Annual Meeting Presentation

DELIVERING FOR OUR FARMERS
2nd October 2019
LIC ANNUAL MEETING

Welcome
Murray King - Chairman

Meeting Agenda
1. Julia Jones - NZX Limited
LIC - Investment Perspective
2. Financial Overview
3. Business Highlights
4. Dairy Herd Improvement
Regulatory Review
5. Outlook
6. Drivers of the Global
Dairy Market
7. Financial Detail
8. Shareholder Council Report
9. Honoraria Report
10. Voting Resolutions
11. General Business

LIC –Investment perspective
- AGM 2
nd
October 2019
JULIA JONES - HEAD OF ANALYTICS, NZX LIMITED

FINANCIAL DNA
2

BEST IN BREED
0%2%4%6%8%10%12%14%16%18%20%
LIC
SEK
SCL
SAN
TGG
NZK
FWL
DGL
PGW
CVT
FSF
SEA
ATM
SML
MWE
S&P/NZX Primary Sector Equity Index
S&P/NZX SmallCap Index
NZX Main Board
S&P/NZX 50 Index
Gross Dividend Yield: LIC and relevant indices
3

BEST IN BREED CONT.
-60%
-40%
-20%
0%
20%
40%
60%
LICATMFWLSCLDGLPGWNZKMWESANSEKTGGSMLSEAFSFCVTS&P/NZX Primary Sector Equity
Index
S&P/NZX SmallCap IndexNZX Main BoardS&P/NZX 50 Index
Returns
Net ReturnGross Return
4

DRY SPELL
4000
0
200
400
600
800
1000
ATMSMLFSFSCLSANNZKCVTDGLSEKPGWMWEFWLTGGLICSEAFWPP
Median
Liquidity (median spread, bps)
Lower = better liquidity
5

TWO DIFFERENT HATS
INVESTOR
CUSTOMER
6

THANK YOU
Julia Jones
Head of Analytics
NZX Limited
Ema il:Julia.jones@nzx.com
Phone:+64 27 524 8901
Twitter:@juliajones110
7

Murray King - Chairman
Results Overview
& Business Highlights

Financial Overview
The major strategic projects we have completed since
2016 to shape LIC into a modern, progressive co-op have
enabled this year’s strong result. Importantly, we believe
the results are sustainable and we are confident that we
will continue to build on them in the coming years.

Highlights
246.5M
TOTAL REVENUE
up 4% from $236.4 million last year.
15.6M
10.98C per share
FULL YEAR DIVIDEND
up from $2.4 million / 1.71c last year.
Fully imputed will be paid to shareholders
on 23 August, representing 80% of
underlying earnings.
19.5M
UNDERLYING EARNINGS
up 541% from $3.0 million last year. This
is Net Profit After Tax (NPAT) excluding the
increase on fair value of the biological assets
and related tax effect.
22.2M
NET PROFIT AFTER TAX (NPAT)
up 139% from $9.3 million last year.
13.6M
R&D INVESTMENT
continues to be high at 5.5% of revenue.
21-25M
EXPECTED FUTURE UNDERLYING
EARNINGS FOR 2019-20
assuming no significant climate event or
milk price drop takes place between now
and then nor any major impacts from
biosecurity threats such as M. bovis.

Business Highlights
Resilient Dairy: Innovative Breeding for a Sustainable Future

Business Highlights
Awards
Co-operation
Amongst
Co-operatives
Winner
CIO of the
Year
Winner
Co-operative
Business of
the Year
Winner
High Tech
Awards
Finalist
Biosecurity
Awards
Finalist

Dairy Herd Improvement Regulatory Review
• LIC submitted on the Dairy Herd Improvement Regulatory Review in support of the
current model, which balances access to core data and the promotion of industry
innovation in data collection, analytics and use.
• LIC has since reiterated its concerns that wholesale change could stifle innovation
and discourage vital long-term research.
• The Government wants to understand the implications of the wider range of issues
raised and is consulting further with the industry.
• We expect greater clarity on next steps in 2020.
Legislation
• LIC is still waiting on Government’s changes to the DIRA legislation that will
unshackle LIC and leave decisions on the co-op’s future to its shareholders.

2016
Separation of LIC
Herd Improvement
and Agritech
2017
Transformation
2018
Share Simplification
2018
Strategy Refresh
2019
Innovation
Led Growth
A strong platform for future growth
Our Strategic Roadmap

Outlook
We expect underlying earnings to increase to $21-25 million in 2019-20,
assuming no significant climate event or milk price drop takes place
between now and then nor any major impacts from biosecurity threats
such as M. bovis.
We have to make sure that in the data-driven future of global dairy, LIC
and our farmers are in a position to be the disruptors, not the disrupted.
That takes financial strength, high-performance and a clear focus on
the innovations needed to keep our farmers ahead of the game.

Wayne McNee – Chief Executive
Drivers of the Global Dairy Market
& Financial Detail

Drivers of the Global Dairy Market
Rising
environmental
demands
1234657
Macro FactorsIndustry DynamicsConsumer
Technology
enabled and data
driven agriculture
Changing shape
of the NZ
dairy industry
Globalised
competition
Advances in
animal genetics
Continued global
demand for dairy
fat and protein
Consumer demand
for transparency
& food trust

Our
potential
Global Pastoral
Genetics and Farm
Management
International
MINDA
Traceability
Traceability
Global Food
Safety
Our
core
business
Livestock
Genetics
New Dairy
Genetics
Technology
Milk
Pregnancy
Testing
Dairy Animal
Health
AI Farm
Sensors
Inline Milk
Meters
Agrigate
NZ MINDA AI
SPACE™
Beef
Genetics
International
Full Service
(Dairy)
International
Dairy
Automation
OEM
Diagnostics
Lab
International
Dairy
Genomics
Global AI
Enabled Farm
Management
International
MINDA
Traceability
Biosecurity
Country Level
Algorithms
Traceability
Global Food
Safety











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G
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A
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M
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Our Strategy
Innovation-led Growth
OUR PURPOSE
LIC is a dairy farmer
owned co-operative which
empowers livestock farmers
through the delivery of
superior genetics and
technology.
OUR AMBITION
Continuing to lead the global
pastoral dairy system.
OUR STRATEGY
An innovation-led growth
strategy for LIC, with an
ongoing focus on the core
NZ dairy industry.
Optimise
the core
Drive value from
the current business
Enhance
the core
Growth through
innovation
Capture value
beyond the core
Leverage existing capabilities
for profitable growth
outside pastoral dairy
60%
30%
10%

Ecosystems around customersProducts around cows
Building Ecosystems Around Customers
From
To
PRODUCT
PRODUCT
PRODUCT
PRODUCT
PRODUCT
PRODUCT
Advisor
Farmer
Owner
Ve t
To

What is fuelling us to achieve
innovation-led growth?

Data
“The world’s most valuable resource
is no longer oil, but data.”
The Economist
May 2017

THE CLOUD
Stored in the cloud alongside over 1 billion
pieces of data from LIC co-op farms.
OUR CUSTOMERS
• Save time.
• Real-time decisions on farm.
• Access to a genetically superior breed of cow.
• High/premium milk production.
• Profitability.
And NZ Dairy Industry
• Globally superior genetics and milk production.
• Transparency from cow to customer.
• NZ dairy herd reflective of regulatory and
environmental standards.
How data is driving
genetics and herd
management innovations.
1 BILLION
PIECES OF DATA
95%
FARM DATA
• Herd information, what
animals make up a herd.
• Static animal data,
biological and ancestral
information.
• Event data, mating and
pregnancy information.
• Production data,
milking output.
2
4
1
LIC
New and existing data analysed
for insights to continuously
improve products and services.
• Breed superior animals.
• Match rising environmental
and consumer needs.
• Increase local and global
demand for product.
3

THE CLOUD
Stored in the cloud alongside over 1 billion
pieces of data from LIC co-op farms.
OUR CUSTOMERS
• Ability to make faster, more informed real-time decisions on farm.
• Access to an increasingly superior genetic breed.
• Increased production of premium milk.
• Access to advanced farm management technologies.
• Protection against future disruption.
And NZ Dairy Industry
• Increased milk production.
• Ability to quickly adapt to meet regulatory and environmental standards.
• Increased transparency from cow to customer allowing food trust.
• Increased demand internationally for premium milk product.
How data will drive
innovation-led
growth in the future.
1 BILLION
PIECES OF DATA
95%
FARM DATA
• Herd information, what
animals make up a herd.
• Static animal data,
biological and ancestral
information.
• Event data, mating and
pregnancy information.
• Production data,
milking output.
• Animal health, animal
wellbeing and fertility.
2
4
1
LIC
New and existing data analysed
for insights to continuously
improve products and services.
• Disruptor not the disrupted.
• Faster response to
environmental and
consumer demands.
• Increased demand locally
and globally for product.
• Faster and more accurate
products and services.
3

Financial Detail

LIC 2018/19
Investment in Research & Product Development
Hardware & Systems 17%
R&D Support & Delivery 3%
Development Projects 10%
Dairy Sire Proving 35%
Information to Improve
Decision Making 4%
International 3%
Emerging Markets 5%
Genetics & Information 23%
Around $13.6M invested annually in product development and R&D

Capital Approvals 2018/19
M. bovis including purchase
of Chudleigh Farm $4.7M
Other projects and
Wash Line $0.8M
HT Pools, Weigh Station Improvements,
Robot replacement $5.3M
Building improvement, vehicles,
and other PPEs $4.3M
Computer hardware and
office furniture $1.4M
IP and Trademark, cloud lift and shift
and external software $7.0M
Digital channel store, HT online book
system and Diagnostics rebuild $3.6M
LICA product development $3.3M
MINDA projects $5.8M
Capital approvals $36.3M

Financial Overview
Total Revenue
NZD $M
2010/11
165.6
177.5
199.5
211.5
232.5
210.7
203.5
236.4246.5
0.0
50.0
100.0
150.0
200.0
250.0
300.0
2011/122012/132013/142014/152015/162016/172017/182018/19

LIC Contribution to Value on Farm
Genetic Merit
Health
Reproduction
Production
2019/20
$339M
$3.5M
$30M
$39M
2020/21
$340M
$3.5M
$30M
$41M
2021/22
$340M
$3.7M
$30M
$44M

Mark Meyer
Council Chair
Shareholder Council Report

David Gasquoine
Honoraria Committee
Honoraria Report

Murray King
Chairman
Meeting Resolutions

Director Remuneration
CURRENT
$123,600
$51,500
$60,000
$647,100
PROPOSED
$123,600
$54,000
$60,000
$669,600
DIFFERENCE
NIL
$2,500
NIL
$22,500
Chair
Each of the other nine Directors
Total for LIC Board (as a whole)
*Maximum pool available to LIC Board to set the remuneration required for
Appointed Directors honoraria and/or the Committee Chairs’ remuneration.
*Maximum sum available to reimburse for
additional duties and skills

Resolution 1
Approval of Directors’ Remuneration
To receive and consider the LIC Shareholder Honoraria Committee’s
recommendation as to Directors’ remuneration, and if thought fit, to
resolve by way of ordinary resolution to:
“Approve the total remuneration of all Directors’ taken together being
increased by $22,500 from $647,100 to $669,600.”

LIC Shareholder Councillor Remuneration
Chair
Deputy Chair
Each of the other 19 Councillors
Total for LIC Shareholder Council (as a whole)
Daily Allowance
CURRENT
$30,000
$9,000
$5,000
$134,000
$220
PROPOSED
$30,000
$9,000
$5,000
$134,000
$320
DIFFERENCE
NIL
NIL
NIL
NIL
$100
There is also a daily allowance of $220 available for Councillors who carry out
extraordinary duties at the request of the Company.

Resolution 2
Approval of Shareholder Councillor’s Remuneration
To receive and consider the LIC Shareholder Honoraria
Committee’s recommendation as to maintain the current level
of Shareholder Councillor’s Remuneration and resolve by way
of ordinary resolution to:
“Approve an increase in the daily allowance for Shareholder
Councillor’s from $220 per day to $320 per day”.

Resolution 3
Reappointment of External Auditor
To consider, and if thought fit, to resolve by way of ordinary
resolution to:
“Reappoint the chartered accountancy partnership KPMG
as the Auditor until the conclusion of the Company’s next
Annual Meeting, and that the Directors be authorised to fix
its remuneration.”

2019/202018/19
LIC Shareholder Council’s Budget
EXPENDITURE
Honoraria
Training Costs
Meeting Related Expenses
Administration
TOTAL
BUDGET
$142,000
$15,500
$74,672
$4,280
$236,452
ACTUAL
$142,088
$7,059
$31,290
$2,287
$182,724
BUDGET
$142,000
$21,500
$75,200
$4,320
$243,020

Resolution 4
Approval of Shareholder Council Budget
To consider, and if thought fit, to resolve by way of
ordinary resolution to:
“Approve the LIC Shareholder Council’s budget for the year
ending 31 May 2020 as outlined in the Explanatory Note in
the Notice of Annual Meeting.”

Resolution 5
Ratify the reappointment of Tim Gibson
as an Appointed Director
To consider, and if thought fit, to resolve by way of
ordinary resolution to:
“Ratify the reappointment of Tim Gibson as an
Appointed Director for a further three year term.”

Resolution 6
Ratify the appointment of Sophie Haslem
as an Appointed Director
To consider, and if thought fit, to resolve by way of ordinary
resolution to:
“Ratify the appointment of Sophie Haslem as an Appointed
Director until the 2020 Annual Meeting of Shareholders.”

General Business
& Q&A