Austin Engineering Limited (ANG) Earnings Call Transcript

All right. So we've got the technology going. That's great. Good afternoon, everyone. My name is Jim Walker, the Chair of Austin Engineering. It is my pleasure to welcome you to the company's 2025 Annual General Meeting. I'd like to introduce to you your directors, our Chief Financial Officer, Company Secretary, Head of Sustainability and General Counsel. First off, Sybrandt van Dyk, who is our CEO and Managing Director; our nonexecutive directors, Chris Indermaur, David Singleton, Linda O'Farrell and Ian Stone. I'd also like to introduce our company's Secretary, Sarah Wilson, who's sitting down here on my left. Our Chief Financial Officer, these people are sitting in the front, David Bonomini. Head of Sustainability, Greg Rotherman; and General Counsel, Kirsten Cattle our Chief Operating Officer is actually overseas at the moment, but he is online. Also sitting in the front of representatives of our company auditors, BDO and are here and will be available to answer any questions on the financial statements and in relation to the audit. The company's secretary has informed me that we have a quorum and present. I therefore declare this Annual General Meeting of Austin Engineering Limited open. I'm pleased to advise that the shareholders that are not here physically are able to watch and listen to a live webcast of the meeting. This webcast will be an opportunity to view the proceedings and the presentations at the AGM and for shareholders to submit online written questions during the meeting. However, the website is provided as a convenience only and does not replace a physical AGM. Shareholders will not be able to participate in the meeting or vote via our website facility. General logistics and the fact that people watching over the website facility are not taken to be present at the meeting, we propose to address any questions that are sent through over the webcast at the end of the meeting and once the meeting formalities are concluded. I'd like to explain the format of today's meeting. Firstly, I will give a chair address, and then we will consider the resolutions outlined in the notice of meeting before I invite Sybrandt van Dyk to give his managed directors address and open the floor for general questions and answers. So once again, good afternoon, everyone. I've already said who I am, but just for the formality, my name is Jim Walker, the Chair of Austin Engineering Limited, and it's my pleasure to welcome you to the company's 2025 Annual General Meeting. I'm pleased that Austin delivered another year of financial and operational progress and it's clear there remains significant capacity for further growth across the operations. Revenue has been strong for a number of successive years, taking us from $203 million in financial year '22 to $377 million in financial year '25. We have recorded improvements in earnings margins over the last few years as we focus more heavily on operating efficiency. We have taken our model and expanded and broken into new markets. I believe we have strong underlying business capable of further growth into the future while delivering strong operating margins. However, we are facing significant challenges in the business as well, and that has resulted in an earnings forecast adjustment for financial year '26. Our share price has also fallen significantly in the past 6 months. This is very disappointing for us and our shareholders, many of whom have had long-term investment in the company. I have been Chair since 2016 and have been through challenging periods before with Aston. Despite this, the company has continued its growth trajectory. I see our current situation in the same light. In short, while I'm going to hand over to our CEO, and mentioned Director, Sybrandt van Dyk to step you through the issues, and importantly, the essential changes that the businesses undertake and to ensure we deliver strong business into the future. I want to reiterate that we have a solid business, strategy in place and in a fully integrated global company with market-leading product offering. We also have a strong team in place, and I believe the right people at all levels continue to grow our business. Sybrandt commenced as Managing Director and CEO on the first July 2025. We is deeply familiar with the business, having served on the Austin Board for 7 years prior. Sy visited all of our global facilities and is already demonstrating its capabilities including immediately addressing and overcoming the challenges in our operations. We value his experience and perspective on the business and in my view, is the best -- he is the best person to work through the current headwinds and to continue to deliver growth and shareholder returns. Our commitment to design, innovation and sustainability continues. Our high-performance tray range reached a milestone of 500 trays operation on order. The uptake of the HPT has shown our ability to design and engineer the best-in-class products that make a significant difference to miners productivity while meeting their requirements around limiting environmental impact. We continue to invest in our people and offer career and training opportunities. Alongside our successful Batam, we have launched a welding school in Casper, Wyoming, with the first cohort of apprentices recently graduating. Through these schools, we are offering training and future employment opportunities while building strong foundations for Austin, navigating some competitive labor markets. In Australia, our partnership with the Kantar Foundation continues to create opportunities for young aberrational and tourist other men through education, employment pathways. These initiatives, combined with our leadership programs demonstrate our commitment to fostering strong and diverse capability workforce. On behalf of the Board, I extend my thanks to our shareholders for your support and look forward to sharing our progress with you. This now brings us to the formal part of the meeting. The items of business to be considered at this meeting have been listed in the notice of meeting. The notice of meeting has been made available to shareholders on the 7th of October 2025 and we'll take it as read. Before we consider the items of business, there are a number of procedural matters I wish to draw your attention to. In the interest of transparency in accordance with the ASX requirements, I will call a poll on all meeting resolutions. I'll discuss each of these resolutions in turn, and then conduct the poll after last resolution. Each resolution and proxy count for each resolution were displayed on the screen when the resolution is being considered. I am holding undirected proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of all resolutions. Any proxies directed that are not voted at the meeting will automatically default to me as Chair of the meeting, and I'm required to vote these proxies as directed. Catlin Knot from Computershare has agreed to act as returning officer. At the completion of the poll, Computershare staff will collect your voting cards and tally the votes. The persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold green admission card. On reverse of your admission card is your voting paper and extractions. Yellow admission cards have been issued to nonvoting shareholders who are entitled to speak at the meeting, but are not entitled to vote on the poll. White mission cards have been issued to visitors who are not entitled to speak at the meeting or vote on the poll. If there is any person present who believes they are entitled to vote but has not registered, please raise your hand and a representative of Computershare will assist you. All good. I shall now proceed with the business in order as it is listed in the notice of meeting. Questions on any item may be raised during the consideration of that item. Please state your name when asking the question. Okay. The first item of business deals with the financial statements and reports. These have been released publicly and forwarded to the shareholders who requested them and are now laid out before the meeting. These financial statements and reports for the financial year ended 30th of June 2020, and. This is not a resolution and no votes are quite on it. On that, I now invite questions or comments from the shareholders in relation to the financial statements and reports and more generally about the management of the company. As I have advised, representatives from the company auditors that are in attendance to answer any of your questions that you may wish direct to them. In relation to the conduct of the audit or in relation to the preparation of the financial statements. Are there any questions? Okay. As there are no questions, we'll move into the second item of business. The next item of business, our shareholders to adopt the company's remuneration report for the year ended 30th of June 2025. Unless there is any objection, I will take the motion as being read and refer you to the screen for details of the proxies received for this resolution. Whilst this a nonbinding advisory vote of the shareholders, the views and comments of shareholders will certainly be taken into account by directors when further considering remuneration matters. I note that a voting exclusion applies to this resolution as set out in no summation. The Board recommends that the shareholders vote in favor of this resolution. As I mentioned earlier, voting on this resolution will be way of poll and conducted after the last resolution. Are there any questions on the remuneration report?

John Fergus is my name. Good morning, everyone. Look, I brought into Austin 3 months ago. So a recent entry onto your share industry. I did submit a question. and you probably have that already. But I'd like -- I read the question, and then I'll tell you why Yes, please -- thank you for pointing beforehand -- so my question is what is the Board of the company set option superior to its performance rights plan. Now my question -- the reason I asked that question is that as a small retail shareholder. I think the performance rights issue is far better to my interests. I think if Mr. van Dyk to be rewarded for these performance I prefer to see it in terms of the health of the company. In other words, you definitely except the company better health than what he booked that he came into it. And I think when you have things like the earnings per share growth, et cetera, et cetera, that is stepping into the health of the company. Leading at -- on the other hand, leaving it sold into share price appreciation. Really doesn't -- there's a bit into rate, because Mr. van Dyk like local control of the share price. I think it would be a control have we be in control of the earnings per share growth in this company. So on that basis, I are very much likely to consider that the future time that'll be very interested in your answer to why you think the share the option Thanks, John. I'll hand over to Linda for that one.

Thank you, John of report. We still have a performance plan on the port and the number of decisive -- in 2021, we approved a Austin option plan, and we see an action -- and the thing at that slide is that share as for inpatient businesses. And for the group, in into chief operating officer and applied in the hiring of the dirt into the global. So the Board has been prolonged with shareholders that we obviously planned has a long shareholder. The objective is secret. So I take your point that the or plan, obviously had seen months well. So the question really is why do you consider Peter? Because we see the clarity of share products and executive performance being leaked has been critical.

Okay? Yes. I'm representing the Australian shareholders today. My name is John Campbell. Our promise is generally in on remuneration, suggests that options, which have to be determined the value of the option of data grant is to be determined by some context for water, which the price project in terms of looking at it, this is much simpler if you use VWAP in terms of the number of share rights that were crate bonus that you're seeing to award the executives. And I think it's much clearer and easier for shareholders to understand if you did the number of options that you end up granting is quite high, and I know it's an exercise pose the fee also quite high to and predicting today's price. The other -- spent on the other aspects, I'd like you to consider with the short and incentive would be better off in deferred shares in half year. And coming to criteria as John Botson suggested the LTI hurdles would also be a bit like over an absolute criteria such as earnings per share with or on capital.

Thank you, that we hear what you say, and we'll take that on board as we go forward. Thank you, any more questions. Okay. No more conversions. I'll move to Resolution 2. The next item of business is the election of Ian Stone. Ian was appointed as Non-Executive Director on the first July 2025. Details of Ian's qualifications and experience are set out in the notice of motion and the company's general annual 2025 annual report. Unless there's the motion as being read and refer to the screen for the details of the proxies for this resolution. The Board, with Mr. Stone abstaining, recommends that the shareholders vote in favor of this resolution. Voting on this resolution will be way of a poll and conducted after last resolution. Are there any questions in relation to this resolution? As there are no questions, I'll now move to resolution 3. As this next resolution concerns me, I'll pass the chair over to Chris Indermaur.

Thank you, Jim. .

Just wait, we're going to get you a mic. We do have people online. Thanks, Sarah.

Thank you, Jim. The next item of business is the reelection of Jim Walker. Details of Jim's qualifications and experience are set out in the notice of meeting in the company's 2025 annual report. Jim has been a Non-Executive Director of the company since July 2016. Unless there is an objection, I'll take the motion as being read and refer you to the screen for details of the proxies received for this resolution. The Board, Mr. Walker abstaining, recommends that shareholders vote in favor of the resolution. Voting on this resolution will be by way of poll, and constructed after the last resolution. Are there any questions in relation to this resolution? Yes.

Thanks on Bugis again. As with most people in the room, this was a surprise on the announcement from the ASC should be up the downgrade for next year. Like you said, a small retail investor. I was short for that because we said something behind the execution of the business, and it says something about the oversight of the Board, not to somehow understand what was happening until the. So on to myself as a small retail investor, I really, really value an independent Board. And that means independent in just words but in spirit. And an independent board as far as I'm concerned is there's a clear division between management and the Board of the company. And the Board is a tough question prepared to put the fleet of the management to the fire sort of really good force. And I don't see anything happening actually. And I'm raising it now because it's up for election here. But I'm wondering whether it's at the time that have an external review of how the board operates. Because as small retail investor, what I saw yesterday was pretty unpleasant.

Thanks, John, and we hear it just say and understanding that in other areas where I work, we do have those external reviews that someone'll take on Board and have a look at it as well. And I can assure you, if you want to talk to our past CEO and existing CEO. They do get -- look at very happily, and we do have a fair bit of debate. The members on the Board with our diversity as far as background is also a good part of that in regards to the way we ask questions. We're not all from the same background. We have a diversity of background, and that's part of the diversity of the Board selection as we go through. But thank you for bringing that up.

Just as 1 -- can I just answer 1 of the points that you raised there, which is the timing of the release -- you'll see that if you look at FX companies, it's very normal for them to release on the AGM date, update to performance, sometimes good, sometimes bad, sometimes flat. But it's usually seen as a point in time where you've got enough knowledge of the year going forward. You've seen enough evidence of what's happening for you to be able to give a prediction about where the things are slightly up, slightly down or flat. So I don't -- I wouldn't get to kind of dismayed about that was that information could have been released just a food have been released today as it got to be the case. I think the decision was not that when people -- when that knowledge had been supersized and pull together and properly analyzed that, that was the time to really not wait for 2 or 3 or 4 days until the AGM occurs. And as I said, I think you'll see a lot of customers do a trading update.

And that, John, that just reinforces our governance from preview. We do have an obligation of disclosure. -- and that's why we did it on that day as well, too. I'm not sharing this part, so I go back to Chris, if you don't mind. because you're voting on me, so I can't talk.

Have quite a while now. And I'd like to pass -- I'd like to comment on your comments, and that said, I found the information flow from the company, has been opaque. It's been very intermittent and it comes such as the update that we received yesterday was a failing likely on the part of the fourth to release in a more timely manner. The information that was released yesterday. I know this is a matter of opinion, but I appreciate your comment on this as I'm sure other people feel the same way, I do.

If you can imagine, we take numbers from Chile. We take numbers from North America, we take numbers from Asia, and it gets all put together in a matrix. It's not a simple exercise from the costing side, from the revenue side, from the sales side, what they see coming. And as soon as that's synthesized and we know what the answer is we have a legal and ethical requirement to put it out straight away. We don't have a timing option here. There is a legal requirement and we. Sure.

With regard to operations in Chile, are we saying that we didn't know until a few days ago, how the Chile operation was running -- would that not have been known over another month or it's at a lack of communication between the Board and the CEO and the operations in Chile. I find this amazing that it wasn't known for months.

But as you imagine, the people from the executive talking to Chile every day and looking at operations in different parts of the operations and also sales, you have to look for what sales are coming, what you think is going to come, where you know is going to come, what's the probability? It's not just 1 number. which leads you to the results. The whole thing has got to be put together and seriously considered before it gets published. This is not.

Can I make a comment on that? So I think it's a great question that you asked. And I don't want to prolong this too long, but I often have this discussion with shareholders and myself in the past about when something's happened and shareholders have all in talked about this before. And the answer generally given is that sometimes, things happen on a moment. And the bit before is different, but what's happening before is different to what happens after. So a mine collapse today, tailings dam leaks the company goes on strike, something changing on station. There's a line in the sand that there's and you can be very clear about the need to announce. What happens in the business is this ebbing and flowing. You win an order, you lose an order, things go well 1 month. They don't go quite so well the next month. You're starting to see a deterioration in performance, but the management is saying, "Don't worry, you think that's going to come back." And you're seeing this, as Chris said, in multiple locations across new organization. And then there comes a point when you say, okay, we've synthesized this, we've looked at this for long enough. We now think that this time to make a statement. And as Jim has said, very clearly, we were under an obligation to announce as soon as we get to that point. But there's not a line in the sand. There wasn't an event that occurs that suddenly changes your outlook. If it was a major contract that you lost or lost that contract, Tomorrow is different to yesterday. But that's not what's happened here. It's ebbing and flowing. And eventually, you get to a point where we'll all the bounds of probability, this now looks like the outcome. And even now, we're predicting forward particularly for 9 months, there are other ebbs and flows that are going to occur, some of which are good, some of which are bad and which are in different fluctuations. All of which will come together to create a result at the end of that period. And that's why -- that's why I say to you that I get your point, to be clear. But it's not as if we haven't talked about Chile for example, several times in the past. There have been announcements, public announcements. We talked about it at the AGM last year, in fact, had problems, and we've seen that in public announcements before. So not it's kind of completely out, all right.

Thanks, Don. I hope that can the filings to some degree, although we hear what you say. Are there any other questions? If there are no more questions, I'll now move on to resolution passed. I will pass the chair back to. Jim.

Okay. Thanks, Chris. The next item of business is the reelection of David Singleton. Details of David's qualifications experience are set out in the Notice of Meeting and the company's 2025 Annual Report. David has been a Director of the company since April 2019. Initially in the role of a Non-executive Director before being appointed the interim Chief Executive Officer in June 2021 and then Managing Director and Chief Executive Officer in July 2021. Before transitioning back to a non-executive Director in July 2025. Unless there is an objection, I will take the motion as being read and refer you to the screen for the details and proxy receipt for this resolution. The Board, Mr. Singleton abstaining, recommends that the shareholders vote in favor of this resolution. Voting on this ratio will be way of pull and conducted after the last resolution. Are there any questions in relation to this resolution?

Chairman, the succession of a non -- the transition of an executive to non executive, leaves the position of the new incoming Managing Director, chief executive, opinion. Can you explain why it's a good idea, given that he has to -- the incoming CEO has to make a whole lot of positions and review what's happened in the past have that task with the other side of the previous CEO?

Happy you asked the question. I got a little small face because I can assure you this was debated very, very rigidly and quite at depth, right? And we understand your position on it and also understand position on as well too. But we thought in this case, and also with a fair bit of discussion with both David and Sy in regards to the understanding of how this was to progress having David on the Board to work with Sy and handover and get the continuity far outweigh the other side that you can talk -- you've spoken about before. Is -- and David and I did speak quite openly, there's going to be some periods in our Board meetings where he may feel uncomfortable, all right, because that's a natural business. David's been man enough to say I can handle that and Sy, having worked with Sy for a number of years. I can assure you want wondering a Sy me has to say things. And that's relation of also the way the Board operates. We're happy to be quite open about these things and have those discussions and be mature about it. Okay. If there are no more questions, I'll now move to resolution 5. Next item of business is the reelection of Linda O'Farrell. Details of Linda's qualifications experience are set out in the notice of meeting and the company's 2025 annual report. Linda has been a Director of the company since 2022. Unless there's an objection, I'll take this motion as being read and refer to the screen for the details of the proxies received for this resolution. The Board, Linda O'Farrell abstaining, recommends that the shareholders vote in favor of this resolution. Voting on this resolution be way of poll and conducted after last resolution. Are there any questions in relation to this resolution? I know we thought there's 1 down the back there for a minute. It's okay. Okay. If there are no more questions, I'll now move to resolution #6. This item is approval to issue up to 3,673,581 unlisted options to Mr. van Dyk, or his nominee under the company's option plan. The Board, Mr. van Dyk abstaining, recommends that the shareholders vote in favor of this resolution. Voting on this resolution will be way of poll and conducted after this last resolution. Are there any questions in relation to this resolution? Yes, John?

This is a question just rate question first, and I'll give you the part of the question -- what the Board looks to you because this market value approach in computing a number of incentive options that we to Mr. van Dyk that's the question. My view about is that there seems to be 2 good ways of determining the number of options that are when you've got a -- what is the market value approach. Playing on us is often used or the use we were probably a net reg price the calculation is to see what the new mass of preceding days with the letter is written. And lo and behold, it comes to $0.30. And I demine that into 300,000, and I come up with $1 million. Now that's a lot different from the 3,673,281 options that were arrived at by the independent parties contracted by, I mentioned. The third party is placed an exercise price of $.0801 as their option. So I'll put it to you want to get one. Why are you not using the manual approach as opposed to 1 of these so far instruments.

Linda?

Thank you. Thank you, John. The options have been valued at fair value, which is under. So the same independent partly that values the option for the, again, in the doing of the options for Mr. van Dyk. And fair value, you refer them to $0.08. The exercise price for cost with options is actually. So fair value, as you referred to earlier, is much more complex way of valuing options, but it's building the underlying risk over the whole performance period. So that's the necessary thing to actually understanding what the value of those options will be. So the fair values is actually $0.32.

Okay. So you do agree with you was divided in the 300,000 -- so that's my question on media. I haven't moved account extended so prove that there's an application came the back shows for retail investors, that's just it is complicated. John Yes, not very good as you can see here, and quite different convene decision that someone's made a on the line -- and I just look at recent that the market value set. The way we're using this for other there should be 1 million options, not 3 million through. Take that Registering.

Sorry, to speaking at this meeting on site but -- are you aware that SI essentially bought those options? Sybrandt, gave up income, salary in order to buy an option in the company going forward. So we are it's a completely different structure of system to the performance rights plan. We're right on. That's quite probably an appropriate cost to all to understand that it's a fundamentally different system and to me, and then I'll stop. I'll give you the performance is poor on the performance right plan, the person there's no downside for the inhibitor. In this plan, if the performance is poor, Sybrandt, will be hitting out part of his normal remuneration as a result of that. very different. So there's downside risk. And maybe that is quite complex and I agree.