Australian Agricultural : AACo 2017 AGM Address to Shareholders

Australian Agricultural Company Limited

ABN 15 010 892 270

AACo 2017 Annual General Meeting Address to Shareholders

ASX Announcement No. 15/2017 23 August 2017

Attached is the Chairman's and outgoing Managing Director's Address to Shareholders for the 2017 Annual General Meeting of the Australian Agricultural Company Limited ('AACo') to be held today.

Media enquiries: Belinda Murray

Director of Corporate Affairs 0418 117 441

Page 1

Shareholders.

Welcome to the 2017 Annual General Meeting of AACo. It is great to be here in Darwin.

Half of our business is in the Northern Territory. We find it a very good place to do business and it makes sense to recognise our commitment to the region by hosting our AGM here.

You will hear from your outgoing Managing Director, Jason Strong, shortly.

As many of you will be aware, Jason has resigned from AACo and we are pleased to have this opportunity to publicly acknowledge his achievements as he presents this annual report as his last AACo duty.

Jason will brief you on the performance of your company in the 2017 financial year - as well as the outlook for the 2018 financial year.

Before Jason speaks, I'd like to put AACo's performance and outlook in a broader context.

Late last year, Bill Gates - the founder of Microsoft - visited our Wylarah Station, and was impressed by what he saw.

Mr Gates later wrote:

"I was impressed by how high tech the whole process was … [AACo] relies on cutting edge genomics to breed Wagyu beef cows, some of the most elite cattle in the world."

I couldn't agree more.

2017 was another year of progress for AACo.

We have spent the past four financial years transforming your company.

Over those four years AACo has evolved from an Australian pastoral company with a proud domestic history into a luxury branded beef business with an exciting international future.

We have built something to be proud of: an authentic beef brand our customers can trust.

At AACo, we have earned trust by …

taking greater control of our supply chain, investing in innovation and technology, and investing in our brands.

Before setting down this path back in 2014, we knew this transformation would take time and considerable effort.

Your Board debated the decision to fundamentally change the way we had done business and the required changes that would be necessary to the company's culture.

In the end, we unanimously concluded that the outcome of these efforts would definitely support the commitment to change.

I am proud to state, as a consequence of those years of planning and investment, we are seeing the fruits of our labour and are now in a position to take our brand to the world.

That is why we launched our Wylarah and Westholme brands in Singapore last October.

We will be intentional in our expansion, learning from each launch.

I am delighted to say that our Singapore launch resulted in a significant increase in demand.

Volume increased 11 per cent and overall average sale prices increased by 28 per cent between September 2016 and March 2017 - compared to the same period in the previous financial year.

We are well on the way to realising our global ambitions for AACo - global ambitions that are grounded in financial strength and operational excellence.

For instance, in 2017:

Our operating EBITDA increased, Our net operating cash flow increased, Our net tangible assets increased,

Our Livingstone facility became even more efficient, and Our margins improved significantly.

However, while the increased integration of our supply chain has made our business more predictable and resilient, we remain exposed to a number of external factors.

In recent months, the Australian beef industry has been dealing with a rise in the value of the Australian dollar, higher feed prices, offshore regulatory uncertainty, changes in global beef supply and Australian cattle prices softening from historically high levels.

This is why our strategy of vertical integration is so important, to reduce some of our exposure to these external market factors.

We will continue to invest in our business to improve the productivity of our asset base and strengthen our organisational capabilities. This will include investment in people, physical infrastructure, and innovation. We will continue to apply a disciplined approach to undertaking such investment decisions, with a clear understanding of the expected strategic and financial benefits.

We remain committed to our strategy. Because it is the right strategy. In summary, your company is in a strong position.

We have good financials.

We control our supply chain from the farm gate to the restaurant plate.

We have the ability - through world-class technology and innovation - to consistently deliver a world-class product.