During this three-month period the northern  Australian cattle industry experienced one of  the worst droughts in decades, with a lack  of grass forcing an oversupply of cattle onto  the domestic market, with a corresponding  dramatic drop in cattle prices. This oversupply  was exacerbated by the continuing fallout from  the Federal Government’s 2011 suspension of  live cattle exports to Indonesia. Under Australian accounting standards, the  company’s financial results for the three- month period were significantly adversely  affected by this slump in domestic cattle  prices through a $43.2 million non-cash,  pre-tax write-down of the market value of the  company’s 676,000-head herd, due to this  slump in domestic cattle prices. The majority  ($35.3 million) of cattle written down in value  were long life-cycle breeding cows and young  grower cattle, not intended for immediate sale.  The non-cash write-down was the key driver  of the net loss after tax of $46.5 million for  the quarter. It is also important to note that  the three-month result is not representative  of results for a full 12-month period as the  bulk of cattle sales and profit are  generated outside of this three- month period. In March the company also announced its  future strategy, building on the turnaround  of the company accomplished in the past  three years. AACo is now clearly focused  on driving shareholder value by building a  global, vertically integrated red meat supply  chain, with particular focus on Asian markets,  servicing the rising demand for red meat  protein. The Darwin Abattoir will be a key part of this strategy. Stage One civil works have been completed for  the facility and in April AACo announced that  it intended to fund construction from its own  balance sheet. The completion of this facility  should go some way to insulating AACo from  volatility in domestic and live export markets  by accessing generally higher and more stable  global beef prices. The slump in domestic cattle prices is at odds  with continuing higher global beef prices  and reinforces the company’s decision to  capture these higher global prices through the  construction of the company’s Darwin Abattoir.  This state-of-the-art facility will open up new  channels to international markets as well as  reducing total logistics costs currently incurred  by moving cattle from the north to eastern  Australian abattoirs. During the three-month period AACo increased  both cattle sales and wholesale beef revenue,  at significantly lower prices, with operating  cash flows remaining approximately in line with the previous corresponding period ended  31 March 2012. Donald McGauchie  Chairman 2 Australian Agricultural Company Limited The Australian Agricultural Company announced at the start of the  year its intention to move its year-end reporting date from December  to March. This better aligns the company’s reporting with its business  cycle, including the end of the wet season. As a consequence of this  decision, the company is required to produce this annual report for the  three-month period January to March 2013. CHAIRMAN’S REPORT