EVT Limited (EVT) Earnings Call Transcript

Good morning. Firstly, I'd like to begin by acknowledging the traditional owners of the land on which we meet today. The Gadigal People of the Eora Nation and pay my respects to the elders, both past and present. I welcome you to the Annual General Meeting of EVT Limited. I'd also like to extend a warm welcome to our shareholders who are participating through our online platform. I've been advised that there is a quorum present and declare the meeting open. I'd like to also now introduce to you my colleagues. From my right, Mr. Brett Chenoweth, Valerie Davies, David Grant, Jane Hastings, our CEO, David Stone, our Company Secretary, Peter Coates and Patria Mann. We also have with us today, both in person and online, a number of our senior executives. Cameron Slapp from KPMG, the Group's auditor, is also with us today and will be available to answer questions later. Every effort has been made to ensure this meeting runs smoothly. However, if any technological issues arise and it becomes necessary to provide procedural information in respect of the meeting, updates will be provided on our website and also through the ASX. We'll begin the meeting with an address from myself and our CEO, Jane Hastings. We will then go through the formal proceedings. All resolutions will be decided by poll. On the resolution, and the poll voting is now open. You can vote at any time during the meeting, and voting will remain open for 10 minutes following the end of the meeting. Please note that only shareholders, proxy holders and authorized shareholder representatives may vote. I'll now ask our company Secretary, David Stone to provide further information regarding the meeting procedures.

Thank you, Alan. For those attending using the online meeting platform, the voting icon will appear on the navigation bar. Once you click on this, the resolutions will appear on your screen. You should see for, against and abstain options for each resolution. You can change your vote at any time until the poll is closed. For those attending in person, if you are entitled to vote, you will have received a blue voting card. Please ensure that you complete your voting card and hand in your card to one of the representatives from Computershare. If you need any assistance, simply raise your hand and one of the attendants will be with you. As Chairman, Alan holds a number of open proxies. As set out in the notice of meeting, Alan will be voting all available proxies in favor of each item of business. Maria Dzopalic of Computershare Investor Services is acting as the returning Officer. We will answer questions and comments from shareholders at the end of the meeting after all of the items of business have been presented to you. This includes any questions directed to the auditor. For those attending online, we encourage you to start submitting written questions and comments now. If you have any difficulties in asking a question, please refer to the user guide, which can be accessed through the platform. To ask a verbal question, please follow the instructions on the online meeting platform. For those attending in person, you may ask a question or make a comment if you hold a blue or yellow card. Simply raise your hand when the Chairman starts taking questions and one of our attendants will be with you. please wait for the attendant with the microphone before you begin asking a question, so that shareholders attending online will be able to hear you. To ensure that shareholders as a whole have a reasonable opportunity to be heard at today's meeting, we ask you to limit your questions or comments to 2 at a time and then allow others to ask a question. Questions and comments should relate to the items of business under consideration at the AGM. Thank you. I will now hand the meeting back to Alan.

Thank you, David. The first item of business deals with the financial statements of the Group, the director's report and the external auditor's report for the year ended the 30th of June 2023. These statements and the directors' report were approved at the meeting of the Board of the Directors of the company in August this year and are contained within the annual report. I have pleasure in presenting these statements and reports to the meeting. And in doing so, we would like to make a few comments on the Group's activities. Friends, the 2023 annual report, which includes the financial statements for the year ended 30th of June '23, was released to shareholders in September this year. The Group's total net profit after tax for the year was $106.5 million, whilst the normalized result after tax pre-AASB 16 was $62.5 million. The result included record performances for our Hotels and Thredbo and a strong recovery trend for entertainment. These results demonstrate the success of the Group's 3 strategic goals those being to grow revenue above the market, maximize the value of our assets and transform the business to mitigate the cost pressures that we are currently facing. Jane will comment further on the Group's results, the strategy and outlook in her address. Friends, the Board was pleased to resume dividend payments during the year with total dividends for the year of $0.46 per share. This included a $0.12 per share special dividend paid in November, last year. The board considers dividends in the context of capital requirements for future growth and the desire for continuity of earnings for both shareholders and also the Group. The Board continues to review, assess and monitor appropriate capital management initiatives also and desires to maintain a strong balance sheet that will support the further development of key assets and maximize sustainable long-term return to our shareholders. The Group's total cash balance at the 30th of June 2023 was $207 million, with debt outstanding of $469 million, which provides significant headroom in terms of the available liquidity with the Group's core debt facility running at $650 million. This facility was extended for a further 3-year term in May this year and will mature in May 2026. The Group prides itself on the strength of its balance sheet, which is underpinned by property holdings. The Board is pleased with the property strategy and progress against the goal to maximize our assets. And this is reflected in the increase in the overall value of the property portfolio to $2.3 billion at the 30th of June 2023. This is an underlying increase in values of 20% and since the previous valuations undertaken in 2021. Further details regarding the property portfolio were released to the ASX in August this year in conjunction with the release of the financial results. We are pleased with the progress on both major property developments being 525 George Street and 458-472 George Street. Jane will provide an update on each development. As each development milestone is achieved, the Board continues to evaluate the strategy to ensure each project will deliver appropriate future returns for our shareholders. In relation to both developments, the Board will decide to proceed only if market conditions are favorable and appropriate value will be created. As I've mentioned previously, the board periodically reviews the structure of the Group to ensure that the appropriate structure delivers value to shareholders and a further review of this approach -- of the approach to structure will be conducted prior to commencement of the major property developments. The Group has been guided by the fourth edition of the ASX Corporate Governance Council's Principles and Recommendations during the year and the Corporate Governance Statement has been published on the Group's website. This statement sets out the corporate governance practices and procedures and should assist shareholders in their understanding and appreciating the importance placed by the Board upon good corporate governance. The Board also focuses on maintaining an appropriate approach to remuneration and details of this approach are dealt with in the annual report. In particular, the Group's policies are designed to, as far as possible, ensure that remuneration package is reflective of employees' duties and responsibilities and structure to enable the Group to attract, motivate and retain high-caliber executives. The Board is also mindful of the tenure of directors and last year commenced a Board renewal process with Brett Chenoweth appointed to the Board in December. The search processes are currently underway to identify further potential new candidates. I and the Board acknowledge the outstanding efforts of our CEO, both in responding to the impact of COVID-19 on our operating businesses, and the management of our businesses in this -- the recovery phase. I'm confident that the actions of Jane and her team have provided a strong platform for the future. To the rest of the executive team and all Group employees, I extend our thanks for their collective and personal efforts. We are proud to have such a depth of experience and recognize the contribution you have made, which has been and will continue to be invaluable as we embrace the opportunities that arise in the future. Friends, I'd like to also thank my co-directors for their efforts during the year. And in particular, our 6,500 shareholders for your on-going support. I may ask Jane to say a few words. Thank you.

Thanks, Alan, and good morning, everyone. Look, we're very pleased with the strong growth that the Group delivered in 2023 financial year, with underlying group revenue up 34% to $1.2 billion, only 7.5% below the pre-COVID year ended 30 June 2019. Group normalized EBITDA was $187 million, up $111.7 million, excluding prior year German Bridging Aid income with record EBITDA results for Hotels and Thredbo. All divisions contributed to the strong growth achieved on prior year. The underlying entertainment result was supported by the combination of more films and our premiumization strategy. With the release slate was better than prior year, however, there are still fewer films released in FY '19 due to post-COVID studio production challenges delaying global release dates. EBITDA for the Entertainment Group of $76.6 million was up $70.9 million on prior year, excluding Bridging Aid. The Hotels & Resorts result was a standout with EBITDA of $87.4 million, a record for the division after adjusting for the closure for upgrading Rydges Melbourne for much of the year. The Thredbo result was also a record, with the new business model delivering EBITDA of $39.8 million, up $23.5 million on the COVID impacted prior year and up $10.8 million on the pre-COVID FY '19 year. The Property EBITDA result was marginally down to $7 million, primarily due to the successful property divestments of Canberra Civic and Double Bay in the prior year. Despite unprecedented cost pressures, each of our businesses continue to find ways to ensure costs were well controlled while still investing in capabilities to drive future growth. At a corporate level, underlying unallocated costs were below FY '19. The cost of compliance continues to grow, and we are also increasing our investment in our sustainability initiatives. Individually significant items represented net income of $41.4 million net of tax and included the completion of the sale of Rydges North Sydney and Darwin Cinema Center and the previously announced settlement with view in relation to the CineStar transaction. Normalized PBIT was up 83% on the prior year. Reported net profit was $106.5 million, up $53.2 million in the prior year and only 1% below the reported net profit for FY '19. As Alan mentioned earlier, the independent valuations for the majority of the Group's property portfolio were updated this year, with the overall portfolio value increasing to around $2.3 billion and like-for-like valuations up 20% on the previous valuations in 2021. Given we also completed the divestment of $282 million of noncore property assets since 2020, this is a very pleasing result. We have a few other properties that have been identified as non-core assets, and we will seek to divest these when market conditions are right and when we can achieve a good outcome. We acquired a number of properties in the year aligned with our strategy to invest in key city locations that are or can be converted into operating assets. Acquisitions in the year totaled around $60 million and included 54 Cook Street in Auckland, which is our flagship Lylo location. The Limes Hotel in Fortitude Valley, Brisbane, which will be the first Lylo property in Australia, which will open later this year. The Alpinehorn Lodge and Thredbo, which is essential for staff accommodation, and we also increased our ownership interest in Rydges Latimer Christchurch to 85%. It is important to reinforce that our property portfolio is unique and the fact that we operate the majority of these assets as Hotels and Thredbo the fact that we continue to deliver strong operating results from these properties is a key contributor to the growth in overall value. The Group's net debt at 30 June 2023 was $262.6 million below pre-COVID net debt levels, and we completed our refinancing process in May with the core facility of $650 million retained for a further 3 years. The combination of our strategic initiatives, improved trading and the sale of over $250 million of non-core property assets over the past 3 years has placed us in the best position to invest for growth and capitalize on opportunities as they arise. Looking at future growth initiatives for Hotels. Shareholders will be aware that our hotel expansion strategy has evolved over the past few years to provide more opportunities. We now have a hotel solution that meets the needs of the entire hotel market from premium to budget experiences, from leveraging one of our owned brands or maintaining an independent brand and leveraging our capabilities. This year, we grew our hotel network by 8 hotels, and the results from our hotel strategy have more than offset the divestment property earnings relating to the recent non-core property sales. Hotel network expansion included the 414-room Rydges Hunter Valley Resort, a great win, a great property for the Group and this was achieved in conjunction with an extension of key management agreements for the Rydges World Square and Rydges Sydney Central properties. As part of our goal to maximize our assets, we have completed the complete transformation of Rydges Melbourne, which sets a new standard for Rydges, including the introduction of 25 apartment rooms and the expansion of our conference facilities by over 1,000 square meters. The QT Gold Coast upgrade of rooms was completed in the first half of 2023, and the conference space upgrade was completed in the second half of the year. The upgraded property has already been recognized at the recent Queensland Hotel Association Awards as the Best Meeting and Events venue in Queensland. We also introduced qtQT, a new cabin accommodation concept and a previously non-revenue generating area of the hotel. Early results from both the QT Gold Coast upgrade and Rydges Melbourne transformation are exceeding expectations with a growing pipeline of business and excellent customer feedback. Our entry into the budget lifestyle segment of the market with the development of Lylo is also performing really well. Lylo Auckland opened in December 2022 to rave reviews, and we've seen very strong demand for that property. We will complete the conversion of the Limes Hotel in Brisbane to Australia's first Lylo later this year. During the current financial year, we will also aim to commence an upgrade of the rooms at QT Wellington, convert conference space at Atura Adelaide and to a new micro room concept and continue our planning for QT Canberra and the Rydges Queenstown upgrades. Turning now to future growth initiatives and cinemas. During FY '23, we upgraded several key cinema locations, including Chermside and Innaloo in Australia and Queensgate in New Zealand with our new premium cinema concepts, which continue to demonstrate an immediate improvement an average admission price and spend per head. We're currently planning to upgrade around 40 auditoriums this year. This includes the recently opened IMAX Darling Harbour Sydney with 325 seats and a stunning 692 square meter screen, with state-of-the-art dual laser projection complemented by EVT premium seating concepts. The response to this opening has been very positive. Other exciting new concepts include ScreenX, a 270-degree immersive cinema experience in Robina, and we have 1 other ScreenX auditorium and 2 new 4DX auditoriums also planned this financial year. We've made good progress on Thredbo premiumization growth plan. Construction of a further 3 mountain biking trails in the Cruiser area was completed in FY '23, and we're progressing a further 3 for the summer, which will take the total number of trials to 15. Upgrades to the snowmaking system includes 60 fan guns on the Supertrial, which were completed prior to last winter, and we have more snowmaking upgrades planned now. We're aiming to complete the installation of the new Alpine Coaster, a year-round attraction, which is expected to open in time for winter 2024. We have also submitted a development application for a new accommodation subdivision at the Thredbo Golf Course, which will release 19 building lots for up to 186 new beds. This will be the first new accommodation division in Thredbo in 30 years. Of course, we'll still maintain the high altitude 9-hole golf course, which has been a question that's been asked. Other major developments continue to progress. As previously indicated, we expect the first of our major property developments to be 525 George Street, the building in which we are located today. This development will be a mixed-use 43-story development, with a truly integrated hospitality and entertainment offer, which will be unique to Australia, if not internationally. The development is comprised of prime George Street retail space, a premium Event Cinema, a QT Hotel with around 280 rooms, conference space, a bar and restaurant and residential apartments. We were very pleased to achieve the approval of the Stage 2 DA application in May 2023, which was a major milestone for this project. In the current financial year, we'll prepare to go to market for construction pricing, which we'll aim to complete by the second quarter of FY '25. In relation to the 458-472 George Street property development opportunity, we previously secured the DA approval for the podium component, which is the extension of the QT Sydney Hotel. We made the strategic decision to withdraw our Stage 1 DA for a commercial office tower above that podium. Aligned with our property strategy to own operating assets in key city locations, we have instead commenced planning for a hotel tower above the podium and aim to prepare a DA submission this financial year. This is a prime location, and we're very pleased with how the hotel concept is progressing. Shareholders approved a change of name of the company at last year's AGM to EVT. As a reminder, E is for entertainment. We have an extensive portfolio of experiences in the eyes of our customers, this includes indoor and outdoor cinemas, restaurants, bars, any of our businesses seeking customer discretionary time and spend. V is ventures from hotel management opportunities, media partnerships to property developments. And T is for travel covering our luxury to budget accommodation options and Thredbo. Our 3 strategic goals that guide the group are to grow revenue above market, maximize our assets and business transformation. You can see from the full year results that we've been able to grow revenue above market, driving higher yields through smarter pricing and utilization of capacity whilst measuring and acting on customer feedback. We continue to maximize our assets and grow property values through the divestment of non-core properties, acquisitions and recycling that capital to invest in priority locations and through premiumization upgrades across each division. Business transformation initiatives have assisted in offsetting unprecedented cost increases. For example, wage growth over the last 5 years in New Zealand and Germany for the minimum wages has been around 40%. Energy costs in Germany were up $8.7 million in financial year '19 and insurance costs up $10 million on FY '19. We've achieved this whilst also delivering material improvements in our culture, community and environment initiatives. We've made strong progress with our environment initiatives this year, including completing waste audits for each division to set a baseline for waste reduction this financial year. Obtaining NABERS ratings for our Australian owned hotels and completing our Scope 3 boundary reassessment. Pleasingly, despite the growth in our hotel portfolio, our Scope 1 and 2 carbon emissions for FY '23 remain below our FY '19 baseline. These initiatives we are working on this year focus on taking appropriate steps to achieve what we can at various levels across each division. I'll now comment on the current year and performance over the first quarter. On a normalized basis, excluding the impact of AASB 16 Leases, the Group's EBITDA was $73.4 million, up 4% on the comparable first quarter result and up 37.6% on the first quarter of financial year '19. This represents the best quarter 1 EBITDA result in the company's history. The Entertainment result was driven by the release of good films, including Barbie and Oppenheimer, driving record results across the Australian, New Zealand and German cinema circuits, including a record market box office for the month of August. Post-COVID, we've seen 3 of the top 5 films of all time, released in Australia and New Zealand, which demonstrates that when good films are released, we can deliver record results. Our premiumization strategy continues to deliver growth in average admission price spend per head across each of our territories. In Australia, average admission price and spend per head were up 27.9% and 57.7%, respectively, on the first quarter of FY '19 and up 4.5% and 2.8% on the prior comparable quarter. Overall, the Entertainment Group EBITDA was $29.2 million, up $19.1 million on the prior comparable quarter and up $24.4 million on the first quarter of financial year '19. I'd like to highlight that this result has been delivered with 12 fewer cinemas as part of our fewer better strategy. The Hotels division continued to deliver strong results with first -- with the first quarter EBITDA record result of $22 million, up 3.3% on the prior comparable quarter and up 9.2% on the first quarter of FY '19. Our hotels continue to outperform their competitive sets. Average room rates have softened marginally from a record high due to discounting on shoulder days, and occupancy has marginally increased as we're yet to see the full impact of a recovered international market due to airline capacity constraints. The weather conditions at Thredbo this season were the worst we've experienced since 2006. Winter had a late start and the season continued with warm weather patterns and an unusually high number of days with strong wins that resulted in key lifts not operating. 50% of snow runs were able to open this year compared to 100% in the prior year. We then experienced unprecedented warm temperatures in mid-September that resulted in the closure of the resort 2 weeks earlier than planned. Despite these conditions, Thredbo delivered EBITDA of $25.3 million, only 15% below the first quarter of financial year '19, which had significantly more favorable snow conditions. This was still the fifth best EBITDA result on record. This result in very difficult circumstances reinforces the benefit of Thredbo's new operating model and the dedication by the team to deliver experiences and results in all conditions. In closing, I wanted to touch on the outlook for the financial year. The Entertainment Group's performance will be subject, as always, to the overall appeal and volume of good films released. Assuming the current film release dates hold, we expect financial year '24 to track ahead of the prior year box office. The resolution of the writers' strike was announced last month, and we anticipate progress will be made between the parties in relation to the actors' strike. Whilst we believe this will have a greater short-term impact on television and streaming services, it is too soon to predict any significant impact on the future film lineup. Towards the end of the year, CineStar Germany will be impacted by the Euro 2024 football tournament, which Germany is hosting next year. However, the return of local films in the German market has been pleasing and has recovered to pre-COVID levels. We're expecting another record year for our Hotels division. Inbound arrival numbers continue to grow, and this trend will only gather pace as airline capacity increases in major international markets such as China return. These positive trends will be partially offset by softening in domestic leisure demand, but overall, we expect to see occupancy grow during FY '24. Corporate travel continues to grow with direct in-person contact increasingly seen as a commercial imperative, particularly for small and medium-sized enterprises, which are a key driver of our hotels. In addition, our conference and event inquiry and booking volumes are encouraging and trending well. Looking ahead to the Thredbo summer demand for mountain biking is expected to be good, again, subject to weather conditions. We have a clear pipeline of premiumization projects to support future growth and we expect capital expenditure this financial year to be around $165 million, excluding acquisitions. Overall, we expect growth in earnings in FY '23 and potential for recovery towards FY '19 levels. I'd now like to take the opportunity to thank Team EVT the positive results we are experiencing from our growth strategies and transformation initiatives are an absolute credit to you all. Your commitment to ensuring the best possible outcomes for shareholders and customers whilst contributing to ensure EVT is a great place to work is second to none. I am exceptionally proud of our team and know we have the right people and capabilities to achieve our goals. I'd also like to thank all of you for your support and interest in attending and to those participating online in this morning's meeting. Thank you.

Thank you, Jane. There is no call for a resolution on this meeting on this matter. I will now move to the resolutions that have been put before us today. The first resolution relates to the adoption of the remuneration report as set out on Pages 29 to 40 of the annual report. Shareholders will notice that this report explains the structure of and the rationale behind the Group's remuneration policies and the links between remuneration of senior executives and the group's performance. It also sets out remuneration details for each director of the company and for each member of the Group's senior executive team during the year and makes clear that the basis for remunerating non-executive directors is distinct from the basis of remunerating executives, including the CEO. Accordingly, I now move that members adopt the remuneration report for the year ended 30th of June 2023. The next item of business concerns the election of Mr. Brett David Chenoweth who having been appointed as a director since the last Annual General Meeting, retires in accordance with the constitution. Mr. Chenoweth's background and qualifications have been outlined within the explanatory notice of meeting and on Page 4 of the annual report. I will now, however, ask Brett just to say a few words before I put the resolution. Brett?

Thanks, Alan. So thank you for having me. I just thought I'd say a couple of things. One is that Look, I've had a career in media, leisure, entertainment, sort of technology businesses. So certainly crossing over everything that EVT does and will continue to do. And my observations over the last 9 months on board are the quality of the asset base, the unique nature of these brands, the strength of this business has really delighted me actually, and I feel really proud to be a part of that. And secondly, and really importantly, the quality of the people that I've managed to meet, staff, executives, Jane's team, this Board have been really, really high quality and again, feel very privileged to serve alongside them. So I'm an active user of all of the products. I've spent a lifetime in media content creation, film, I spent a lot of time in the hotels. I do a lot of skiing. All of the assets of this business are used as an active user. And again, I couldn't be prouder about the asset base this company has. So I'm glad to be here and look forward to continuing to serve and thank you for putting out for election today.

Thanks, indeed, Brett. And friends in putting this resolution, I must say that the period we've already spent with Brett has been a very encouraging one. He's been a great contributor, and I'm sure he's going to be a solid director into the future. I now move that Mr. Brett David Chenoweth, having been appointed as a director since the last Annual General Meeting and who retires in accordance with Rule 8.1(c) of the constitution and being eligible, is elected a director of the company. Fourth item of business concerns the reelection of Valerie Anne Davies, who retires by rotation in accordance with the constitution. Ms. Davies' background and qualifications have been outlined within the explanatory notes to the Notice of Meeting on Page 5 of the annual report. Friends, I now move that Valerie Anne Davies, being a Director who retires by rotation in accordance with Rule 8.1(d) of the constitution and being eligible, is reelected a director of the company. So move. The next item concerns the renewal of the proportional takeover provisions. These provisions were initially introduced at the AGM in 1991 and are required to be renewed at least every 3 years. Most recently, in 2020, the provisions now require renewal. Full details are included in the explanatory notes to the notice of meeting. And accordingly, I move that the proportional takeover provisions in the form of Rule 6 of the constitution of the company be renewed for a further period of 3 years from the date of this meeting. The next item relates to the award of performance rights to our Chief Executive Officer. The performance plan provides an incentive for executives to achieve above-average performance over the medium to long term in the Group's business, which will then be reflected in higher Group earnings and growth rates. The plan enables the company to grant rights to executives and senior managers each right, representing a right to receive 1 fully paid ordinary share in the company. The rights vest and ordinary shares are allocated to the participant upon the satisfaction of the performance criteria as set out in notice of the meeting. Your Board considers that this incentive management under the plan to be an important tool in attracting, motivating and retaining employees and executives. Accordingly, I now move that approval is given for all purposes, including ASX listing rule 10.14 and for the award of up to 200,000 performance rights as a long-term incentive award to our Chief Executive Officer, Ms. Jane Megan Hastings, on the terms set out in the explanatory notes to the notice of meeting. And so I move. Friends, that was the last item on the Notice of Meeting. I'd now like to invite questions and comments relative to any of the items of business under consideration at this AGM. You may also ask questions of the auditor about the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements and also the independence of the auditor in relation to his conduct of the audit.

We do have a number of questions online, so I might ask one of those, and then we can come back to questions in the room if there are any. So a question from a shareholder, Stephen Maine. The question is, the Chairman owns more than $700 million worth of shares in the company. Did you really need a $10,000 pay rise to $204,000 in the latest year. Why doesn't he work for free like James and Kerry Packer did when serving on public company Boards. Also, is it more tax effective to receive fully franked dividends rather than paying the top rate of personal income tax.

Well, for a start, I'm not James or Kerry Packer. I can assure you of that. Pete, would you.

Yes, I'm pleased to comment Chairman. Look, I'd like to just start by saying the Chairman makes an enormous contribution to the business, which far outweighs the cost of his salary. And as a major shareholder, his interests are totally aligned with the business, and I think that's some very important aspect of the company. And comment on the actual dollars, I think there's 1 pertinent fact that is worth mentioning. And that is that in 2019, pre-COVID, the Chairman's annual salary was $328,000 per year, which was appropriate in terms of the market -- conservative in terms of the market. In 2023, it is $2004 -- $204,000 per year, which is still well below it was pre-COVID. So the Chairman is certainly -- the salaries being paid is certainly very conservative.

Thank you, Peter.

We have a question -- a couple of questions in the room.

My name is Ronan. I'm a long-term shareholder. Alan, you're doing a great job, continue doing a great job, whatever they're paying you, it's not enough. Just continue doing it. Thank you.

Thank you, Ronan. And I do have the desire to have the bulk of main come through dividends to be aligned with people like yourself. Thank you.

Yes, another question in the room?

My name is Alex Caritas. I'm a shareholder. In relation -- sorry, for you Mr. Chair -- to Jane. In relation to Thredbo, how are you set if we have another set of bushfires coming through Thredbo because now we're moving into El Nino type weather patterns. So I'm just wondering how we're set for that. And also how we're set for during winter, we have a repeat and ongoing repeat of the winter effect on the Thredbo asset.

I'm going to open by saying I am not an expert, but we do have experts in our team focused on exactly both of those things. So in relation to the bushfires, of course, we're considering what the future weather patterns look like. There's actually been a lot of rain in the Thredbo area. It's actually quite damp, A lot of the dryness is further out. And that is part of the prevention strategy as we head into that season. And we still have quite a lot of surrounding damage from the original bushfires, which acts as a break as well. So I'm very happy to connect with someone who is our expert on that. But we do have teams working on making sure that we are kind of looking after the environment as much as possible naturally in order to protect from these things coming ahead. From a winter perspective, look, we look back at every single season for the last 10, 15 years and what it looks like. And I think I alluded to in my speech that the season was like 2006 -- and we're seeing quite a consistent trend of you hit that low season it comes back up, it builds back up. There's quite a seasonal trend, which is happening at Thredbo. But some of our mitigation strategies include our snowmaking, which we're investing more in. And from a wind conditions perspective, the [ Gondola ] has gone in, we've got a chiller replacement plan, et cetera, over a period of time. So we have a number of things that we can do to make sure that we are able to operate in warmer environments. I think that's the message there. Alan, you're also a long-term [indiscernible], do you want to comment.

No, I support those comments, Jane. And I think in terms of the people we do get through and when the initiatives that the team has undertaken to improve yield to improve customer experience, have all gone a long way to sustaining our earnings. And I think we should not lose sight of the fact that Thredbo is not just a ski resort. There are a couple of other aspects to the company. I mean, when I first got involved in this business, I remember Thredbo used to be virtually close in summer. But now we've got sensational summer revenue that's been rolled about by management's initiatives. It evens out the approach. We have a significant real estate income and further real estate development to come on board in the coming years to ensure a year-round resort is really what we have.

Second question, if I may. Can you outline if you have an expansion strategy overseas, across the various business units.

I can answer that. Yes. In Hotels, yes. We believe there's still more growth for us across because now we've expanded our hotel strategy from budget to luxury. We can see still very good growth for us in Australia and New Zealand. But we are looking to assess offshore markets where we could see our brands moving to. And we're really in the phase of exploring what those markets are and learning more about those markets and brands. But we would like to see in the future our brands -- our hotel brands, offshore.

Beyond New Zealand.

I call New Zealand, Australia -- we're on -- yes, beyond Australia and New Zealand, I should say.

[indiscernible]

We're keeping our options open at this point in time because our brands can relate differently in each of the markets, but we are tending to look at English-speaking markets as the priority focus.

We do have an online question regarding the resolution -- regarding Valerie Davies reelection, again from Stephen Maine. Question is, it's very unusual seeing independent female directors serving for more than 10 years and far more common for male directors to resist retirement, having served 12 years since 2011, wouldn't it have made more sense for Valerie Davies to retire, as the longer you serve, the more you become a prisoner of your past decisions undermining your independence. Could the Chair and Valerie both comment as to whether this will be her last 3-year term and whether she intends to serve a full term.

Well, I'll make the opening comment and say that I don't believe there is any difference between the male and the female directors on this Board nor should there be any difference between the male and female directors on any Board. The value has been a valuable contributor and continues to be. I really do not accept the premise that may tenure on a Board compromises anyone's independence. I think if anything, the corporate history over a number of years can make directors more penetrating in their questions, more understanding of the businesses and, in fact, more valuable to the company. Valerie's next reelection will be looked at, at the time it is due. But at this stage, I certainly don't see any reasons we -- Valerie willing, we would not be supporting a reelection.

Thank you, Alan. I'd like to say a few words as well, if I may. It's always been a privilege to serve the Board of EVT and now more so than at this time of transformation, as Jane described, so eloquently in her address. I've always valued being an independent director. I've had a long directorship career, and I think the longer you serve the more you learn and you're never ready for the next situation that comes out of the blue that you haven't experienced before. I believe that independence is critical, I've served this more diligently and faithfully, I believe. And I serve at the will of the shareholders and also at the will of my Board, my Chair and my colleagues and again, just to reiterate that it is a privilege, and I thank you for your words, Alan.

Thanks, I've got a question in the room.

Sorry if I arrived late if it's been covered already. But just a question, Charlie Kingston on behalf of Ocean Capital. But just a question on how the Board views the return on assets of the company now. I think the market value that you think the property assets are worth is around about $2.3 billion. And I believe the target going back to 2019 for your earnings on a pretax, pre-interest basis was around about $160 million. So that's, therefore, about a 7% return. Now I appreciate there are some operating assets. There are some leasehold assets, you can manage from hotels. So it's a very simplistic way of looking at it, but I suppose if you look at some REITs, some property, just passive landlord collecting assets. I think Jan described them recently on a call as not zombies but ghosts property owners so that they are in no position to actually increase the value of those assets or get a better return out of those assets. But if you look around some of the property just passive rent collectors, it's very easy today to get a sort of a 6% or 7% yield on those assets. Given that EVT owns most of your assets, and again, I appreciate some of them aren't necessarily income-producing yet. But again, some aren't reflected in that $2.3 billion figure, just trying to get a sense of whether or not EVT equity owners are getting paid for that additional risk of owning and operating those assets given that if we were just a passive rent collector, a lot of these assets are getting 6%, 7% yield. If you go back to your original target of 2019 the return on those assets is circa 7%. So I just want to understand the Boards if there is a target return on your assets, which I would hope that is well and above some sort of passive rent collectors given that we are taking a lot of additional risk with owning and operating some of these assets.

Sorry, we're just going to try and summarize your question because it's harder to hear -- hear off the microphone. David can you summarize?

Yes. Look, I think the question -- just to summarize the question. I think you referenced a profit for interest and tax circa $150 million pre-COVID. We've now got $2.3 billion at fair value of property, which we disclosed at 30 June '23. I think the question means our shareholders getting appropriately paid to have the risk of the property ownership. Does that -- if I capture it?

Is there a targeted return on those assets that the Board hopes to achieve given that clearly, it's not reflected in the share price. But again, the share price is volatile. But is there -- if you're a passive rent collector, it's pretty easy to get a 6% to 7% return without taking that operating risk. So just trying to understand if the Board has an internal target, sort of through the cycle given that you think the properties are worth $2.3 billion, what's the sort of return on those assets that we should be expecting as an equity owner?

Yes. Look, we do not evaluate the total portfolio on a return basis. We do, however, look at individual assets, and we look at the return being achieved from those particular properties. Of course, the key driver in our portfolio has been the ownership of hotels. Over recent years, we've suffered greatly in hotels and also in cinemas. So the return has not been [indiscernible]. However, with the work that we can demonstrate now in terms of property improvements, hotel refurbishments, we will be able to significantly improve the overall earnings out of those assets. And a classic case is the Rydges Melbourne and also a further example is QT Gold Coast. But we have to spend the money to improve the properties to get the yield back.

Okay. But -- just looking at the share price, I think it's, call it, $10.50, whereabouts were trading. I think the pre-COVID distribution was around about [ 50-odd cent ]. Please correct me if I'm wrong, but that's, call it, circa 5-odd percent yield if we get back to those levels. But we are taking considerably more risk by operating and owning those assets. So I'm just trying to understand if you think if you own a passive REIT, where you don't take any of those risks because the thesis -- a lot of the thesis of owning EVT is there's a lot of assets there. I think if you accept the market value, it's circa $12.80 per share. Just trying to get a sense of -- if all goes to plan and we're operating those assets to full potential, what's the sort of target return that the Board hopes to achieve off those assets? Should it be a 10% return, given we're owning and operating, should it be at 12%. I'm just trying to get a sense of -- we're making sure that the equity owners are -- through the cycle, I appreciate you've been through a lot going to get paid for that extra risk, please?

Yes. Look, as I mentioned, we don't have an overall target. I believe that the ownership of assets is good overall for the shareholders and for the company, particularly where those assets are disposed in the Hotel business. And look, we take your comments on board. And I assure you that we will have a discussion down the track along these lines. Company structure is an issue that has been on the agenda for the Board for a couple of years, whether there is an increase in overall benefit to the shareholders of some restructuring of assets that's an ongoing evaluation that we're undertaking, and I can't comment on that at this stage.

That's fine. And just 1 more. Just be interested as to the Board's views on sort of free cash flow because, obviously, hotels, they're a very capital-intensive business. I think this year, you're expecting to spend $160 million on CapEx, last year, I think it was $190 million. I appreciate there might be some asset purchases within that. But Obviously, there's a lot of CapEx that needs to go into these assets to essentially stand still. And I know you don't split out the maintenance versus growth. And again, it's a very vague categorization. So I would say that you need to spend certain amounts of money just to stand still, otherwise you go backwards. But off the top of my head, again, sorry, I don't have the numbers in front of me, but I think last year, the operating cash was about $240 million. If you take off the $120 million of lease payments, I think, roughly, Apologies if those numbers are incorrect. But, you've got $120 million of operating cash flow coming out of those assets. If you then say you've got to spend $190 million some has gone into new assets, but it doesn't seem like there's much free cash flow left post making all those investments. So I'm just hoping to get the Board's thoughts on sort of what the true free cash flow that this company can deliver sort of through the cycle on a standstill basis.

We're not going to go into the detail. First, frankly if -- what our valuation of true free cash flow is. We present the accounts to you. You've obviously done your homework and you can see what the picture is at this stage. We raised how many million in property sales, Jane, just over -- $210 million in real estate sales. We have more real estate to dispose of, as Jane mentioned in her report, plus we have some very, very profitable high cash flow businesses, not least of which is Thredbo. We're confident about being able to maintain our commitment to capital expenditure in the future.

And I guess, I think just -- it's important to highlight that we -- our premiumization strategy is very targeted. And when we're investing, we're getting a good uplift. We're not investing to stand still. I think that's -- and you've seen that in our numbers. A good example of that would be you could -- admissions are back in quarter 1 versus 2019, but EBITDA is well ahead. And we've got substantially less cinemas. . So that's part of that is investment in premiumization and bringing it up to standard and parts of pricing strategies, et cetera. But there is no project that comes to the Board that does not have a growth aspect to it. And that's also part of our maximizing assets in Melbourne, the 25 apartments, they're dusting off the back of house and turning it into revenue-generating conference space. So we're looking at growth every time we're looking at upgrading assets. And when we look at an asset and go, you know what, we don't believe this is right for us, thus the cinemas, we've divested, we're out. So we're being very targeted and we do look for growth in every dollar that we are spending. It's not just maintaining to stay still.