Kelsian Group Limited (KLS) Earnings Call Transcript

Good morning, ladies and gentlemen. My name is Fiona Hele, and I'm Chair of Kelsian Group Limited. On behalf of the Board of Directors, I thank you for joining here today at the U-City Function Center, and I welcome those listening online. I'm also pleased to welcome the shareholders here today who are also previous Board members. The Company Secretary has confirmed a quorum for the meeting, and so I declare the meeting open. I'd like to acknowledge that today, we mentioned the traditional country of the Ghana people of the Adelaide Plains and pay respect to Elders, past and present. We recognize and respect their cultural heritage, beliefs and relationship with the land. In person today in Adelaide, I've got the following directors to the left myself, from far left Jackie McArthur, Terry Sinclair, Diane Grady, Caroline Elliott and Terry Dodd. I've got Graeme Legh, our Group Chief Executive Officer; and Kelsian Joint Company, Michelle Evans, and Andrew Muir are also present. We've also got thank you, Nigel Stevenson from Ernst & Young, our external auditor, who will be here to answer questions as required in the meeting. On behalf of the Board, I thank you for joining us and for your continued interest and support of Kelsian. This morning, I'll reflect on the considerable progress made during financial year '26 and the strong position in which Kelsian has entered this coming -- this financial year. FY '26 was an important year for Kelsian. We delivered another record financial results, strengthened our balance sheet and took a significant step in reshaping our portfolio. The strength of the result was evident in our cash generation. Net operating cash flow reached $220.1 million, while leverage reduced to 2.46x at 30 June within our target range. The Board declared a fully franked dividend of $0.10 per share, bringing the full year dividend to $0.18 per share. Importantly, our results demonstrated the resilient nature of Kelsian's earnings, particularly in the second half of the year when we delivered a strong financial performance despite businesses globally experiencing continued inflationary pressures and significant fuel price volatility. These results reflect the essential nature of the services we provide, the indexation mechanisms protecting a large portion of our fuel and wage costs, the strength of our contracted operations and above all, the commitment and professionalism of our people. While we are pleased with this progress, we recognize that strong financial performance alone is not enough. Our focus remains on translating our operational strengths into improved returns on capital and sustainable long-term value for our shareholders. The completion of the sale of our tourism portfolio journey beyond on 30th September was an important milestone in this journey. The divestment positions Kelsian as a more global commuter and contracted transport business with lower capital intensity, less exposure to discretionary consumer spending and a greater proportion of earnings supported by long-term government and corporate contracts. This divestment has brought considerable change for our people. On behalf of the Board, I sincerely thank our marine and tourism teams for their contribution to Kelsian and for the patience and professionalism they demonstrated throughout this transition. Their work has been an important part of Kelsian's development, and we are extremely grateful for it. This transaction has strengthened our balance sheet and provides us with greater flexibility. However, it does not change the discipline with which we deploy capital. Our capital management and allocation framework provides a clear basis for decision-making on leverage, dividends, investment returns and the deployment of surplus capital. We will continue to assess opportunities against their strategic merit, risk profile and potential to generate attractive returns. Turning now to Kangaroo Island. I acknowledge that the delays have been frustrating for the KI residents, and I'm thankful for their patience and understanding they have shown us. I'm delighted to share that [indiscernible] commenced services this morning, I think, at 5:30 a.m. this morning, and it was very smooth, are here, and alongside [ CL2000 ]. And his sister, [indiscernible], is on her way to Australia as we speak. And Terry Dodd's just advised me that it's currently, and he showed me on the map, it's north of the Longbot, straight, just northwest valley, so it's well and truly on her way. Safety remains our highest priority and underpins every aspect of our operations. During FY '26, we achieved significant improvements in both our lost time injury frequency rate and our total recordable injury frequency rate. The Board remains focused on safety, leadership and effective controls to manage critical risks and accountability throughout the business. Kelsian operates an inherently high-risk transport and marine environments. Every day, our people carry significant responsibility for the safety of our passengers, employees and other users of public roads and waterways. Serious transport incidents remain our most significant health and safety risk. Tragically, a passenger died in June 2026 following an incident involving our Australian bus operations. Our thoughts remain with the passengers family and all those affected. An independent review is underway, and we will carefully consider its findings. Safety remains a key priority, and we continue to focus on enhancing our controls, systems and practices. The Board has withheld the safety component of short-term incentive awards pending the outcome of this independent review. Turning to remuneration. We have listened carefully to feedback and made changes to strengthen the alignment between executive rewards and long-term shareholder outcomes. Our financial measures focus executives on earnings growth and capital allocation decisions that deliver strong risk-adjusted returns. Half of any final short-term incentive award is deferred into equity. Return on invested capital now sits along earnings growth and relative shareholder returns in the long-term incentive plan. minimum shareholder requirements also apply to directors and executives. We continue to review and benchmark our remuneration approach to ensure it supports our strategy, reflect shareholder interests and enabled us to attract and retain talent. During FY '26, the Board undertook extensive benchmarking against comparable organizations. We will continue to review our approach to ensure it remains appropriate, competitive and aligned with our strategy and shareholding interests. In alignment with shareholders also matters around the Board table, and all Kelsian directors do own shares in the company. Good governance ensures the Board continues to focus on the company's changing needs while maintaining the right mix of corporate history, experience and skills. I'm delighted today to be announcing that Graeme has been appointed to the Kelsian Board in addition to his ongoing role as Group Chief Executive Officer. During the past 19 months, Graeme has led Kelsian through the delivery of record FY '26 results and the tourism portfolio divestment. His depth of experience and knowledge of the business will be valued to the Board, and I am confident he will make a significant contribution. Neil Smith resigned from the Board in February 2026. Neil was a founder of Transit Systems, which Kelsian acquired in 2020, and he played an instant role in building international bus and marine operator that Kelsian is today. I welcome Neil who's in the room today. And on behalf of the Board, I sincerely thank him for his significant contribution over the past 16 years, and we wish him all the best in his retirement. We regularly review the Board's mix of skills and success and plan to reflect the needs of a more focused international company. Last year, Terry Dodd announced that he would not seek another term beyond this year and a search for a new director is well advanced, and we will update shareholders at the appropriate time. Alongside Board renewal, our oversight throughout FY '26 continue to cover strategic and operational matters, including operational risk cyber resilience, implementation of the new global finance platform and the opportunities and risks associated with climate change. These matters are important in protecting the business today whilst ensuring we are equipped to address the challenges and capitalize on the many opportunities ahead of us. As Australia's largest multimodal transport provider, Kelsian plays an important role in supporting the transition to lower emissions transport and encouraging greater use of public and shared transport. During FY '26, we continue to work closely with our government customers and industry partners to expand our zero-emission bus fleet. We also supported debt pro electrification projects in New South Wales, South Australia, Western Australia and Victoria, providing the infrastructure needed to deploy and operate these buses. These initiatives are particularly important at a time when households are increasingly focused on transport affordability. Governments are responding by investing in more frequent, reliable and accessible public transport to help ease cost-of-living pressures, reduce congestion and support sustainability. Importantly, the shift towards public transport supports Kelsian's long-term growth outlook. Government investment can create a reinforcing cycle better services attract more passengers supporting further investment in transport networks. Through our partnerships with government and industry, calcium is well positioned to contribute to and support this transition. Despite delivering record financial results, our share price has been disappointing. I understand and I share this frustration. The Board recognizes that our success must be measured not just by our operational achievements and financial results, but by the value we create for those who invest in Kelsian. Our engagement with investors following the results was constructive, and it was encouraging to receive the positive feedback on our operating performance, improved cash generation and strengthen balance sheet. Our responsibility is to turn these achievements into stronger shareholding returns and build lasting value for our shareholders. The Board and management remain focused on delivering against our commitments, improving returns on invested capital and pursuing growth with discipline. We recognize that confidence must be earned through consistent performance and clear communication, and we remain committed to delivering on this. In closing, I would like to thank Graeme and his leadership team for their hard work and commitment in a demanding yet transformative year. And thank you to my fellow directors for their contribution, diligence and support. Most importantly, I thank Kelsian's people. Across our global operations, you continue to deliver safe, reliable transport solutions to passengers, customers and communities every day. You have continued to do so through a period of considerable change, and your contribution has been fundamental to our success. To our shareholders, thank you for your continued support and interest in Kelsian. After a year of change, we have taken an important step towards a more focused commuter and contracted transport business. Kelsian enters FY '27 with strong operational momentum a strengthened balance sheet and a substantial pipeline of organic growth and acquisition opportunities. I'll now hand over to Graeme, who will discuss this in more detail.

Thank you, Fiona, and good morning, everyone. I would like to start by reflecting on the significant progress Kelsen has made over the past 2 years and why that progress gives me confidence in our future. When we announced the portfolio review in October 2024, we set out to improve the performance of our core operations, strengthen our balance sheet and established a disciplined framework for sustained future growth. Today, I'm pleased to report back on the significant progress delivered against each of these priorities. We undertook the review of our portfolio to ensure our operating businesses were aligned to our strategy and delivered appropriate returns. The review led to the tourism portfolio divestment, which we completed at the end of September. Kelsian is now a more focused commuter and contractor transport business with lower capital intensity, reduced exposure to discretionary consumer spending and a more stable earnings base. We're committed to strengthen the balance sheet. Through earnings growth, strong cash generation and disciplined capital expenditure, by 30 June of this year, we have brought leverage within our targeted range of between 2 and 2.5x underlying EBITDA. This was achieved before completion of the tourism portfolio divestment and the receipt of these proceeds has since further strengthened our financial flexibility. We're also committed to greater discipline transparency in how we make investment decisions. We introduced our capital management allocation framework, setting clear targets for leverage, dividends, capital expenditure and investment returns. Within our core operations, we said we would focus on efficiency and operational excellence. In Australian bus, we've improved returns from our Sydney contracts and secured an extension for our Region 6 services. We said our international platforms will provide opportunities for growth. In the United States, we've delivered exceptional growth from both new and existing customers, supported by investment in fleet, depots and local management capability. In Singapore, we have secured contract extensions and expanded our core public transport operations. We've also diversified we're winning and transitioning the new Sentosa's services. In the U.K., we are 1 of only a handful of operators to be awarded Fast franchise contracts as a significant regional bus market undergoes a structural shift to a contracted bus product transport model. And in New Zealand, we have secured long-term Auckland Ferry contracts, providing an entry into an attractive and adjacent market. We've also continued to invest in the long-term the business, including new corporate systems. Taken together, these achievements for Kelsian in a much stronger position to grow. We have a more focused portfolio, a stronger balance sheet and established operating platform in markets where we see substantial opportunities. Our responsibility now is to convert these opportunities into sustainable earnings growth and improved returns on capital. We plan to pursue that growth and discipline to deliver long-term shareholder value. Before turning to the FY '26 results, I want to provide some background setting out the scale of our operations and the key characteristics of our business. Kelsian is a leading multimodal transport operator, connecting people and places across Australia, the United States, Singapore, the United Kingdom and the Channel Islands. As at 30 June 2026, we employed 1,300 people and operated more than 6,300 buses and 120 vessels. Over the last 12 months, our services delivered 384 million customer journeys. In Australia, we're the largest multimodal bus and ferry operator. In the United States, we're the second largest motor coach operator. In Singapore, we're the third largest public transport bus operator. And in the U.K. and Channel Islands, we have established a platform from which pursue regional bus franchising opportunities. Our operating capability, scale and long-term customer relationships provide the strong foundation from which to continue our growth. Turning to our financial performance for the 12 months ending 30 June 2026, representing another record result for Kelsian. Group revenue increased by 8.8% to $2.4 billion with growth achieved in all geographies. Underlying EBITDA increased by 10.8% to $315.8 million, which after adjusting for the delayed Kangaroo Island [indiscernible] costs, was at the top of our FY '26 guidance range. With this result, over the last 3 years, underlying EBITDA has grown at a compound annual rate approximately 25%. Underlying EBIT was up 14.5% to $155.7 million, and underlying net profit after tax and before amortization was up 17.2% to $111.1 million. The result demonstrates the resilience of our business model. The majority of FY '26 revenue is contracted and contractual indexation mechanisms provide important protection against inflationary pressures, including the significant volatility in fuel prices witnessed in the second half of the period. Growth was supported by new contract wins and existing contract growth, including in the United States, the full year contribution from the bank's down rail placement services in Sydney, contract indexation and improved performance in marine and tourism. Importantly, the earnings result again translated into strong cash generation and a stronger balance sheet. Net operating cash flow was $220.1 million, up 7.3%, and leverage reduced to 2.46x, within the target range. After one-off costs associated with acquisitions, the tourism portfolio divestment and the implementation of the new group finance system, statutory net profit after tax was $63.5 million, up 16.6%. FY '26 was a year of operational execution and meaningful strategic progress. The United States continues to perform with the ramp-up of new and existing industrial contracts, solid growth in corporate and technology employee transport services and a stronger charter contribution. In Australia, operating performance in our key urban public so contracts improved as service changes were implemented and the impact of depot electrification and government fleet replacement delays became more manageable. These initiatives helped offset the higher repairs costs associated with operating older diesel vehicles. We signed a 2-year extension of our Region 6 contract in Sydney on improved terms and successful once the Ipswitch and loading services in Queensland. In the U.K., the award of Liverpool bus contracts validated our strategy of establishing an operating presence ahead of regional bus franchising. We also acquired Wales transport, positioning Kelsian for the pipeline of franchise opportunities expected across Wales. In July, we were awarded new long-term ferry contract in Auckland and entered in an agreement to acquire Bella Ferries, establishing a platform for further growth in New Zealand. Across the group, our focus remains on operational excellence, disciplined capital management and growth that meets our investment return hurdles. As Fiona has emphasized, safety remains our highest priority. It is also fundamental to the quality of the service we provide and the confidence place in us. The improvement in our workplace injury frequency measure in FY '26 is encouraging. Our responsibility is to keep strengthening safety leadership and the controls that protect our people, passengers and other road and waterway users. We must apply that focus consistently across every operation. We continue to work with our government and corporate partners to improve service quality, support mode shift to public transport and enable the transition to lower emission fleets and infrastructure. As at 30 June, we operated 454 zero emission buses across Australia, and our Australian bus Scope 1 emissions reduction target remains on track. We directed $4.2 million to introduce the suppliers during the year and continued our partnership with the Royal Flying Doctor Service. These partnerships reflect the contribution make to the communities in which we operate. Our capital management allocation framework provides the discipline for our next phase of growth. It starts with cash generation and the investment needed to maintain safe, reliable operations. Following the divestment of the tourism portfolio, our average annual net sustaining CapEx requirement has reduced from approximately $85 million to $73 million. Our leverage target remains between 2 and 2.5x underlying EBITDA, and our dividend payout ratio is 40% to 60% of underlying net profit after tax and before amortization. All growth investments must be aligned with our strategy, accretive to earnings per share before amortization and deliver returns above our pretax cost of capital within 3 years. At the group level, we are targeting a return on invested capital of at least 200 basis points above our pretax cost of capital over the medium term. Today, we are reporting our progress against these targets we set out in the framework. With our recent initiatives and financial performance, driving improvements against all key measures. Importantly, as at 30 June, leverage was within our target, and the tourism portfolio divestment has further strengthened our position. We also continue to make steady progress improving the group's return on invested capital with this measure now central to how we assess perform and prioritize investment decisions. We've made a solid start to FY '27, with first quarter trading in line with our expectations. It was pleasing to successfully complete the tourism portfolio divestment on 30 September, concluding the sale process we first announced in April 2025. Th sale delivered gross cash proceeds of $149.9 million. We've retained the Rottnest Island Ferry operation in WA, which was previously included in the sale perimeter. Kelsian will continue to operate the 1 service alongside our contracted Transport Berry operations in WA. With the divestment complete, Kelsian is a more infrastructure-like contracted people transport business with lower capital intensity and a more stable earnings base. Moving forward, our focus and resources will be our core bus, motor coach and marine transport businesses. We also continue to progress the new opportunities that will commence in FY '27. In the U.K., mobilization is underway for the Liverpool bus contracts, and we've been nominated as preferred bidder for contracts in West Yorkshire, with services scheduled to commence in the second half of FY '27. In New Zealand, preparations are progressing for the Auckland Ferry contracts commencing in July 2027, with the acquisition of Auckland's Bella Ferries expected to complete in the coming. This service will give Kelsian's first operations in New Zealand, an attractive and adjacent market for contracted public transport services. In the United States, we continue to see strong momentum in industrial employee transportation with growth in FY '27 from both existing and new contracts. Given the start to this financial year, today, we reiterate the earnings guidance provided on the 30th of September for underlying EBITDA of between $295 million and $310 million, assuming no significant deterioration in the operating environment. Turning now to reporting updates for Kangaroo Island and the commencement of our new agreement for the KI ferry service. Under this new contract, SeaLink is delivering 2 new vessels and associated land site infrastructure that will support this critical transport link for the next 25 years. I recognize that the delays in the construction and delivery of the new vessels have been frustrating both the KI community and Kelsian shareholders. Despite these delays, I'm pleased to be able to confirm that the new infrastructure works and ramp-up were completed successfully during the 3-day service shutdown last week. One of the existing vessels recommenced services utilizing the new infrastructure on Friday. And the first of the 2 new vessels successfully commenced operating full partners services today. The second new vessel departed Indonesia this past weekend and is expected to arrive in Australia by mid-November, with this entry into service to follow the required preparation and approvals. The new and identical vessels will deliver greater operating flexibility and provide a significant improvement in customer experience with a more spacious, comfortable and accessible journey between the Ireland and the Mainland. The purpose-built vessels are 10 meters longer and 2 meters wider than the existing vessels, offering around 65% more vehicle lane capacity per sailing. The roll-on roll-off design new shore infrastructure support faster, safer turnarounds and more daily sailings. The additional capacity will support demand growth over the life of the contract. Delivering a project of this scale has not been without challenges but the commitment, determination and collaboration of our team has been instrumental in reaching this point. Our focus now is completing the transition to the expanded ferry service safely while continuing to deliver a reliable efficient service for Kangaroo Island. As I noted earlier, the capital management allocation framework guides our future investment and capital management decisions, with clear targets for leverage, return on invested capital, capital expenditure and dividend payouts. The proceeds from the tourism portfolio divestment will be applied in line with the framework and directed to where they best grow and optimize shareholder value. We see a compelling opportunity to build on the businesses we know, grow with our customers and scale our international platforms. At the FY '26 results, we outlined our 3 complementary growth pillars. The first is to protect and grow our core markets, retaining contracts, improving service quality and expanding existing customers provide the foundation for sustainable growth. The second is international growth. Scaling the established platforms we have in the United States and the U.K. and building our presence in New Zealand. These are markets where our experience and local capability gives us a credible basis to compete and grow. The third is to pursue strategic opportunities, including selective bolt-on acquisitions a strategic advantage, add capability, scale or geographic reach and meet our return requirements. Across all 3 pillars, the objective is the same: growth that improves earnings per share, cash generation and return on invested capital. For each of our 3 growth pillars, there are several near-term initiatives that we are focused on. Starting with our core markets. The Australian bus business has secured important contract extensions, and we continue to focus on service improvements, operational efficiency and delivering growth services. There are also meaningful opportunities to expand. We have submitted a tender for bus services in Wellington and are pursuing a new tender opportunity in Queensland. In Melbourne, tenders coming around 40% of the city's bus contracts, representing approximately 800 buses in the market, providing a significant organic growth opportunity. In the United States, the immediate opportunities to build on the strong momentum in industrial employee shuttle services. We continue to grow our services for existing clients and are actively pursuing new contracts. These large industrial projects require reliable mass transport solutions and our established facilities, fleet and local relationships position us well to capitalize on the ongoing investment into LNG, energy, infrastructure and data center projects. In regional U.K., the shift to bus franchising is opening markets in which we can apply our proven operating expertise and skills from our long track record of successfully delivering contracted public transport bus services. The Liverpool contract wins and preferred bidder status for contracts in West Yorkshire are important first steps, with mobilization of these contracts underway and services commencing in FY '27. In New Zealand, the awarded Auckland Ferry contracts and planned acquisition of Bell Ferris provide the initial platform which to build. Alongside organic growth, we continue to explore targeted acquisitions that strengthen our existing platforms. Further acquisitions in the United States are being explored. Although [indiscernible] is the second largest motor operator. The market remains fragmented, providing scope for selective acquisitions to add local capability, customer relationships and improve our geographic reach. Outside the U.S., in our other existing markets, we continue to identify and pursue strategic acquisitions that will enhance our position for key identified growth opportunities. Our approach will be disciplined. Any acquisitions must have a clear strategic purpose and meet our stated return requirements. We have an attractive pipeline across the 3 growth pillars. Our task is to convert the right opportunities into profitable services while continuing to improve the performance of the businesses we operate today. To conclude, I believe Kelsian is well positioned for the next phase of this development. This confidence is grounded in both our proven capabilities and in the opportunities we actively pursuing growing in the United States, competing for regional bus franchise in the U.K. and adding to our contracted operations across Australia, Singapore and New Zealand. We have a more focused commuter and contracted transport portfolio, supported by long-term government and corporate customers with the divestment reducing our exposure to discretionary consumer spending and lowering sustaining capital requirements of the portfolio. Our defensive earnings have protections fuel price movements and other inflationary pressures through direct contract indexation mechanisms or cost recovery arrangements. The FY '26 result demonstrated how these protections support the resilience of the business. We operate established platforms in our existing markets with their scale, local expertise and customer relationships supporting further growth. Our markets offer strong organic growth with a pipeline of contract opportunities across all 3 operating divisions. And we're also actively exploring several attractive acquisition opportunities. The last 2 years have shown how we execute against priorities. Now we plan to build on that progress, retain and improve the core business, deliver on the contracts already won and convert our pipeline into sustainable growth in earnings and returns. I'm confident in our people, our operating platforms and the opportunities ahead, and I look forward to continuing to report to you on our progress. Finally, I would like to thank the Board and also thank all of our people across the group for their dedication and the service they provide to our customers and communities every single day. To our shareholders, thank you for your continued support. I'll now hand back to Fiona to continue with the meeting.

Thanks, Graeme. We'll now move on to the formal part of the meeting. The notice of meeting was distributed to all members on the 25th September 2026 and lodged with the ASX on the same date. A copy is available on the Kelsian website. As Chair of the meeting, I will take the notice of meeting as read. The notice of meeting provides details of the motions to be put to this meeting and I will give shareholders the opportunity to ask questions and comment on each motion. Today, we'll be voting on all resolutions by conducting a poll. I'll go through the voting instructions again at the end of the meeting, and where members have a reasonable opportunity to speak. On entry, you each will have been issued with a card, a pink card that entitles you to vote on Resolutions 1 to 6 and to ask questions; an orange card that entitled you to ask questions but not to vote; or a white card for visitors who cannot vote or speak at the meeting. Only holders of the pink cards are entitled to vote. The poll for each resolution will be open during each item and the polls will be conducted for all resolutions at the end of each -- of the meeting. I have been advised by our share registry that all proxies received have been checked, and I declare them valid for the meeting. The proxy votes for each resolution will be displayed on the screen for information. A summary of proxies and voting outcomes will be lodged with the ASX once finalized. As Chair of the meeting, I will vote all directed proxies in accordance with directions given by our shareholders. I'm also holding open proxies as Chair of the meeting. These will be voted in favor of Resolutions 1 to 6, where I have been duly authorized to do so. Any directed proxies not voted at the AGM automatically default the meeting chair, and I will vote those as directed. In accordance with the company's constitution, each shareholder entitled to attend and vote at the meeting is entitled to a direct vote on a resolution. I will provide an opportunity for questions and comments in respect of each of these items as were introduced. We'll also outline proxies received for each resolution as they are put to the meeting. Shareholders and proxy holders will also be able to ask general questions relevant to the AGM near the end of the meeting. At the appropriate time, please raise your pink or orange card to indicate that you have a question or comment you wish to make. When I acknowledge you, please wait for a microphone to be brought to you, state your name and put your question or comment to the meeting. I do ask that you keep your question short and to the point, and each member should restrict themselves to no more than 2 questions per shareholder or proxyholder to enable as many shareholders to participate as possible. We'll endeavor to answer as many questions as possible in the time allocated but deserve the right to rule out questions not relating to the meeting or out of order. There are 7 items of business on the agenda, with 6 of those items containing resolutions as listed in the notice of meeting and before the meeting today. The first start of the business before the meeting is to receive and consider the financial report, the director's report and the auditor's report for the year ended 30 June 2026. No vote is required for this item. The financial statements have been made available through our website and lodged through the ASX.

Now is the right time to ask questions about the business or anything in the financial report, the Chair's report and the group CEO report. We also have Nigel Stephenson here from Ernst & Young, our external auditors. Nigel was able to answer any questions that relate to the conduct of the audit, the independence of the auditor, Kelsian's accounting policies and the preparation and content of the auditor's report. If you have any questions on the remuneration report, could you hold them to the next item, please. So I now invite any questions you may have on the financial statements or the company's operations, and please raise your pink or orange to indicate. And James. Thank you.

Good morning, Chair. My name is James Han. And along with my colleagues, GregorConnell and Tony Greco, we represent the Australian Shareholders Association. Today, we represent 16 shareholders with 138,000 shares, and thank you for meeting with us and discussing issues that we brought up. So the general meetings information, I have a couple following questions. I had 3, but I think you've answered one. As a background, I will just say from our observation, Kelsian is in a competitive business environment operating in 5 different regulatory environments, Australia, U.K., U.S., Singapore and the Channel Islands, and 3 transport industry domains, buses, motorcoach and marine. Necessary skills for the Board and operating business include government procurement, industrial relations, service performance economics, franchising and the list goes on. The first question I had that I think has been adequately answered is how do you determine the capital allocation and pricing of each different contract in each to maintain profit above weighted average cost of capital. If you wish to say more on that you can, but we are okay with the statement of 2% being the target for this coming year. How are the skills required by both the Board and the Kelsian organization, identified, tracked, managed and developed to ensure opportunities can be identified 1 and executed for the long-term benefit of the company, including customers and shareholders. So basically, what we're asking is, how do you guys identify the that are required and then go about putting them into your organization because we see it as having a fairly high level of complexity. And just quick question if the chair wishes to answer it. What have been your major challenges in the past 12 months, for example, divesting tourism business, division, renewing the Board or changing companies management, which is the acknowledgment that you guys have basically been through the ringer. So feel free to make a comment on that.

Thanks, James, and welcome. Good to see you again, and Greg and Tony. I think you've actually answered the questions you asked, but I will have a bit of a go, and I might hand to Graeme because I know you heard from me last week, so you might want to hear from Graeme's perspective. I'll talk to the Board, and I did mention in my address that, obviously, with the diversity of thinking, it's really important to pull together a board that has a lot of different cross-section of skill sets, international and local experience, industry experience, and the list goes on. My role as Chair, I worked closely with the Board to make sure we've got a really clear succession plan in place and to make sure that we feel that we are getting enough refreshment of the Board. I do feel really comfortable that we have had some really solid refreshment and some great additions to the Board, and I'm really comfortable that we've got a good Board moving forward for the next stage of calcium. In terms of attracting those people, it's obviously, I was clear to say that today, we've got a recruitment process in place where we've done a global search, and we look forward to announcing something at the right time about our next Board Director. I might hand to Graeme on the -- around the retracting of talent globally. I think that was another question.

Thanks, Fiona. I mean I think it's clearly a very important issue for us. At the end of the day, we are a people business. I mean, most of our operations are moving people, but we also employ 13,300 people across soon to be 5 different countries, and that does come with these challenges. I think the important way to understand our approach to how we manage that is we do consider ourselves a decentralized business. And what I mean by that is we do actively try to empower our people who are on the ground in each of those jurisdictions to be able to make the decisions and the solutions, the problems that they have in their individual market. So our job essentially is not an easy job, but we -- our focus is making sure we are working to have the right people on the ground in those locations who have the capability, capacity and knowledge to make the right decisions for their local environment, which means we are not trying to solve the problems of 5 different countries and 3 different sub industries that we operate in, centrally in the 1 location here in Adelaice. Our focus is very much decentralizing and empowering our important people in each of those markets to make sure they do what is right for the challenges that they face.

What was your greatest challenge of the year?