Dairy and meat business Beston Global Food Company's ongoing battle with rebel Chinese shareholders continues, with the two investors again coming close to derailing the company's annual general meeting.
South Australian-based Beston's improved post-COVID sales outlook and plans for a methane bio-energy pland powered by cow manure and milk factory waste have been overshadowed by multiple protest votes against its board, including a fourth strike against its remuneration report.
The China-based Kunteng Limited and the Australia Aulong Auniu Wang Food Holdings together have held about 13 per cent of Beston shares since 2016, although their portion of the share register is soon to shrink to 6pc following a $28 million shareholder capital raising which they did not join.
The Chinese have a history of voting against the board of directors.
Last week they led an attempt to spill the board after its remuneration report was opposed by a sizable 44 per cent of votes cast at the AGM - well more than the 25pc "strike" needed to trigger another vote to sack all directors.
The subsequent ballot to spill was lost when the opponents could only muster the same 44pc of votes, failing to get the meeting's majority backing.
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Another protest vote from the rebel contingent was registered against the re-election of director and former Elders and Santos chairman, Stephen Gerlach, although he retained his Beston seat with 47pc backing from AGM voters.
Chairman Roger Sexton said although the "recalcitrant shareholders'' had occasionally been in email or telephone contact with the company, they had provided no critical feedback or helpful suggestions about the loss making business' operations in the past year.
The investors have retail sector connections in mainland China and South Korea and became shareholders in 2016 soon after Beston was formed, having promised to buy about $20m in export cheese lines.
They never actually followed through with any product purchases, with Kunteng saying no such deal was formalised before it spent about $29m buying its share stake.
"They have not placed a single order, yet those sales would have underpinned our anticipated early profits if they had," Dr Sexton said.
"It's my assumption they remained on the share register to attempt to get a successful spill motion through, hoping to install their own candidates as directors - and effectively take control of the business without paying for it."
Shareholder frustrations
Dr Sexton told the AGM his board understood and shared shareholder frustrations around Beston's performance 2021-22, which ended with the company posting its second $21m loss in a row.
"Some of you have voted against the remuneration report," he said.
"We understand that the time horizons of some shareholders are more short term than the objectives contained in our 10-year business plan, but factors outside the control of the company like drought, pandemics and floods do happen and should not impact voting in relation to the remuneration report."
The said the company, unlike some, had navigated the COVID-19 pandemic and survived, if "somewhat battered and bruised" by the loss of food service sales and equipment import delays.
Beston used the period to upgrade productivity at its Jervois milk plant which was now running at 95pc capacity and on track to produce about 16,000 tonnes of mozzarella cheese, while its customer base was becoming bigger and higher end.
Profits perhaps?
Optimistic about turning a profit for the first time since it was founded, Beston has forecast full year earnings before interest, tax, depreciation and amortisation of $8m to $10m this financial year - up from pre-tax earnings losses of $18m last year.
November sales were a monthly record, equivalent to the entire value of last year's second quarter.
The AGM heard year-to-date sales were up 49pc to $46.6m, with guidance for the full year tipped at $150m to $180m.
Export orders had doubled in the past year to now represent 40pc of total revenues and included well established customers in Japan.
Despite the competitive national milk market, which has restricted hard cheese output at its Murray Bridge plant, Beston has contracted about 260m litres to its two milk processing plants.
Methane power
At Jervois early plans were underway to build a pilot biogas digester and electricity generator fuelled by methane captured from factory effluent, dairy farm manure and other organic waste to supplement the plant's energy supplies.
Dr Sexton said the project was in its early days, but if proven viable it may well be a game changer of the site's energy costs, potentially cutting them by 60pc if the methane capture unit increased to full scale.
Beston is also involved in an on-farm methane abatement program with its milk supply partners, Aurora Dairies.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
