'm Rachel Farrant, and I'm delighted to be seeking your support for reelection to the Skellerup Board. I bring to the Board over 30 years of experience as a Chartered Accountant Business Adviser. I'm currently a partner at BDO Wellington. My career has helped me focus on businesses growing sustainably, managing risk in delivering long-term value. I've held a number of governance roles across a range of sectors from infrastructure and technology to property and manufacturing. This means that I have a broad perspective in a deep understanding of many businesses.

Since I joined the Board in 2022, I am a new-bee, I have gained a strong understanding of the Skellerup Group. It's businesses, it's people, it's two of us. I've had the privilege of serving as the Chair of the Sustainability Committee and a member of the Audit Committee.

The regular visits we have to the Skellerup [indiscernible] have allowed me to see first hand the pride of our manufacturing teams, the innovation in our products and the loyalty of our customers. Whether it's the global reach of our industrial division or the iconic status of our Wigram campus here in New Zealand, Skellerup is a company with both heritage and ambition.

During my last 3 years, One of the highlights has been the highly successful seamless transition of the CEO and CFO roles, and we are lucky to also hear about the releaching today the previous Managing Director, who will be a continued valued ongoing Board number, hopefully. This transition has demonstrated the strength of our strategy the resilience of our operations and the dedication of our people. I will continue to work to ensure governance is future-focused. Our risk is managed soundly and a sustainable ambition are embedded in a commercial manner as to how we operate.

But what really sets Skellerup apart is its connection to everyday people, including every day New Zealanders. I'm sure you saw a story earlier this year about the Dairy Manager from Westport. If he you didn't, he was out hitting cows one morning, when he was struck by lightning. He passed out and couldn't see for several minutes and his quad pipe wouldn't start, but he got up, grabbed his torch and keeps working because as you see it, I quote, the cows aren't going to milk themselves. Later, he credited his Skellerup gumboots, especially, specifically the Quatro model, which is over the year for saving his life.

This thick rubber soles likely insulated him from the worst of the strike, even rang Skellerup to say that you've the best gumboots people ever had. At stories like this that remind us what Skellerup stands for quality, reliability and a deep commitment to our customers. Whether it's surviving a lightning strike, we're providing precision engineered products for portable water systems our products are trusted to perform.

I do remind you that Skellerup is a lot more than just gumboots. Our products in geographical locations are extremely diverse. If reelected, I will continue to advocate for strong governance, strategic investments, transparent communication and a board culture that is collaborative, diverse and aligned with our strategic goals. Thank you for your trust and support and your belief in what we can achieve together.

Thank you, Rachel, and I would mention that the guy got a free gear of gumboots out of all of that, I think. And Dino found himself on national radio being asked to get fashion advisers to what close is best await a pair of them pair of gumboots. Soaking it, lost the journey.

I now move as an ordinary resolution that Rachel Farrant to be elected as a Director of the company. I will now pause any questions on this resolution. And again, we'll take questions from the floor first. Kim, are there any questions online?

There are no online questions on this resolution, Mr. Chairman.

There appear to be no questions relating to that resolution. Thank you, Kim. We turn to Resolution #2, reelection of David Mair. In accordance with the company's constitution, David retires at this meeting and being eligible office himself for reelection. The Board recommend David, as the Director of Skellerup and unanimously supports his reelection. Before considering this resolution, I'd like to invite David to briefly talk in support of his reelection.

Thanks, John. Obviously, I'm seeking reelection to the Board after a rather long period of time as a Director. Just before I start, something Rachel mentioned, and I'm not sure that people understand how smooth this has been, the change -- the successful transition from when I was managing director a year ago through to Graham, who is doing a fantastic job, he became CEO. Tim Runnalls became CFO, and we have Kim down the bay, he will be reviewing questions, our Group Financial Controller. And so there's a lot of talk about transition even on the Board, but the reality is we have a very good process to dealing with us.

And so I'm delighted how well the transition has been. So [indiscernible], when I step back, gave me a compliment. He said Mr. Mair, you have proven competent. Graham, you've got about 12 years to prove your competence. Anyway, the other thing I'd like to say, I think for most Boards, there are a number of purposes, but number 1 is to choose the CEO. And another one is to ensure the reputation of the company is held up. So I'll just tell you a little story.

Again, my head to please use today of visiting on site at Wigram, I had a running out session with Dino. You've heard from Dino and also Graham. And we were talking about the development team because the future of this company heavily depends on a lot of new people are here just fantastic. But one of the things I did independent of these people, was that Dino has been giving some lectures at Kennedy University, and we have a process where we are getting an opportunity to get that best. Isn't that wonderful? So the reputation of Skellerup is growing, and that's really important to all of us. Well done.

Got a couple of other comments. But anyway, I'm a big Warren Buffett fan, as many of you know, and he believes there are 3 critical things that make a good Director. #1, you must think like an owner. And if you want to leave some on it, ask David Christian, who always has their shareholder mentality that ownership mentality. And I aspire to do the same. I love buying shares in companies. I've got 3.6 million reasons for the management team here that continues to evolve, and I'm sure they will.

But it's not just about me. It is about the company as a whole. So the second thing is your directors work incredibly hard. We read the Board papers, we engage in a healthy discussion about things that we make decisions. Those decisions in general are support the management team. It works really well. The third thing, I think, is you need to have a particular interest in the business. I love this business. And Rachel mentioned the key word is connection. I feel connected. Anyway, I'm setting reelection. Thank you.

So I now move as an ordinary resolution that David Mair be elected -- reelected as a director of the company. I now pause for any questions on this resolution. And again, we'll take questions from the floor first. Kim, are there any questions online?

There are no questions on line Mr. Chairman.

There appear to be no further questions or no questions, in fact. So we'll move into the thorny issue of Resolution #3, which is the remuneration of the auditor. This is a standard resolution which we present to you every year. Ernst & Young, are the existing auditors of Skellerup. Pursuant to Section 207T of the Companies Act 1993, Ernst & Young are automatically reappointed as auditors for the ensuring year. The Board seeks the approval of shareholders to be authorized to fix the remuneration of Ernst & Young for the 2026 financial year. I now move as an ordinary resolution that the directors be authorized to fix the remuneration of the auditor for the year ended 30 June 2026. Are there any questions on this resolution from the floor? Good. Are there any questions online?

There are no questions online Mr.Chairman.

Excellent. Thank you, Kim. Okay, ladies and gentlemen, that concludes our formal session, discussion of the resolutions. If you wish to vote on the resolutions, whether in person or online, you should do so now, as I will shortly close the voting. Once all votes have been cast, they will be counted by the Computershare registered, which drive Computershare. The results of today's meeting will be released to the NZX on completion of verification of voting.

I will now theatrically pause to allow you further time to finalize your votes. Do we really need to? This is wait 15 seconds. So I'm waiting -- Right. Voting is now closed. For those of you here in the room, I now ask Computershare to collect the voting papers.

We now move to general and more informal part now is your business. At this point, we will open the floor to any questions on Skellerup's performance and any other matters shareholders may now wish to raise, including questions submitted online during the course of the meeting. A reminder to please take your name and whether you are a shareholder or a proxy holder. I will take any questions, general or otherwise from the floor first. Do we have any ...

Richard Thompson, shareholder. And along with my wife. We have a family trust company that has invested with Skellerup, something like how long is 2004, so over 20 years anyway. And I give you -- I congratulate the Board and the executive and all the employees of Skellerup for providing a terrific return over I those years.

I do have a question. Kind of following on from the first of the online questions. Graham, you were asked about Australia and the examples you gave, I think I interpreted correctly, it's both being in the Industrial division, Sydney and Melbourne. Do you see any opportunities for the Agri division over there, they must make quite if you has?

Why don't we give the opportunity to answer this. So the answer is a market -- but Dino, give you a de answer on that time. Thank you.

Yes, there are opportunities. I think it has to be separated between dairy and footwear. The dairy industry in Australia is under a lot of strain for climate reasons, also for political reasons, with approximately 1/4 of the New Zealand dairy size. But we are a strong player in Australia and we have had a strong distribution partnership with the company in Melbourne for many years. Is there much growth to be had in dairy in Australia? Probably not. Frankly, I think it's not wise investment of our resources to try and squeeze the last few percent out of that.

Footwear really is where we see more opportunities for Agri. We have to be cautious not to simply export the rebrand to Australia, that's not likely to succeed. But our footwear product range is much broader than that. And as you can see on the table here, the Quatro range and the safety range is where we've had some great success, and we continue to focus on Australia as a potential growth market for that part of our business.

Is there a question over here? Any other questions? Well, can you know what I'm going to ask you. Are there any questions online? Sorry, sorry, sir. Sorry, apologies.

I collect bullet points over the years from the media. One of them was the ability of the United States, the Agri industry to crank up its production. I'd be interested to hear your comment on that.

You seem popular today Dino.

The U.S. dairy industry productivity, I don't think it's likely to crank up dramatically. I hope that hasn't been misunderstood. My point earlier was that the Indian dairy industry currently operates at approximately 1/3 of the production efficiency of the U.S., basically putting the U.S. write on top in terms of production efficiency and countries like India, which is not just a large but currently the largest single dairy producing country in the world and not so at the very bottom, but fairly low down in that range. So we expect productivity gains to come out of parts like India, like Eastern Europe, South America, middle East and even parts of Africa.

The U.S. production efficiency is relatively high just because the U.S. has had a focus on industrializing its dairy production for much longer, and it's embraced a fairly standardized operation model which is not [indiscernible] here in New Zealand, but essentially grain fed. So there are breeds, cow breeds like Hosting and the likes that are extremely efficient at converting starch and glucose at plant matters into essentially fat and protein in milk. There's not a hell of a lot more to be gained there. Yes, I think that answers it. Thank you.

Any other questions from the floor? Okay. Now come, any questions online?

There are no online question, Mr. Chairman.

Okay. Thank you. There are no questions remaining. It remains for me to thank you for your attendance. I now declare the meeting closed and invite you all to join the directors and management for afternoon tea and refreshments. We have a couple of nice young bar tender people who have just materialized at the bar. I'm sure they'd be very happy to serve you soon. Thank you very much.

Okay. Good morning, and welcome, everyone. I think we've just ticked over to 10:00 a.m., so we'll get underway. Tim and I will summarize the highlights from FY '25, provide some context around key impacts and the markets and applications we're focused on. Please remain on mute with your cameras off if possible. We'll take questions at the end and probably the best way to do that is to raise your virtual hand and then Tim will take those in turn.

Overall, very pleased with the result and our position and it really reflects an excellent contribution from our businesses and people around the world. We'll move to Slide 2. Okay, so the graphs, you've seen these before. We've used these for a couple of years now. It shows revenue, gross margin percentage and EBIT over the past 7 years. So over that 7-year period, our EBIT has grown at a compound annual growth rate of 10%, and that's been underpinned by revenue growth and gross margin expansion. And these results really are an outcome of our primary focus on engineered polymer products for high-performance and conformance applications in the global market and show the resilience of our earnings over economic cycles. Many of the applications we sell into do not suffer from volatile demand. The 2 largest applications, which many of you will be well aware of, that our products are used in dairy and what we call potable water and wastewater.

The products we sell into dairy are essential consumable products, meaning they are highly correlated to milk production and not milk price. 70% of the revenue we generate from sales of this application comes from international markets and the other 30% coming from the New Zealand market. The products we sell into potable and wastewater applications are most closely aligned to investment in new and improved infrastructure and population growth. And the demand for these products, again, is robust across the economic cycles, and that's proven by the results that we continue to achieve.

Important to note that the achievement of the growth over the past 7 years and for a longer period of time, we've had 9 consecutive years of EBIT growth now, and they haven't been at the expense of investing in the future. Over this period and particularly in the last few years, we've increased our front-end presence in market and our development capability in our operating businesses and our manufacturing platform. Just last week, we took delivery of 4 injection molding presses for multicavity production at our Wigram facility in Christchurch. Over the past 12 months, we've invested in additional capacity and modernization, not only in New Zealand, but also in the U.S., Europe and China.

Moving to Slide 3. Just focusing in on FY '25 here. As reported, you have seen earlier today, EBIT of $78 million, up 7% on the prior year and our ninth consecutive record result. Revenue growth from key markets in existing and recently launched products, and we'll talk a bit more detail on this later on. And as I commented on the outset, an excellent performance from our leaders and teams across the world. Operating cash flow strong at $66.5 million, down a little bit on the prior year as we deliberately increased our investment in inventory, which we talked about at the half year result to primarily mitigate around, at that point in time, what we saw as risks of tariffs being imposed, and, of course, that became a realized risk, and to support the growth in the business that we've achieved. So despite this investment in inventory, which has served us well, we've been able to fund the investment that we needed to make in equipment and people to meet our organic growth needs, a record dividend payout and a small reduction in debt. So our debt continues to remain at very low levels and give us the opportunity to continue to grow the business. Dividend, $0.255 per share for the full year, commensurate with the increase in earnings, up 6% on the prior year.

Just some comments on tariffs before I hand over to Tim for the next few slides. The FY '25 impact from a direct point of view was minimal due to the management of inventory and the price/cost mitigation actions we were able to take. We estimate the increased cost as a result of the new tariffs were imposed were less than $0.5 million in FY '25. That's a direct impact. But there were some indirect impacts which had some influence on our results. Most notably, when there was some real escalation in tariffs in China, we like a number of other companies, suspended shipments for a period of time. And then when those tariffs came back to a more manageable level, began to ship product again, and that resulted in some surge in freight pricing at that time. So we did suffer some higher freight costs throughout the year, and that's one example of that.

And then secondly, as some of our customers dealt with the impact of tariffs that influenced their demand patterns as well. And for example, we had one large customer in the health and hygiene sector that suspended delivery of products in May and June as they moved to make some changes in their assembly activities and where they carry out those activities. So there's both direct and indirect impacts on FY '25, but relatively minimal due to the actions we took, as I said, around managing our inventory levels and the actions we're able to take both with pricing with customers and reducing costs of our products.

As we look forward to FY '26, with the actions that we've taken and the situation that we have in terms of where we manufacture our products and the various tariff levels that are applied, we estimate that the increase in tariff costs, based on levels as they currently are, is less than $5 million, but in the order of $4 million to $5 million for FY '26. And we would expect to more than offset that with revenue and earnings growth in FY '26. So it's a headwind to us, but we still expect to continue to improve and grow the business going forward. That cost is after taking into account the actions we've already taken. There's actions we will continue to take. But some of the opportunity to reduce the rest of that impact is harder to shift and that relies on making some more significant investments should we choose to in terms of where we undertake certain manufacturing activities.

So I'll leave it there on tariffs. I'm sure there'll probably be some questions towards the end and hand over to Tim to go through the next few slides.

Thanks, Graham. So I'll just use the next few slides to reflect a bit deeper on the FY '25 result. So starting with our 7-year financial review. Revenue was up strongly 7%, or up 4% in constant currency terms, against the prior year. The increase was broad-based, with the Industrial division up 7% and the Agri division up 8%. Foreign exchange rates were a tailwind for us this year with the key U.S. dollar exchange rate down 3% on the average rate of the prior year.

Gross margin is largely unchanged from the prior year, just above 43%. Improved margins in the Agri division through the impact of higher volumes and productivity gains were partially offset by a change in product mix in the Industrial division. Indirect costs continued to be closely controlled, were up 7% on the prior year. That was impacted roughly 1/3 by a weaker New Zealand dollar, 1/3 by investments in people, as Graham noted, in terms of product development and front-end sales resource and the other 1/3 investments in facilities, in travel costs and in marketing to service our customers and end markets.

Overall, this meant EBIT was up $5.3 million to a record of $78 million. Finance costs were down by $1.1 million on the prior year as market interest rates declined, and we held a lower average level of debt. Favorably, we were able to successfully extend our debt facilities during the year, resulting in an additional reduction in total cost. The tax expense reflects an effective tax rate of 26.5%, comparable with the normalized rate for the prior year. And just a reminder that in the prior year, we reported an underlying NPAT due to us being required to make an adjustment for the removal of tax depreciation on buildings in New Zealand.

The relatively lower finance costs and increase in EBIT meant a 9% improvement in underlying EBIT on the prior year. Underlying NPAT, sorry. Reflective of the group's strong financial position and operating cash flows, as Graham mentioned, we've increased the dividend to $0.165 per share, which represents a 92% payout ratio of after-tax profit, consistent with that in FY '24. Operating cash flow was slightly lower due to the previously mentioned investment in inventory to counter tariff and supply chain disruptions, ensure continuity of supply to customers and meet increasing market demand. In FY '25, we funded CapEx of $9.2 million, a record dividend payout of $48 million, and an increase in lease payments of $7.1 million, meaning our net debt closed $3 million lower at $12.4 million, or just less than 4% of total assets.

Moving to our earnings bridge, which reflects the change from underlying NPAT reported in FY '24 to the record FY '25 result. For the Industrial division, we continue to see earnings growth from the key potable and wastewater applications through increased market share and the launch of new products, which Graham will talk about shortly. This included vacuum systems in the U.S. and Australia and increased demand for infrastructural pipe products in the U.S. market following a softer 2024. Robust demand for products in solar applications in the U.K. drove an increase in the roofing and construction earnings, and we continue to see increases in demand for pipe connection products in the U.S., which was somewhat offset by a continued weaker Australasian construction market. All other Industrial applications performed roughly in line with the prior year.

Demand for dairy consumables remained strong throughout FY '25, contrary to the customer destocking that we saw in the first half of FY '24. Higher demand fueled higher production volumes and resulted in operating leverage and a significantly improved performance in the year. Footwear volumes and revenues were higher on the prior year, but were insufficient to counter some quite significant raw material costs increases as a result of lower production through our facility in China to manage down our inventory levels. 2025 corporate costs were slightly higher because the prior year included a reversal of a long-term incentive cost for the former CEO, which didn't repeat in the current year. Corporate costs are very well managed and remain less than 2% of total group revenue. The FX movement reflects the change in the pretax revaluation and hedging losses of around $400,000 this year, being favorable to the $1.3 million reported in the prior year. As I previously touched on, interest was lower and the effective tax rate reasonably unchanged, resulting in the record EBIT for FY '25 -- NPAT for FY '25.

Turning briefly to group revenue by market. I note that Graham will cover the divisional split shortly, so I'll focus on the key changes for the year. North America continues to be our largest market by share of revenue, increasing both in absolute terms and as a proportion of group revenue. Growth in the U.S. was broad-based with sales of our OEM and own dairy consumables seeing significant growth, growth in vacuum systems and roofing and construction products and a return in demand for our high-performance marine foam. Decreases in the relative share of revenue for New Zealand and Australia are reflective of the tougher trading conditions in these markets, particularly the impact of the depressed construction activity with residential building consents in Australia at decade low levels. Growth in the U.K. and Ireland is driven by the supply of roof flashing products used in solar applications in the U.K. and to a lesser extent for specialist drainage products.

Turning to group revenue by application and having touched on several of the key drivers previously, I note that we show strong growth across most of the group's applications. For our key applications, dairy had a strong return through strong demand throughout the year. Demand for products used in potable and wastewater applications was resilient with revenue in absolute terms for this application increasing by 7%. Roofing and construction revenues were higher due to the higher solar flashing revenue in the U.K. and pipe connections in the U.S. and revenue from sales of specialist footwear, as I mentioned, were higher based on an increase in volumes augmented by the launch of our new Red Band Low product as well as additional sales of Pink Band gumboots in support of the Breast Cancer Foundation. Other smaller applications performed largely in line with our expectations.

With that said, I'll hand back to Graham to cover the divisional performance for FY '25.

Okay. Thanks, Tim. We're on Slide 8 now. Another record result for our Industrial division. Over the past 7 years, we've achieved a compound annual growth rate of 12% for EBIT. As Tim touched on, potable and wastewater, demand was solid. Infrastructural pipe applications, the demand was up both in North America and also in Australia, where we have recently, over the past 2 years, launched gaskets for polypropylene pipe, which is increasingly being used as a substitute for concrete pipe and wastewater applications. Somewhat countering that was some reduced demand for tapware in North America, reflecting the market and also some loss of market share by one of our customers.

Roofing and construction, as Tim noted, was a standout from the U.K. where in multiunit new dwellings, there is a requirement to incorporate solar solutions as part of those builds. So we continue to see good growth in that sector in the U.K. in particular. And then as Tim also mentioned, U.S., we saw some small growth where our focus is primarily on the metal roof market, countered somewhat by a softer market in Australia and New Zealand, in particular, Australia, where we have a significant presence through our Deks business based out of Melbourne.

As I noted earlier, freight and tariff impacts eroded our earnings slightly for the Industrial division. And then as we look forward, really we see we have continued strong opportunity, both with existing customers and new customers. And we talk about this a lot, but our capability to engineer and manufacture high-performance, high-conformance polymer products and increasingly integrating molded components in those provides us with something that generates some significant value for our customers and good growth opportunities for us going forward.

We'll move to Slide 9. As Tim noted, what we're looking at here now is just for the Industrial division, we've got by market on the left and by application on the right. As you can see from the market graph on the left-hand side, North America continues to grow as a proportion of our Industrial division revenue. And that growth was broad-based as we noted, potable water, wastewater, roofing and construction. We did have a slight increase in our hygiene applications, albeit it was softer in the final quarter of the year. As I noted earlier, our largest customer in that application suspended deliveries in May and June as it went through some changes that they were making in terms of where they assemble and manufacture their products.

U.K. and Ireland increased as a consequence of the roofing and construction demand, as we said. Australia and New Zealand was up fractionally in real dollar terms over FY '24 despite the headwind of roofing and construction and sport and leisure applications demand being a little bit more subdued and Asia was flat.

We'll move on to Slide 10 in the Agri division. Obviously, the most significant contributor to the improved earnings in FY '25. So a result we're very pleased with. In part, the improvement was expected because we did not have, and we were not expecting to have, the destocking impact that we had in the first half of FY '24. So from an Agri division point of view, just to give you some context, roughly 75% of the revenue is generated from sales we make into dairy applications and the balance of that coming from footwear applications.

From a dairy point of view, the growth was broad-based, both from a market perspective. International sales up at 10% on pcp, whereas domestic sales also up by 6% on pcp. And then in addition to that, we had that broad-based market growth. We also had good growth across both our OEM customers and our own branded products. And those branded products include some newly launched liners and newly launched car feeding. We talked about the Thriver product that we were to launch this year last year. That met our expectations in FY '25 with the revenue we've generated and probably exceeded our expectations in international markets. As we move into FY '26, we're in the peak calving feeding season in New Zealand right now. Demand for this product is good. We also have trials with versions from this range currently in progress in North America and Europe and I'm confident on the opportunities we have going forward with that product range.

The strong demand and the investment we've been making in productivity and process improvements provided us with an additional boost to earnings. Obviously, higher demand with a fixed cost base always provides that opportunity. But as I note, that has been aided by the investments we've been making in equipment and process, as you expect, and therefore, translating into an excellent outcome from an earnings point of view at the EBIT level.

Speaking of footwear now, as Tim noted, revenue growth in the New Zealand domestic market was achieved, including the newly launched Red Band Low. If you take a look at our annual report and you get some time later on today, there's a QR code in there, and you can see the Red Band Low racing down the course at the Red Bull Trolley Derby earlier on this year, which coincided with the launch of that product. And that's obviously a product that we expect to continue to generate revenue growth for us in the future. We're also working on a new lifestyle range of boots for which the first product will be launched in FY '26. So good prospects going forward for footwear. As Tim noted, the FY '26 earnings contribution was somewhat reduced due to the impact of higher raw material costs and a planned reduction in production to manage down inventory levels.

A couple of years ago, we boosted production in response to COVID demand, which proved to be more than what we needed. So over the past 12 months, we've been working our way down, and we expect to be able to lift the production rate a little bit as we move closer towards the second half of the year and start to regain some of those efficiencies. That said, whilst the contribution was down on the prior year, this remains a very valuable and very profitable business to us.

Looking forward from an overall point of view, as I noted earlier, the global demand for protein continues to increase. If you look at what the projections are in the market, they generally range from 4% to 6% to 7%. And we're seizing the opportunity that presents by investing in product innovation, investing in our capacity, investing in people, and we have a multichannel model to capitalize on this, not only in our traditional strong markets, but also in emerging and developing markets in Asia and in Eastern Europe.

We'll move on to the next slide. I won't pause long here because Tim has covered a fair bit of this off. Again, what you see on the Agri division here you see on the left-hand side, our revenue by market and on the right-hand side by application. As I noted before there, roughly on the right-hand side, that split of revenue between dairy and footwear. And I just wanted to emphasize again here, this is a global business. 63% of the revenue across our dairy and footwear product range we generate from international markets. And there's understandably sometimes an assumption that this business is significantly leveraged off the New Zealand market, given that Agri is such a significant part of our business and our country's business, and it is important to New Zealand and important to us. But significantly, the international markets have a big say in what our results are for this division as well. And we continue to see good growth opportunities in international markets for, in particular, our dairy products, but also our footwear products. Just a note there on footwear. Our growth in New Zealand over the past 5 years has been aided by our increased presence in the big box retailers such as Bunnings and Mitre 10 MEGA and the new products we've talked about that we've added to the range.

I think with that, we'll move on to Slide #12. Just a recap on environmental, social and governance matters. If you've had a look at the annual report and compared that to a couple of years ago, you will see the page count is quite a bit higher and to a large extent, that's due to the inclusion of our climate-related disclosures. What we found working through this process is we've genuinely gained some benefits by thinking about the risks and the scenarios and the opportunities that come with the impacts of climate change. The investments we have continued to make in our business mean that the intensity of our scope 1 and scope 2 emissions continues to reduce, which is obviously a positive outcome. And this year, the big activities have been the development of an emissions reductions plan, and we're using our largest Agri facility at Wigram as a pilot for that. And we've identified some excellent opportunities to deliver both good environmental outcomes in terms of reductions in emissions, alongside good commercial and financial outcomes as well. So that's been some good work and some great contribution by both Tim and his team and our team at Wigram.

We've also worked on developing our first Climate Transition Plan. You can read about hat in the annual report. And just I think the understandable focus on climate means that sometimes the other environmental initiatives can perhaps get a little bit sidelined. And I wanted to highlight that we're trialing currently a recovery scheme in New Zealand whereby we are collecting liner waste to be used as a fuel substitute in the cement manufacturing process in the top of the South Island. So that's an activity we've got going on as a trial at the moment. And then final point on environment, scope 3, greenhouse gas emissions, that data gathering process, we reported these last year and again this year, the process of gathering that information and calculating those emissions remains a significant activity, which I think we manage as efficiently as we possibly can. I would say that the prospect of that needing to be subject to assurance next year scares me somewhat in terms of what cost that may bring to the business, and we don't really understand that yet. So I certainly have some reservations around the benefits of what's currently mandated in terms of those emissions requiring assurance next year.

Moving on to social. The first point we make there is around health and safety. Our target is zero harm. Our people, our leadership, our teams embrace this, and I think we have an excellent culture around health and safety. All of our sites have monthly meetings and they have active committees. I participate as often as I can in some of those meetings, and I'll be in Europe in September and will be visiting 4 of our businesses and will have the opportunity to sit in those discussions and those activities there, too. We have a good, both internal and external framework. We've moved to a model over the past 12 months of ensuring that each of our sites and locations are subject to an external review each year, as well as our own internal activities. So a strong focus on this. We, as I noted at the outset, the target for us is zero harm. And I think that's the only target we would want to have.

Just some other comments there. We do have part-time and hybrid arrangements. We regard that as a critical opportunity to both retain and attract talent, to be quite frank. And I think the important consideration is this is a case-by-case basis, a role-by-role basis, and it has to be a good outcome for both the group and our employees. Some of our employees have to work in international time zones reflecting the business that we're in. And so therefore, an arrangement whereby they spend at least some of their time working from home is absolutely the most [ simple thing ] we can do. We have no issues over pay equity. All of our leaders confirm annually that our pay levels are set on an equitable basis and no reports of discrimination or harassment. And just finally, on governance, there's been no change to our Board, as you would observe. We continue to benefit from a Board with, I think, a highly effective mix of skills, experience, and tenure. And I think it's a great benefit to ourselves, management running the company, and shareholders.

Just to close, I want to recap on our business model and strategy and how this translates into earnings growth. The chart at the top, you'll have seen before. We emphasize that the critical element we have is we have a deep technical expertise both across the products and the formulations that we design, the manufacturing processes that we have, our capability to design tools and manufacture products. And we really focus that expertise on products for precision, high-performance and conformance applications. Our development is customer focused. So we work hard to try and understand the customers' need, whether that's an OEM customer or a broader market where we're selling a branded product to ensure that we focus our development on real innovation and performance to deliver maximum value for our customers.

We have been investing in market presence, and from a manufacturing perspective, less so at this stage, but certainly from a people perspective in terms of having people in markets. And for the future, and I'm sure we'll have some questions on this, we would expect that we'll be manufacturing more of our product in the years ahead in market. It's not an imperative must-do-now activity for us. We have a very profitable model, a very scalable activity, but it's something that we'll be looking to do more of in the years ahead. And then I think a real strength is our business unit model, whereby we measure our business units, and we have accountability, capability and measurement at that business unit level. And if you look at the graph at the bottom, I think, our strategy and our focus is delivering great outcomes. So what we put together there for you is an indexation of our EBIT over a 7-year period compared to GDP growth in key markets over that same period of time. And using 2019 as the base year, cumulatively our EBIT has grown by 87%. And the cumulative GDP growth in our key markets over that period of time is 7% to 13%. So again, just emphasizing that point that we continue to believe we can generate strong earnings growth with the mix of products and the focus that we have regardless of the economic environment.

So with that, we'll take questions. And I can see we've got a few hands up already. Tim?

Some early hands up. So I think, Guy, you were first. If you'd like to unmute yourself, I think we can fire away.

Yes. And well done on delivering through a period full of disruptions. And so maybe just starting on that, it looks like you've offset about half of the additional Trump tariff going into next year. So there's that $5 million [ hole ] to make up or offset. Can you talk a little bit about how the plan is to do that? Are there more mitigation levers that you need to pull? Or is this now requiring a bit more underlying growth to offset that last $5 million?

Yes, perhaps, the way we think about this, Guy, is this year, our total tariff cost was around about $5 million. Yes. And with the tariffs as they currently sit, imposed on a like-for-like basis, we would be looking at a number of about $18 million for FY '26 on a like-for-like basis. And there's a few elements to this. I'll just briefly go through it. The dairy products that we sell into the U.S. fall under a class exemption. So therefore, there's no great mitigation from us, but that reduces a tariff impact of around about $3 million that otherwise would apply. And then with the products that we [ contract manufacture ] in Vietnam, we're able to substantially offset the impact of the 20% tariff that now applies there with pricing and cost adjustments. And then the other key manufacturing platform for us is in China with our vacuum systems and footwear.

We can offset some of the impact with cost changes and pricing increases, but we cannot offset all of that. So when we talk about the incremental cost of around about $5 million, or somewhat less than that in FY '26, the largest share of that is attributable to the products we currently assemble and manufacture in China. And so there's no magic answer for that other than considering could or should we do that somewhere else. And we've done a fair bit of work on evaluating that. Obviously, any change would take some time and require a transition. So there's not like an instant switch whereby that generates a saving that completely offsets the tariff. And frankly, we're going to continue to remain patient on that whilst there's uncertainty around where that Chinese tariff may land. Currently, as I said at the outset, there's the 30% tariff from the current cycle of administration and then there's some higher tariffs that apply to some of our products from the previous administration.

So I think the important point is it does not negatively impact our ability to be profitable selling these products in the U.S. market now, but it's an additional cost to us. And so if you like, the $4 million to $5 million we talk about in FY '26 is a little bit harder to shift and is a bit more structural in terms of the actions we would need to take. That said, the underlying opportunities for us across the business, we're confident will more than offset that cost in FY '26.

No, I appreciate the color and all the moving parts there. Look, I know that you've long signaled shifting some of that supply chain and some of the manufacturing base in part to account for these tariff tensions. Can you talk a little bit -- I mean, you seem to have signaled a bit harder in this round about the additional cost or perhaps the size of investment required to do that. Could you talk a little bit more around that, whether you're just talking about CapEx related to perhaps North America manufacturing, but also whether or not there'd be any operational cost headwinds as you look to relocate or shift assembly or manufacturing?

Yes. I think probably the point that we were making in the commentary here is we're not signaling any material change in what we previously talked about in terms of capital investment that's required. If we do this organically, we can scale up at a rate that suits the speed that we want to go at. For example, we've talked about we could move to manufacture some of our high-volume products in North America. And we've been investing in establishing a more modern manufacturing capability and capacity at our Wigram facility to make that option easier if that's something we choose to do. So there's no urgent hurry for us to do this.

What we do see, though, is good opportunities for us to grow sales, for example, in the Asian market. We sell a limited amount of product into China, but we think we have good opportunities to grow in that market. And so, in parallel, we're thinking about, hey, may we shift some of our product manufacturer, for example, on dairy rubberware, if we were to shift some of that from New Zealand to North America, we would match that with demand growth for our products into markets nearer to New Zealand and Asia, for example. So as we have developed that capability now, we have options in terms of whether we pursue that organically or whether we look to accomplish that with an acquisition. And we have optionality around timing because we don't have a problem here with a burning platform of unprofitable business. So no, we're not trying to signal a vast change in CapEx requirements. And we're thinking about this very carefully because shifting product and adding cost doesn't make a lot of sense to the bottom line.

Just one last one from me around the inventory buildup ahead of these tariffs. Has that inventory build managed to largely wash back through as we are today? And have you had any indications from the customer set that their own inventory builds have largely washed through and destockings occurred?

Yes. So firstly, on ours, Guy, we've continued to carry slightly higher levels of inventory, and you can see that in our numbers. It's not as high as it was at half year, but we've continued to carry high levels. For example, Vietnam was sitting at a tariff of 10% until recently. So we took the opportunity to build up inventory of some products that we were pulling out of Vietnam from a risk mitigation perspective, thinking that may go up, which has gone up to 20%. So we're still carrying some higher inventory levels. I don't believe that our customers in the U.S. have built up inventory of our products to mitigate tariffs. Pleasingly, a lot of our customers just see us as a supplier of products in North America. They don't think too much necessarily about where our product comes from.

Now obviously, when we go to them with price increases because of the impact of tariffs, they do. But there's not been significant build of inventory by our customers in North America. So we're not concerned about a significant destocking from our Industrial customers in North America. In some applications, particularly in the performance marine foam level, there was an immediate knee-jerk reaction saying, hey, can we buy all the product you've got in America, which we declined. So yes, I don't think we've got customers sitting on substantial amounts of inventory because we've been pretty careful around how we manage that as well. But we have ensured that we [ built up ] our inventory levels to provide us with a period of time to manage through price increases.

All right, so, Rob, I think you were next on the draw. If you can unmute yourself.

Congratulations on yet another record result. Keen to kick off with a question on the outlook statement. So it seemed to speak to an acceleration in revenue growth in the next 12 to 36 months. And based on comments elsewhere, it looks like that might be driven by the water division within Industrial, specifically new products from existing customers. Could you give me some color on the programs that you see coming up that give you confidence?

Yes, Rob, we're not trying to signal an acceleration in revenue growth. The comment around the 12 to 36 months was more around the business model may change over the next 12 to 36 months as we perhaps implement some of the things we've talked about of more in-market manufacturing capability. We are targeting growth, particularly in the -- and we think we have opportunities to grow our sales in dairy applications perhaps more rapidly than we have in the past by targeting some of those developing markets of Asia and Eastern Europe. And so that's really the broad context of that. So those objectives and targets that we've got, we're not trying to project anything other than what we've talked about in the past in that we have confidence that we can continue to grow earnings at a similar rate to what we have been achieving over the past 7, 8 years. So that's the space that we're currently in.

But I think, to answer your question more broadly around our opportunities for growth, we see good opportunities for growth in dairy application. And personally, I'm more excited about this than we have been able to be before because of the investment that we've been making in capability, both people and equipment. And I think the plans and opportunities we have for growth with both our own innovative products under our own brand and the relationships we have with OEM customers. So good prospects there. And then we continue to have a broad range of opportunities across the Industrial division. And despite the impact of tariffs and what have you in the U.S., that remains a market of great opportunity for us.

Okay. Makes sense. And just to be super clear, so for these new opportunities, you're not expecting an acceleration in OpEx. You'd expect margins to be perhaps broadly steady over the next few years, barring tariffs?

Yes, we would. Yes. So there's no step change in operational costs. We have been investing and we'll continue to invest in capability, but it's not at a rate that it's going to outstrip our earnings -- sorry, our revenue and margin growth.

Okay, cool. You had some pretty strong exit growth rates for revenue across both the businesses. Could you speak about what you've seen in July and August?

Yes. So we're only halfway through August. So we can probably reflect on the first 6 weeks of trading. I would say in line with our expectations thus far, Rob. So consistent with our objective to consistently grow the business. It's in line with our expectations. From an Agri point of view, in the New Zealand market, this June, July, August period or May, June, July, August period is always a peak season. Demand for both dairy and footwear in the New Zealand market has continued to be good in the new financial year. So we're well placed, particularly from an Agri point of view 6 weeks into the new year. The biggest question mark I have from an Industrial point of view is -- and you guys read all the macro data and what have you as well -- is with the impact of tariffs and costs passing through to consumers, what might happen to overall demand. Notwithstanding the comments I made at the start is from a potable water point of view, for example, our spend is more linked to -- sorry, our sales are more linked to infrastructural investment and population growth. But some of our other applications, the margins will suffer if there's a reduction in demand in response to cost increases in North America. So that's the greatest uncertainty that I see for us looking forward for the next 12 months.

Crystal clear. One more, if I may. So in line with what you were just speaking about, so obviously, we've got a headwind from tariffs and then there's these unknown secondary effects -- second order effects from demand. But all else equal, assuming the demand from the tariffs alone and business as usual, do you expect to grow NPAT next year or this financial year, sorry?

Yes, we do. Obviously, we don't provide earnings projections at this point in time in the year. We typically provide that our annual meeting in October. It's just too early in the year. But certainly, Rob, our target is to continue to increase earnings this year and in the years ahead.

Rohan coming in third, still on the podium.

Just on the podium. Just on new products, can you give us an idea of, I guess, contribution to the results in terms of sales and maybe sort of an exit run rate? I know that they obviously are ramping up still. Just interested in terms of what they've added so far.

It's always a hard one because what do you define as a new product? Something we launched in FY '25 or is it FY '24 or is it FY '23? If we break it down between the divisions first, and we talk about Agri in particular dairy from a calf feeding team point of view, we've talked about the Thriver product. We've only just launched that. So the contribution was pretty modest, around about $1 million in FY '25. But we have -- someone is not on mute. Is that your background noise, Rohan?

That's me. That's my colleague. I'll mute myself. I'm sure you don't want to hear it.

We'll put up with it. So yes, so just talking on that. So the contribution modest in FY '25, and we expect that to grow much more significantly this year and in the years ahead. And in particular we're pretty excited by the opportunity we have in international markets. I mentioned we had trials in Europe and North America. We have a trial in North America will conclude shortly, and that's a big market. So significant opportunity for us there in an area that we haven't traditionally focused on strongly. Our core line of business, we've got some products that we launched in North America, again, both in FY '23 and then more recently in FY '25 with the silicone liner that you've seen before coming in the single-use shell. We expect good growth for that in FY '26. And talking to Dino the other day, I think that the nature of our relationship with some of our OEM customers has changed somewhat in terms of we are adding an increasing amount of innovation to some of their developments and that they'll provide us with what it needs to work from an interface point of view in terms of how it works into their system and asking us to come up with innovation and opportunity around the design of the liner itself.

So on the Agri side, we have a positive outlook going forward, and I think we can grow it. If you strip out the impact of the destocking in '24, I think we can achieve faster rates of growth going forward than what we have in the recent past. From an Industrial point of view, we've had a number of products come on over the past few months into the OEM space. And as we've talked about before, typically, these products come with annual revenue opportunities of at least $0.5 million, $1 million and more. So we've added in another 2 or 3 products over the last few months, which each will generate around about $1 million a year, and we continue to have other of those opportunities that we're working on developing now. So there's good -- continues to be good growth from organic opportunities. And then we're in the process of adding a bit more resource in market in the U.S. The applications we're in are good applications, but we think we can target a slightly broader group of customers in some of those applications, which will bear fruit for us in the years ahead.

Perfect. What about the -- sorry, European foam? I understand you need to attack that market slightly differently. You had a DC that you were setting up. I was just wondering how that opportunity is going.

Yes. So we set up that distribution center in the Netherlands. About an hour's drive, I think, out of Amsterdam.

Yes. In a center called Venlo.

So that's been up and running for several months now. We had some existing customers in Europe. But frankly, to grow that market and to realize the opportunity that was there, we were very clearly needed to set up our own base there. So we have our own facility there. We have a team of 3 people. And we expect that operation to move into profit rather than cost roughly around about halfway through this year as we build up that customer base. So yes, so that's underway. And I think we've got an excellent guy leading that business with significant connections in the industry and experience in the industry up there. Of course, it's holiday period in Europe right now, so a lot of businesses are closed or working on or just coming back, I guess, from holidays. So the success of that will become evident as we move closer to the end of this calendar year.

I look forward to the asset tour.

If there's anyone else that would like to ask a question, we've still got a few minutes to go, otherwise, so just throw up your hand. Pause for a second.

No more?

Not that I can see.

Okay. Thanks, everyone, for tuning in. I know there's a number of companies delivering results today. So appreciate you taking the time to tune into us. As I noted at the outset, a result we're very pleased with, a position that our business is in, both from a capability point of view and the markets that we're present in, that we're very pleased with and optimistic about for the future. So thanks very much for tuning in, and we'll talk to you again next time. Thanks.

Thank you.