Port of Tauranga Limited (POT.NZ) Earnings Call Transcript

[Foreign Language] Good afternoon, everyone, and a really very warm welcome to this year's Annual Shareholders' Meeting of the Port of Tauranga Limited. And I'd also like to welcome and acknowledge the [ AV ] of the Tauranga [indiscernible], who are here. My name is Julia Hoare, and I'm privileged to share this wonderful company. Before we start, the Mercury Baypark have some housekeeping notes that they've asked me to pass on to you. Firstly, in relation to emergency evacuation. In the very unlikely event of an emergency, the fire alarm will sound throughout this theater here. So please make your way to the nearest exit, and move toward the emergency assembly points which are located in the car parks outside, and please remain outside until you are instructed but it's safe to return. Now you'll note that today's meeting is being webcast live for the benefit of those shareholders and others who are unable to attend in person. And this is really part of our commitment to shareholders making the meetings as accessible as possible, regardless of location, though I'm very delighted to see so many of you still here in the room with us today, which is fantastic. But we welcome all of you that are participating online through our virtual meeting platform provided by our share registrar, Link Market Services. We hope that holding a hybrid meeting as we are today is going to support greater participation and enable much greater engagement with our shareholders. So we welcome you all whichever forum you are joining us today. As you'll appreciate, this is a formal meeting and there are certain formalities that we'll need to work through. So please do bear with me. The company's secretaries confirm to me that the notice of meeting were sent to shareholders and other persons entitled to receive it on the 21st of September 2023. As a quorum is present, I have the pleasure informally declaring this meeting open. Present today amongst us are our auditors, Matt Matuschka from KPMG, our lawyers, and we got Montie Baskett from Holland Beckett Law. And we've also got our share registry managers Link Market Services. And with us today, Ashcroft, Stan Malcolm and Brendon Jarvis. In keeping with best practice, we'll be conducting a poll on each of the resolutions and of those that were listed in the notice of meeting. And for those of you who are here with us today in Tauranga, you'll be able to cast your vote by filling out the form you either brought with you or received when you entered the room by the registration desk today. And this will be collected towards the end of the meeting. For those of you who are participating online through our virtual meeting website, you'll be able to ask questions and votes once you have validated your registration. To vote, you'll need to click the get voting card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate that. And then please mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. And for those online, once you have made your selection, please click the submit vote at the bottom of the card to ensure that you lodge your vote. And if you've got any questions, please can you refer to the virtual meeting online portal guide and use the helpline specified if you require any further assistance. For those of you in the room, there will also be an opportunity after the conclusion of today's meeting to meet with your directors and also your management team. And we hope you will join us for some refreshments at the conclusion of the meeting. And in addition, we're really delighted to continue our historic tradition of being able to have our port tours. And so I'll discuss the logistics of those port tours for those that are going to join us after today's meeting at the conclusion of today's meeting. To start off with, I would like to take this opportunity to introduce your directors to you. We have Doug Leeder -- well it's in a different order from what I put, that's okay. Alison Andrew, Dean Bracewell, Sir Robert McLeod and Brodie Stevens. And our Director, Alastair Lawrence, is unfortunately an apology for this meeting today. I'd also like to introduce our management team to you. And on the podium with us today, I've got Leonard Sampson, our Chief Executive; and Simon Kebbell, who's our Chief Financial Officer and Company Secretary. And we have the other members of our leadership team here in the audience today, and I'm just going to ask them to be able to stand up. So at least for those of you who are in the room and want to corner them afterwards when you're having a cup of tea or coffee, you can actually take questions as well to them. So if I could ask Blair Hamill, our GM commercial to stand up; Dan Kneebone, our GM Property and Infrastructure, Mel Dyer, our GM Corporate Services; Pat Kirk, our GM Health and Safety; and Rochelle Lockley, our GM Communications, who's actually back of the room because she's organizing today's proceedings. And I'd really like to thank all of you as shareholders for your participation in today's meeting. It's a great opportunity that we get once a year to actually be able to talk to you and hear your perspectives either in the room or as I say, over a refreshment at the end. So -- and also online, obviously, for you online. So thank you all for your participation today. My fellow directors and I intend to vote all of the discretionary proxies we've received in favor of the resolutions as set out in the notice of meeting and less specifically disqualified under the resolution. Now I'd like to just start with my address and really talk about the highlights of the past year for the Port of Tauranga Group. In the 12 months to June 2023, it was certainly a year of 2 halves. In the first half, we were assisted by an increase in container transshipment, and we had a really welcome return of cruise ships over the summer. In the second half of the year, we experienced the impacts of extreme weather events in the North Island. Whilst Port of Tauranga was fortunate enough not to incur any damage to our port infrastructure, there was significant disruption to transport networks and some cargo volumes were seriously affected. Cyclone Gabrielle, in particular, caused much damage across the forestry sector. This resulted in early harvesting of some cyclone-damaged trees and as a result of that, export log volumes through Tauranga have remained strong throughout the year despite the global log prices. Since April, we've also seen a significant decrease in imported container volumes due to a weaker domestic economy. And this has been reflected in the national trade data reported by Statistics New Zealand over the last 2 quarters. But despite these impacts, I'm really pleased to advise that the company performed very well and produced another year of excellent results. Group net profit after tax increased 5.2% on the previous year to $117.1 million. This was largely driven by parent company earnings, which increased 7.7% and whilst associate company and subsidiary earnings declined by 10.7%. Total revenue was $420.9 million, which was an increase of 12.2%. However, costs also grew substantially, especially for labor and fuel. Operating expenses increased by 15.6% to $210.6 million. In addition to this, renegotiation of our contracts with KiwiRail led to significant increases in rail costs, which is likely to have had caused some modal shift for importers in particular. The Board declared a final dividend of $0.088 per share to bring the total dividend for the 2023 financial year to $0.156 per share, which was a 6.1% annual increase. As New Zealand's largest port, we continue to invest in capacity, resilience and efficiency of the New Zealand supply chain. We've recently opened the Ruakura Inland Port in Hamilton, directly connecting the Waikato region to our facilities in both Tauranga and Auckland. It's a 50-year 50-50 joint venture with Tainui Group Holdings or TGH as we refer to them as. In TGH, we found a long-term partner who shares our vision and our values. The partnership brings together expertise in cargo handling and logistics and TGH's deep regional connections, and we look forward to strengthening our relationship with them. Ruakura Inland Port is a real game changer for the Upper North Island freight network. It unlocks environmental and economic benefits for importers and exporters who are based or soon to be based in the Waikato. Inland ports play a really crucial role in our vision for a more integrated and efficient upper North Island supply chain. And this investment by us is the latest on more than a decade of developments designed to make sure that New Zealand remains competitive internationally by facilitating visits from bigger ships. And our strategy supports New Zealand's decarbonization efforts. It addresses shipping capacity constraints and also protects our nation's access to global customers. But there is one crucial development, which is urgently required. And as no doubt, you will all be aware, we have been trying to obtain a resource consent to convert some of our land at Sulphur point into a third containership berth. This development has been included in the regional coastal environment plan for decades, and formal consultation began back in early 2019. An environment court hearing on the application was held across three weeks in early March. We're still awaiting outcome of the court's decision, but we are hopeful of an imminent resolution. This berth project is absolutely critical to New Zealand's economy. Without it, importers and exporters will face capacity constraints within a few years. We already have a number of weekly services on our waiting lists for berthing windows. The project is an essential one for building resilience as well. The catastrophic weather events that we had earlier this year demonstrated once again, New Zealand is in need of greater resilience and capacity in our national supply chain. Concurrently with this, we are pursuing our plans to automate a new container storage area at the terminal. The automation is planned to both accelerate our decarbonization progress and increase our capacity within our current footprint. Our biggest source of greenhouse solutions is diesel use, so opting for an all-electric automatic stacking crane offers us significant efficiencies over an equivalent diesel straddle operation. And Leonard is going to expand more on this when he gives his address. Our capacity building plans are critical for the future of New Zealand Inc. We simply can't meet the trade needs as a nation without investment in infrastructure, particularly in the North Island freight network, including ports. Unfortunately, the current regulatory framework does not always encourage nor facilitate investment in new or existing infrastructure even when it's environmentally sound and/or is critical to the national economy. In our view, there are challenges in upgrading existing assets to ensure they're fully utilized. And as a result, adoption of new technologies such as automation could also be delayed. And therefore, we're missing out not only on the associated economic benefits, but environmental benefits as well, including our decarbonization opportunities. The new government has an opportunity to smooth the path for sound investment as well as deliver the required transport infrastructure to facilitate a truly integrated, resilient and cost effective Upper North Island supply chain. Port of Tauranga is strongly focused on decarbonization as part of our commitment to long-term sustainability. We've made significant progress in improving fuel efficiency and reducing waste. And in accordance with New Zealand's commitment under the Paris Agreement, we're committed to reaching Net-Zero greenhouse emissions by 2050. Our Scope 1, 2 and 3 emissions have been audited annually since 2017. We're undertaking a large amount of work at the moment as we prepare for the new and comprehensive climate-related disclosures regime. We've engaged external expertise to also assist us with this work. And we've also been supported by external advice at a governance level as well. We'll produce our first audited climate-related disclosures report with our annual results in 2024. And we're also mindful that our future disclosures would also need to consider a new regime, which is the task force on nature-related disclosures. As we promised at last year's annual meeting, we have undertaken a thorough benchmarking exercise on Directors' fees, and I thought it was appropriate to address it here as well as when we get into the resolutions. And we did sent quite a bit of information out which accompanied these resolutions and have shared with you a summary of the independent report, which was prepared by Ernst & Young. Ernst & Young provided us with benchmark data for a comparator group of 19 companies of similar size or operations. What we are recommending to you today is to raise the Port of Tauranga directors' fees to the top of the bottom 25 percentile of that comparative group, meaning that the fee level of the 75% of companies in this group will still remain above ours, and I'll comment more on it shortly. Our last director's fee review was done in 2021. And since then the regulatory and compliance landscape has continued to evolve. The remit of our audit committee has changed and has been expanded to include sustainability and the broader obligations that we have now under the climate-related disclosures regime. The Board has also recently set up an additional Board subcommittee, the Health and Safety Committee. And that's to assist us in focusing even more deeply on health and safety practices and responsibilities. Whilst we consider that we do have a strong health and safety culture, the performance of the New Zealand port industry has rightly been in the spotlight for many years, and we must continue to pursue continuous improvement. There is always room for improvement, and everyone needs to be able to go home safely. We believe our recommendation sets the fee pool at a level which will continue to attract high-performing directors. And we're seeking shareholder approval for an increase in aggregate director's fee pool to $1.125 million. In that figure, we've included a headroom of 16%, but I want to really stress that it's not our intention to increase the base director's fees to the limit of that pool in this year. And we've set out the actual increases in the notice of resolution. But rather, what it will do is give us flexibility to accommodate additional duties as they're required, the ability to adjust directors' fees in future years in accordance with CPI if we think that's appropriate and also gives us ability to manage board transitions and Board appointments, which until recently, we had real difficulty when we were bringing on new directors and wanted some sort of crossover of Director. So we will deal with the resolution in due course in the formal part of the meeting, but I just felt it was appropriate to give you some broader perspectives now. On behalf of the directors and the company, I'd also like to expressly thank Sir Robert McLeod, who is soon going to retire from our board after 7-years of service. So Rob is one of the 2 directors who was appointed by our cornerstone shareholder, Quayside Holdings. And as a result of Rob stepping down as a chair of Quayside, he will cease to be a Port of Tauranga Director. So Rob's insights, his expertise and his sage wise words, his commercial acumen, his sound judgment have been very, very valuable to us. as a board and a company over the last few years. And Rob, we will miss you as part of our team. As announced last week, Quayside Holdings has recommended the appointment of Fraser Whineray as their second representative on our Board. For those of you who don't know Fraser, he brings a wealth of executive experience, including as Former Chief Operating Officer at Fonterra and Chief Executive of Mercury. He has also held governance positions with Tilt Renewables, Opus which is now WSP, and AgriZero. And his deep understanding of global trade and supply chains will be invaluable as we continue to invest in resilience and capacity for the benefit of the New Zealand supply chain. Fraser is going to replace Sir Rob at the end of October. Now, Fraser's announcement by Quayside was actually outside of the specified timeframes that we had to be able to include his appointment in this resolution process for 2023. And as a result, although he will join our Board with effect from the first of November, you will have the opportunity to vote on his appointment at the 2024 Annual Shareholders Meeting. I'd now like to invite Leonard to share his update on the company's trade and operational performance over the last year and to give us some guidance on what we can expect 2024 to look like.

Thank you, Julia, [Foreign Language]. As Julia described, it was a year of 2 halves, as we moved away from the congestion that has plagued our operations, whilst at the same time, balancing the impacts of a downturn in import demand and sluggish global commodity prices. Once again, the resilience of our cargo, long-term freight agreements and key customers have helped us remain strong throughout the period. In March this year, New Zealand ports reinstated pro forma berth windows after more than 2 years of extreme congestion. Prior to March, more than 2/3 of vessels arriving at Tauranga were off schedule, putting unprecedented pressure on our facilities at the container terminal. And as you can see from this graph, the impact on storage volumes at the container terminal due to the lack of shipping reliability has been significant, with over 5,000 containers more than usual prior to early -- late 2020. The improvements in March and schedule integrity are helping us return productivity back to normal levels. Our crane rate, which is the moves per hour by Crane has over the last 3 months average 30 moves per hour after dipping to the low 20s during the peak of the congestion period. If we move now looking at cargo trends over the past year, total trade decreased 3.5% to 24.7 million tonnes. Imports decreased 7% to 9 million tonnes, whilst exports volumes decreased 1.5% to 15.7 million tonnes. Our container volumes for the year, reflecting a softer import demand in the second half of the year decreased 5.1% to 1.18 million TEU. However, our log exports increased for the year, 2.6% to 6.2 million tonnes with an unexpected boost in the second half of the financial year due to the influx of cyclone- damaged trees that were harvested early. Our dairy export volume, including transshipment cargo increased 2.7%, whilst the meat exports increased 3%. Kiwifruits this year were impacted -- Kiwifruit exports this year were impacted by weather and freight quality issues, decreasing 20.3% compared to the previous year. However, the long-term outlook for kiwifruit remains strong. We once again welcomed Cruise back with 88 cruise ships over the last summer season and the first cruise ship of this season arrived on the October 18. At present, we have 112 cruise vessels booked over the next few months, which is getting close to our record of 116 in 2018, 2019. We're excited about the new business opportunities presented by the Ruakura Inland Port, our joint venture with Tainui Group Holdings. The inland port, which is directly connected via rail to Tauranga container terminal as well as the MetroPort Inland Port in Auckland as part of the Ruakura Superhub, a giant logistics and commercial precinct near Central Hamilton. The Superhub's first tenants include Kmart, which has started importing containers through the inland port with the new dairy cool store due to start exporting next month. Our subsidiary company, Quality Marshaling, is operating the Inland Port on behalf of the joint venture entity. This facility gives us some headroom whilst we pursue our plans to increase capacity at the Tauranga container terminal with the construction of a new berth and introduction of terminal automation, both within the current footprint. We are close to selecting a vendor for the automation project, which will help us to improve safety, reduce fuel consumption and reduce greenhouse gas emissions. We have already completed an $11 million electricity infrastructure upgrade in anticipation of the development and the new technology involves fully electric rail-mounted gantry cranes, together with manned hybrid straddles running between the container stack and ship-side. I will now play a short video that demonstrates how the berth extension and automation developments will work together. [Presentation]

Similar automation models already -- are already used in some of the world's most efficient container terminals, including Singapore, Shanghai, London, Antwerp and Melbourne. I can reassure you that we will not be testing new or unproven technologies. In the meantime, we are continuing to invest in new equipment that is more fuel efficient, improve safety and increases productivity. Last month, we received four new hybrid straddle carriers, which are currently being commissioned in the terminal. We already have 3 in the fleet, and they have proven to be more than 25% fuel efficient than our existing diesel electric models. In May this year, we took delivery of our new pilot launch, the Troy Evans, named after the late pilot and Tug master who helped design her. Troy was an internationally recognized champion of marine safety, and the new launch contains a raft of new safety features. We've recently dismantled the oldest container crane in our fleet, which was commissioned when the container terminal first started in 1992. And in January next year, we will start the assembly of a new crane after it arrives from the Liebherr factory in Ireland. From a safety perspective, Port of Tauranga continues to take a lead role in port sector safety, with involvement in both the port industry association and Port Health and Safety Leadership Group. Our own Pat Kirk, GM Health and Safety, who I'm sure you met before, is currently the Chair of the Port Industry Association and is part of the sector-wide leadership group. Pet has been heavily involved in the development of industry-wide initiatives such as the fatigue risk management system and the draft Approved Code of Practice. Both initiatives have been developed in consultation with businesses, unions, regulatory agencies, including Maritime New Zealand and Worksafe. Port of Tauranga continues to take its environmental responsibilities very seriously with a special focus on air and water quality in and around the port. Dust generation from port activities complies with the national environmental standard for air quality, but that is not good enough for us. In the past few years, we have installed additional wind fences, increased wharf sweeping and improved traffic management and cargo handling systems, and we've utilized water misting hoppers to handle dry cargo from bulk ships that operate on the port. We've also strictly enforced wind limits on handling potentially dusty cargoes with newly installed alarm lights to alert stevedores when wind speeds exceed safe thresholds. Pollution monitors on the port boundary show a significant improvement in air quality since 2019 and over the past year, we've increased funding for air quality monitoring and within the port area, which has helped to facilitate the Bay of Plenty Regional Council to introduce supplementary air sensors into the nearby residential areas. The council is now posting real-time air quality indicators on its website with the 12 new sensors designed to detect particulate matter, including salt-laden air as well as nitrogen dioxide, which is generated from petrol and diesel vehicles as well as vessels. Port of Tauranga has an extensive water quality monitoring program as part of our stormwater resource consents where we test for suspended solids, heavy metal toxins and other contaminants. All monitoring results are well within the current consent limits as well as the Australian, New Zealand Conservation Council guidelines for marine water quality. However, as with air quality, we are not content to just comply with the consented conditions. And in this regard, we are currently investigating new technologies to further improve stormwater quality, particularly on the older Mount Maunganui wharves. As Julia mentioned, we have started our process of preparing for the new climate-related disclosures regime and with increased frequency and intensity of major weather events, these are being factored into our infrastructure planning. It is likely we will continue to see an increase in operational delays due to extreme weather events as well as higher insurance premiums and other associated costs. From an emissions perspective, our total greenhouse gas emissions for the year decreased 7.3% to just over 40,000 tonnes. This was primarily due to reduced cargo However, with total -- whilst total emissions reductions remain a priority, we are also closely monitoring our emissions intensity, which is the greenhouse gas emissions per tonne of cargo. And in this regard, I'm happy to report that we reduced our greenhouse gas emissions intensity by 3.8% over the past year. Of course, our biggest opportunity to significantly reduce emissions further lies in automation. The all-electric automatic stacking cranes produced significantly fewer emissions than an equivalent diesel straddle operation. The trend to larger, more efficient vessels also has significant benefits for New Zealand's overall export emissions profile. They produce fewer greenhouse gas emissions per container and this will continue to encourage New Zealand shippers to aggregate to the big ship services that currently can only call at Port of Tauranga. I'll now provide a quick update on trade in the first quarter and our outlook for the year 2024. As expected, we've continued to see global economic volatility with total trade for the period down 9% in the first 3 months compared to the same period last year. Coastal shipping changes, along with an early end to the kiwifruit season, slow start to the dairy export season have all been contributors. Softening international commodity prices and demand has had an impact on some of our key exports as shippers have hit pause to instead focus on building inventory or looking for alternative export markets. Our total container volumes for the period have decreased by 20.9% to just over 250,000 TEU, with the main impact from reduced transshipment volumes decreasing 31% as a result of changes in vessel rotations. Our containerized imports are down 23% on the previous year, reflecting weaker domestic consumption and as Julia mentioned, significant increases in rail costs. However, we do expect some recovery in the next few months with the usual pre-Christmas boost to imports. Based on the first quarter's results, we expect full year earnings to be in the range of $95 million to $107 million. As always, our strong diversity of cargo, income streams and underlying operational efficiency will continue to hold us in good stead. It is clear, however, that rising costs, softer international commodity prices and geopolitical conflicts will continue to create challenges for trade. Before I wrap up, I'd like to thank our team members for their dedication. This photo you see here was taken just a few weeks ago when our staff and family supported, The Keep New Zealand Beautiful Clean up, by collecting over 150 kilograms of rubbish from the streets and beaches of Mount Maunganui. I'd also like to thank our business partners for their continued support, especially in helping us get projects such as the Ruakura Inland Port up and running. And thank you, too, to our customers who have remained patient and understanding through what we now term the congestion years. Finally, my appreciation to you as shareholders. for your continued support. Together, we are connecting New Zealand and the world. [Foreign Language].

Thanks very much, Leonard. I'd now like to turn to some of the more formal business of the afternoon. And at first, we'll just discuss our integrated annual report. The 2023 integrated annual report containing the financial statements and the auditor's report for the year ended 30 June 2023 has been sent to those of you who have requested a copy and it's also available on our website. And for those of you in the room who so would like a copy, there are a number on the front desk as well, which you're welcome to take a copy of. And I'll be very happy to take any comments or questions that you may have in relation to this report, during the general discussion after the rest of the formal business has been dealt with. But I now propose that we receive the annual integrated annual report of Port of Tauranga for the year ended 30 June 2023, including the audit report and the financial statements. Ladies and gentlemen, now we come to the formal part where we will address resolutions. And the matters requiring resolution was set out in our notice of meeting. which you will all have received. So moving to these resolutions. As I mentioned earlier, I propose to call a poll on each of the resolutions. Many shareholders have already voted by proxy, and the results of the polls will be announced by the stock exchange after our meeting today. So our first resolution today relates to the reelection of a director. Mr. Douglas William Leeder, will retire at this meeting and being eligible, offers himself for reelection as a Director of the company. Mr. Leeder was appointed to the Board in October 2015, and as a Director of the company pursuant to clause 26 of the Constitution and now offers himself for re-election. Biographical details are contained on Page 61 of the 2023 integrated annual report, also in our notice of meeting and on our website. So we'll now deal with the re-election of Mr. Douglas William Leeder. Firstly, your Board recommends Mr. Douglas William Leeder to you as a Port of Tauranga Director and unanimously supports his reelection. So I'm going to invite Doug to address this meeting on his proposed reappointment.

Thank you, Julia. [Foreign Language]. Firstly, could I acknowledge you as shareholders and the owners of this business, acknowledge you for your participation here today. It's always very encouraging to see the level of interest and the levels of attendance that we see as a Board as you turn up to these AGMs, it is sincerely appreciated. And as I said, the Board really appreciates the level of interest that you have because, as I said, ultimately, you own this business. As the Chair and the Chief Executive have outlined in the past decade from my observations, the growth in this business has been significant, and it has been stellar. However, with growth comes expectation. And for those of you who reside in Tauranga or live close to Tauranga, you all understand the growing pressures in terms of traffic congestion, the pressures of growth in terms of infrastructure. And frequently, the cause of that in my view is unfairly pointed to the Port of Tauranga. The reality is that the pressures on growth are multi-factual. You do have, for instance, a nice climate here. Tauranga and its beaches are a nice place to live. We do have a very successful infrastructure in terms of supply network, in terms of what's being delivered by the Port of Tauranga. That supply chain infrastructure is an attraction to other businesses who have a high reliability on the continuity and the reliability of that supply chain. Therefore, businesses are attracted to Tauranga and the resulting area. Alongside the establishment of new businesses, our other entities that come to Tauranga to support those new businesses. Those are some of the factors that are driving the pressure in terms of growth in Tauranga. But however as I said, with growth comes expectation. And that then leads to the Board's focus -- one of the Board's focuses, which is a focus on our license to operate. I can assure you that the Board has a very high focus on its firstly issues such as health and safety, issues on its regulatory compliance and issues around its social license to operate and being a good corporate citizen, not only with the inference of Tauranga, but within the wider region. And now I can only emphasize that, that focus going forward is going to continue. What I would like to say is that sitting behind the shareholders here and what I would also like to acknowledge is the employees of the Port of Tauranga as well as the extended workforce that work within the environment of the Port of Tauranga. Those people, together with yourselves are the biggest advocates and advocating to the wider community on the efforts that the port is making in terms of being a good corporate citizen and addressing those issues in terms of its license to operate. And I'd just like to acknowledge because I see, especially on social media, the contribution that those people make in terms of advocating. Yes, the ports a nice place to work. It does do its very best in terms of addressing some of the issues that some of the community would like us to address. So my closing comments are that I have enjoyed my time here to date as a representative of your shareholding on the port, I believe I can still offer a worthwhile contribution and I would ask for your continued support for my reappointment to the board. [Foreign Language].

Thanks for that, Doug. I'd now like to propose that Mr. Douglas William Leeder be reelected as a Director of Port of Tauranga Limited. So I'd like to open it up before I ask you to do your vote and ask if there are any matters for discussion or questions you may have as shareholders or those entitled to ask questions, relating to the resolution for Mr. Leeder's re-election. So I'll start with, are there any questions from the floor here? No, I don't see any. Are there any questions online? Thank you. There are no questions online. So as there are no questions from shareholders, I would like you to do your vote by marking your cards or online either for, against or abstain in the appropriate place. For those of you who are participating through the virtual meeting website, you should now submit your votes, and I'll just give you a few seconds to do that. Thank you. [Voting]

The next item on the agenda relates to directors' remuneration where shareholder approval is being sought to increase the director's fee pool by $245,000 from $880,000 plus GST, if any, to $1.125 million per annum plus GST, if any. I did spend a little bit of time in my address earlier talking about this. And this is a result of external advice we sought and Ernst & Young provided a report to us. And they have recommended that we raise the Port of Tauranga director's fees to the top of the bottom 25 percentile of our comparator group. And the summary of that report is actually available on our website and also at the investor center. And the composition of that comparative group is also available for you to view. In terms of the pool itself, the increase in the directors' fee pool includes a headroom of about 16%. And and the proposed changes in the directors' remuneration as set out in the notice of meeting. And as I mentioned, it's not proposed that this headroom be allocated to directors, but rather, there will be an increase in the current year, but it gives us the ability to adjust as we move forward in future for issues that may arise. The company will be required by the NZX listing rules to disregard any votes cast on this resolution by any director and any person associated to that director is defined in the NZX listing rules, whether directors intended to receive a payment or benefit from the approved remuneration pool. Except where the vote is cast by a director or one of their associated persons as a proxy for a shareholder who is entitled to vote and that director or associated person votes in accordance with the express instructions to vote for or against a particular resolution on the proxy form. So I now propose the directors' fee pool be increased by $245,000, from $880,000 plus GST, if any, to $1.125 million per annum, plus GST, if any, with the aggregate amount payable to all Directors of the company for their services as Directors, to be divided amongst the directors as the Board may determine. I'm going to open it up to questions and comments and discussion. And we do have -- we have received 3 questions online. So I think what I will do is I will address those 3 questions first, and then I'll open it up to those of you in the room and also online. The 3 questions that we have received online were quite similar in nature. So I'm going to give my response as one longer response. And 1 of the 3 questions was quite detailed. So I think that we have truncated it to capture all the pertinent points that were raised.

So the first question, I'll read out the 3 set of questions first, and then I'll give you a response to them. So the first question is from [ Mr. Timothy Gilbert Grove ], who expressed that in his opinion, it's generally wrong to use benchmarking to increase fees for directors in public companies. He also noted his disappointment with the share price of the company and queried an increase in fees given the current share price performance. And Mr. Grove does not support the proposed increase in directors' fees. The second question came from [ Mr. Peter John Ansley ] who queried what makes the directors think the oversight of a reduction in share value of 13% over the last 12 months deserves an increase in Directors' fees. And the third question comes from [ Mr. Bruce Raymond Walker ], who asked for justification of the increase in directors' fees when directors are on numerous boards across the country, and we have insurance paid for us to cover any misdeed or liabilities, and he thought the level of directors' fees was obscene. So let me respond to those 3 questions together. And firstly, I'd like to comment on the share price performance. And we as directors and the company are obviously very disappointed with the share price decline during the past year and particularly as it comes off the back of 3 consecutive years of record performance by the company. And in our view, the decline is actually a result of a number of factors, including at the moment, the current high interest rate environment, which alters people's investment decisions and also the current economic conditions. This is actually not a Port of Tauranga specific issue as you'll appreciate if you've got a diversified share portfolio because a number of listed companies are similarly impacted. Port companies are long-term infrastructure assets and investors generally gravitate to such assets for their reliability and certainty and it's certainly not been helpful for us that the environment court decision has been delayed and it hangs over us still, and it does provide some uncertainty, which I think is also being reflected in our share price. As I mentioned, I'd just like to highlight that over the last 3 years, the Board has overseen strong growth in the company's profitability and also in the dividends we paid to you with to you as shareholders. We're embarking on a major -- we're embarking on major transformative capital projects, and we intend for those to continue to drive performance and profitability into the future. And whilst I can't control the share price, the Board and I are committed to delivering on key strategic objectives and generating long-term sustainable growth for you, our shareholders. In relation to the specific benchmarking question, it is standard and best practice to benchmark not only directors' fees but also executive management remuneration using a comparator group, and that is what we've done. Our comparator group contains 19 companies, and the benchmarking exercise was undertaken independently of us by EY. And as I said, we will end up sitting at the top of the bottom 25 percentile of this growth for fees. So they are the questions we had online, I'm sorry, in advance. So I'd now like to ask if there are any questions online, and then I'll open it up to the floor. Nothing. There's no questions online. Would anyone from the floor like to ask a question. And if you do, I'd ask you to raise your hand and we'll bring a microphone to you because for those online, they can't hear you unless goes through the recording system. There's a couple of questions. I'll start over here.

Yes. My name is Luca. I just wonder if you had that benchmark fee wasn't the range, you'd bugger off elsewhere, we wouldn't have your services here. I hope you don't.

Look, as I said before, -- we use benchmarking exercises to try and be as objective and as independent as we can. From a company perspective and a Board perspective, we want to make sure that we've got really good people at the helm that are going to drive the company forward and drive its strategic objectives forward. The way that we can get independent advice is only through using an independent source and benchmarking. And in terms of our comparator, as I say, we are at the -- there are still 75% of those companies, 19 companies with fees in advance of ours. So I think we've tried to be as objective and as reasonable as we can in this process. And I don't wish to comment on the caliber of the benchmarking firms. There was a question over here.

[ Roger Houghton ], shareholder. I was just wondering how many proxy votes have you got for these?

In accordance with the Shareholders' Association, we can't put up the proxy votes until after the completion, they ask us not to reveal that, but we have had votes. Do you know, Simon?

Sorry, Chair not off the top of my head.

Not off the top of your head? Look, I'm sorry, I can't answer that right now. I don't know the numbers. I haven't been given the numbers. Apologies.

But immediately following the annual meeting, it will be -- Sorry, immediately following the annual meeting that will be announced to the NZX so you'll be able to see the proxy numbers.

Could you hear the answer there? No, sorry. What Simon has just said is that we don't have the numbers to hand, but Link Market Services is obviously collected all of those proxy details and at the close of the meeting, once everyone has submitted their votes online and also yourselves here having voted the results we put up on the NZX website as soon as it's available. Are there any other question down here?

[indiscernible] representing proxies to the Shareholders' Association. We were interested in the pool, the headroom. And I'm sorry, I missed you did explain the reasons you wanted that, but I didn't catch that. And I wonder if you just go through those again.

Of course, of course. So in our resolution, you'll see the proposed actual fee increases that we are proposing for directors in the current year. But what it does result in is there is a headroom which is not allocated. And as I mentioned, at this point in time, we have no intention of allocating that headroom will certainly not in the current year. But as we move forward in future, if it's appropriate, we will adjust directors' fees with a CPI or something like that if we think that's appropriate. We also need to be mindful as the regulatory environment shifts and moves. If we have greater requirements for greater committees and greater work we may allocate amounts to those types of committees as we move forward. Over the last 2 years, we've had an issue where we've had to rely on a special NZX provision whereby where we've desired to bring in new directors partway through a period and have an overlap with an outgoing director, and that could be really beneficial for you as shareholders and for us as a company because we get really good continuity. We've had to rely on an overlap that says that the pool can be expanded, technically expanded to cover the fees of that director. It's not a desirable thing to have to rely on an overlap -- on a special provision like that to be able to flex the directors fee pool. So we just felt that, that was also important should we, at some stage, want to have an overlap between directors. So it's not our intention to be awarding massive fee increases to all directors this year, but rather just to address those three issues in particular. Are there any further questions? Thank you. So therefore, it's now time to submit your vote. So if you could please mark either for, against or abstain on the appropriate place on your voting card or in your virtual screen. For those of you that are participating through the virtual meeting website, please now submit your vote and remember to press that button to actually submit it and I'll give you just a short pause here to let you do that online. Thank you. [Voting]

The third resolution relates to our ability to fix the remuneration of the auditor. The auditor general as auditor of Port of Tauranga Limited pursuant to Section 19 of the Port Companies Act 1988, is automatically reappointed as our auditor for the year ended 30 June 2024. KPMG will undertake the audit on behalf of the auditor general. This particular resolution concerns the fixing of the auditor's remuneration and seeks shareholder approval that the directors be authorized to fix the auditor's remuneration. Port of Tauranga statutory audit fees for the financial year ended 30 June 2023 were $357,000, including disbursements. So I now propose that the directors are authorized to fix the remuneration of the auditor. So are there any matters for discussion or questions from shareholders present here or those of you online concerning this resolution? There's nothing online and no one here in the room. Thank you. So again, could you please submit your vote by marking either for, against or abstain in the appropriate place on your voting card or on your screen. And again, for those of you participating online through our virtual meeting website, could you now please submit your votes. [Voting]

Whilst those shareholders online are submitting their votes, I'd actually now like to ask our share register, Link Market Services to come through the room. So they're going to be moving through the room now. And for those of you with voting cards in the room, we'll be collecting your voting cards. And as I said, for you -- for those of you who are online, please make sure you have clicked to submit your vote. And voting is going to remain open until 5 minutes after the conclusion of this meeting. And as I mentioned earlier, the results are going to be announced to the NZX by the end of today and will also be on our website. So I'd now like to move to general business and open up the meeting for general discussion. And this is really the part of the meeting where you have the opportunity to raise further questions that we haven't already talked about. I have got some questions that have been submitted in advance, but what I will do first is open it up to those of you online to see if you have any questions that you would like to pose to us at this point. Nothing online at this stage. That doesn't stop you, for those of you online that want to ask questions if there's anything coming out of the discussion, you still have an opportunity to do that. I'll now turn to the questions that we've received in advance and then I'll open it up to those of you here today. So the first question we have received in advance is from Mrs. [ Moura Gene Ansley ]. And her question is quite similar to one of the questions on the directors' fee questions, which pertains to share value, and she says the share value has gone down by 8% over the last year and when will directors restore the value. And I do think I have talked quite a bit about the share value issue when I talked about directors' remuneration. And I do have to promise to you that directors, we collectively are very, very committed to sustainable growth of the company and our stewardship of it. It's very important to us there is long-term sustainable growth for shareholders. As we talked about in my address, we've just completed Ruakura. We are very hopeful that we will get the berth extension through and that we can take that next stage of real development forward. And we believe that the successful completion and oversight of strategic initiatives should, over time, be reflected in our share price. But thank you, [ Ms. Ansley ] for that question. The second question I have online is from Mr. William Thompson [indiscernible]. And that's to do with the wharf extension, and he said, when will the wharf extension at the port receive approval and what are the reasons for the long delay. And I think as outlined by both Leonard and myself today, we are awaiting the environment court decision on our resource consent and the application was heard in the Environment Court over a 3-week period, which started in early March this year. The development has been included in the regional coastal environmental plan for several decades, so it's always been envisaged. And we did begin our formal consultation in early 2029 -- 2019, sorry. The port applied unsuccessfully for consideration under the Fast Track resource consent processes in 2020 and 2021, before we successfully applied for a direct referral to the Environment Court. We've obviously found our really lengthy process, very frustrating, but we are hopeful of an imminent and hopefully positive decision from the court. Our third question online is from [ Kevin Barry Taylor ], and he has asked whether we have considered having a dividend reinvestment plan. So Mr. Taylor, yes, we considered a dividend reinvestment plan as you'll appreciate, a capital management plan that's going to help preserve cash to strengthen our balance sheet. And we do have a large capital investment plan ahead of us in the near future. However, we also have a very strong balance sheet, and we'll be able to undertake these investments using debt and cash flow. So at this stage, we are not considering a dividend reinvestment plan, but it is something that we may consider in the future if our balance sheet warrants it. So they are the questions I've had in advance. So I'd now like to open up to the floor to see if there are any questions from you here today. I've got a question down here in the front.

My name is [indiscernible]. A few years ago, there were investigations done as a consequence of the problems in the Port of Auckland. My question to you is to advise us whether those investigations are still going on, whether you anticipate any consequences of that for the total harbor infrastructure for New Zealand and in particularly for the Port of Tauranga.