PWR Holdings Limited (PWH) Earnings Call Transcript

Good afternoon. This has been video. So we do have to start on time. So just a couple of small housekeeping things being included, make sure your phone is to turn on [indiscernible]. Thank you. Really appreciate it. And we'll move this moving forward at a regional pace that make sure we don't miss anything. So good afternoon, ladies and gentlemen. My name is Kees Weel, I am the Founder and Chairman of PWR Holdings. On behalf of the Board, I'd like to welcome you to PWR's 12th AGM and the second held at our global headquarters here at Stapylton. We hope you enjoy the tours and lunch today. Welcome also to everyone who could not join us in person who are watching us via our webcast. A copy of the webcast recording will be on our website after the meeting. As quorum is present or formally PWR's 2026 open. Let me first welcome my [indiscernible] Board members. I would like also to extend a warm welcome to executive management team. Also, I'd like to welcome a partner at KPMG, who is here from the company's auditors. Stephanie Davidson, thank you, partner of [indiscernible], the company's lawyers. Phil Klein from the Commonwealth Bank, our company's finances. Unfortunately, Phil has fallen ill this morning, and he sent some of his senior people down. So welcome, and thank you for filling in to Phil. The team from Computershare share registry provider. Thank you. And all our PWR employees, shareholders that are here today. Let me turn to today's meeting which will pursue as follows. Firstly, I will give my Chairman's address. Sharyn will then give her CEO and Managing Director address. Shareholders will be able to -- will be invited to questions after that. We will then take the formal side of the business of the meeting to finish off with general business. So to my Chairman's address. Good afternoon, and thank you. It's a pleasure to welcome you here today to our global headquarters. Also, I'd like to thank those and welcome those joining us on the webcast. Thank you for your continued support for PWR. Well, looking back at the year that was, 2026, when we met here 12 months ago, we'd only just moved into this building and I was stepping down as Managing Director. Twelve months on, the relocation is complete, the team is settled and the facility is doing exactly what we build it to do. Many of you saw for yourselves this morning during your tour. 2026 was a strong year financially for PWR. The company declared a total dividend of $0.08 per share fully franked for 2026, which was double from the year before. Sharyn will talk more about our performance shortly. 2026 is also a year of our people. We grew our team to more than 700 people across our sites globally. With these people, PWR's DNA culture and culture continue to shine through everything that we do and good people are the key to our ongoing success here at PWR. On a personal note, I'd just like to thank our shareholders, our team, our customers, our partners for the support and kindness that have you shown me and my family during my health challenges. It reminded me, again that PWR's strength has always been about its people. Changes in PWR in the last 12 months. In April, the Board appointed Sharyn Williams as our MD and CEO. After we've done a global search and came up a bit short on anybody at all that would match Sharyn. Sharyn brings closely to 20 years of ASX listed executive experience and a long connection to our culture. I will add a small note that she is 1 of our original investors. So when we floated 10 years ago, she did see the light of PWR just in the corner of her eye and she's never let go of the opportunity. So also I'd like to thank -- also I'd like to thank Matt Bryson, who stepped up as acting CEO at a really difficult time and led the business for the most part of the year, through the move and into the period of renewed growth. And I'm also pleased that he has joined the Board as an Executive Director from July 1. He's deep technical and customer knowledge is a massive asset to the board. Just a note on Matthew. Matthew joined me when I was nothing in 2000. I approach Matthew, and him and his wife moved up from Sydney on a wing and a prayer and a promise that I said I have a future for you. I think you can help me. And thank God he came. So he has been a strong pillar from 2000. And I think what we've achieved from 2000 to -- well, past 25, 26 years has been unbelievably a great step of faith and a great leap of confidence and also a great asset to the company. So thank you, Matt. Jason Conroy, became our Lead Independent Director in March. And in April, we also welcomed Sue Forrester on the board as an independent Nonexecutive Director and the Chair of our People and Culture Committee. Sue and Matt will be based in for a reelection later on the meeting. At this time last year, the day after our AGM last year, I jumped on a plane and went to Poland. I had time to do a fair bit of research about what's happening around the world and my little stay in hospital, I had plenty of time to fill in, and it's a journey that I will thoroughly enjoy. But also I went there 12 months ago straight after the AGM and surprisingly enough tomorrow, I'm heading in the same direction. So I'm proud to announce in the last 2 weeks, we have signed a lease for 10 years with options for extensions and have been handed the keys to our new, site brand-new facility in Poland. So after looking at sites there 12 months ago, and also meeting with the mayor of Krosno, the location we knew we wanted to be in. This connection has helped us immensely with reducing red tape of setting up our new business in Poland. The Mayor was unbelievable. He said, you must come to Krosno. It was -- you look back everyone's funny, but the other side, if you look back, it's exciting. And they really want PWR to set the business up there, which is a fantastic invitation and what have you. So I look at what we've been to do here at Stapylton in the last 3 years. What we've got out here has taken us 3 years to get there really. And then I look forward and seeing what we can achieve and we'll achieve in Poland over the next 3 years. So we've put the peg in the sand in Poland and we'll be having -- we'll be cutting the ribbon on the front door next week in Poland, which is exciting. In closing, we go into '27 with a strong leadership team, a world-class facility, a clear strategy and I'm very optimistic about PWR's future. So thank you to all our global team and their hard work and our shareholders for your continued support. I'd like to now hand over to Sharyn and she'll fill you in with a lot more of what's happening at PWR. So thank you very much.

Thanks, Kees, and good afternoon, everyone. It's a privilege to address you for the first time as PWR's Managing Director and CEO. We say that our people are important. So I want to take a moment to speak about our executive leadership team that is with us today. So firstly, Ben Nelson, GM of Technical Services. Benny has been with us for over 18 years and is a technical superstar. Jason Hicks started as an apprentice on the floor over 20 years ago and is now our General Manager of this beautiful Australian facility. Matt Bryson likely needs no introduction, but our Chief Technical and Commercial Officer and Executive Director, and you'll hear more from Matt later, although Matt is 1 of the foundational pieces of our business. Andi Scott, our GM of Advanced Technologies has been with us for 11 years, and will speak to you soon around what he's led in terms of building our aerospace and defense business over the last 6 years. Rob Shore, our new CFO, and joined us 6 months ago and has excellent experience and a few scars that he's brought with him as well to quite handy. And Jake Howard, our GM of Strategy and People. Jake has been with us for 4 years and is 1 of the most pragmatic people operators I've ever had the pleasure to deal with. Now Benny Jackson, who you met last year isn't with us today. He's over in U.K. and Poland and getting us set up over there. Over the past 2 years, PWR undertook 1 of the largest periods of investment and transformation in our history. In FY '26, our focus shifted from building the capacity you see before you to converting that capacity into growth, operational performance and improved returns. FY '26 was a year of execution, consolidation and renewed momentum. The year started slowly as you'll recall from our last AGM as we settled into a new facility here at Stapylton. Our first quarter last year, revenue was only up 6% year-on-year. We then built momentum through each quarter to finish the year with record results. Now we have a number of people in the room today who are team members of PWR. This result is built upon their shoulders. So I give you all a heartfelt thanks. So our revenue grew 31% to a record $171 million or 34% in constant currency growth, which is substantial growth. Importantly, that growth translated into a much stronger earnings outcome. Our EBITDA rose 60% to $41 million and our net profit after tax was up 83% to $18 million. Our NPAT margin improved 3 percentage points to 10.5%, and we achieved that while absorbing the cost of our new facility. We also increased our research and development spend and added capability and capacity within our team. Consistently strong cash conversion is a defining characteristic of this company and FY '26 was no exception at 105%. We returned to having positive free cash flow of $11 million. Our gross debt peaked during the year at around $28 million and the team did a great job managing our working capital to finish net debt of just $5.6 million at the end of the year. So that is a very conservative gearing of around 5%. The Motorsport revenue rose 45% to a record of $102 million. This is the first time we have passed $100 million and is a credit to the team. it also reflects how positive our customer relationships are. The 2026 Formula 1 regulation changes required new cooling solutions across both the power unit and the chassis lifting the content per car. It was positive, however, that we also grew outside of Formula 1. We grew across World Endurance Championship, Formula E and off-road categories as technologies that were proven in Formula 1, such as our MMX investment and our battery cell coolers were adopted more widely. Our aerospace and defense revenue grew 31% to a record of $35 million. We completed an initial U.S. government order, and we also secured a follow-on order increased since we initially received it to USD 12 million. What is pleasing is we are now an approved supplier to all of the Tier 1 defense primes, and that's a credit to the team and the business after 6 years to be held in such high steam. We were 1 of only a few international companies that were recognized by Northrop Grumman in their 2026 annual supplier awards. Our North American facility achieved CMMC 2.0, which is a security -- cybersecurity accreditation and we also achieved our NADCAP accreditation for heat treatment and chemical processing and a number of people in the room today were instrumental in achieving those certifications. Our Australian site was recertified for AS 9100 and NADCAP after the relocation. Importantly, we enter FY '27 with an aerospace and defense order book of around $40 million and a book-to-bill ratio of 144% in FY '26. So what that means is the orders taken outpace revenue recognized. In OEM, revenue was $15 million, reflecting the completion of major programs in prior years, but also the timing of new programs. The Ford Mustang S650 is now in production and a new 8-year hypercar program is expected to ship in H2 FY '27. Our aftermarket automotive revenue was stable at $16 million as we focused on reshaping the catalog to focus on more higher volume, higher value products. As Kees mentioned, the Stapylton transition is complete. Revenue from products manufactured in Australia reached a record of more than $100 million. We simply could not have achieved that at our former Ormeau site. Our U.K. and U.S. operations also achieved record levels of local manufacturing output. As Kees outlined earlier, we're now taking a measured step into Europe. Our PWR Poland entity was established in March 2026, and our new site in Krosno, in Southeastern Poland's Aviation Valley is expected to commence initial operations this financial year. Europe is a large and growing defense market that remains largely untapped for us. And Poland gives us a base close to those customers. It allows us access to skilled talent and the ability to bring more component manufacturing in-house. This will be a phased investment with capital expenditure of $16 million over the next 4 years. That's within our existing CapEx plans and cash flow forecast. Our strategy is built on 4 pillars, and we've made tangible progress against each of them in FY '26. In innovation, we increased our investment by 17% to $15 million in R&D. We extended our capability into Inconel, stainless steel and nickel for high-temperature applications. This is important because in aerospace and defense, this area was largely untapped by us and now gives us more opportunities. In profitable growth, margin expansion through our higher volume months demonstrated the operating leverage behind our NPAT margin expansion plan. As a sustainable business, our rooftop solar now supplies around 1/3 of the Australian factories energy needs with estimated annual savings of $450,000. We've got Mark Sparky in the room today that helps with that. And we continue to invest in our people, which matters greatly with skilled labor remaining tight across all 3 of our locations. As Kees mentioned, we now employ more than 700 people globally, of which almost 20% are female. We launched our first internally managed apprenticeship intake and grew our global apprentice numbers to 33. Following on from being named 2025 Queensland Export of the Year, and the manufacturing and Advanced Materials award recipient at the 2025 Australian Export Awards, we are now proud to shortly be inducted into the 2026 Australian Export Awards Hall of Fame. As you know, PWR has strong, skilled and capable executive leadership team. Some of you have met in previous years. So today, I'd like to ask Andi Scott, our GM of Advanced Technologies to come and introduce himself to you and to provide some more context on our Aerospace and Defense segment.

Apologies for getting a bigger head shot. Good afternoon, shareholders. My name is Andi Scott, I'm the General Manager for Advanced Technology at PWR, leading our aerospace and defense business. Following a successful career in Motorsport, were I enjoyed a time at the leading Formula 1 team, I joined PWR in 2015. Over the past 11 years, I've had the privilege of helping diversify PWR's products into new markets beyond motorsport. Today, my focus is on working with our global customers, providing advanced thermal management solutions for demanding aerospace and defense customers and continuing to build our capability and innovation to support PWR's long-term growth. In the 6 years since we entered the aerospace and defense, we have achieved a few key milestones, and I would like to share those with you today. We have added critical third-party accreditations such as our AS9100 NADCAP and CMMC 2.0 which allow PWR to be a supplier in these risk averse takers. We have developed a world-class team to be able to support the aerospace and defense sector using the same DNA that has made PWR so successful in other sectors. And PWR has become a supplier to high-level customers such as U.S. defense prime contractors and U.S. government itself. As Sharyn mentioned, we have been recognized by Northrop Grumman in their annual Supplier Excellence Awards, where PWR were recognized as only 1 of a few international companies to receive the accolade. We have also moved up in the value chain. We have been able to provide go from component level supply through to higher-level system and subsystem assemblies. And this comes with the added benefit of additional revenue generated through engineering services rather than product only. The above has helped us to grow our aerospace and defense business at an average 50% CAGR over the past 5 years. It's a privilege to be part of this team and I look forward to contributing to the next phase of the company's growth. Thank you very much.

Thanks, Andi. We'll now move on to our outlook. We've seen a really positive start to FY '27, with shipments on the follow-on U.S. government order in our A&D segment and shipments on the Ford S650 program for our OEM segment. Both of those commenced in July. As previously advised, the U.S. government order of AUD $17 million, is weighted to the first half and we expect a more balanced revenue and earnings profile this year than seen in prior years. In Poland, as Kees mentioned, we've signed a 10-year lease with options for our new site, and Benny and Wayne proudly received the keys the other day, and our initial operations remain on track to commence in FY '27. Our outlook for FY '27 is revised upwards for increased growth expectations for our A&D segment. The remaining outlook remains largely unchanged from that provided at our FY '26 results in August. In Aerospace and Defense, we now expect FY '27 revenue growth on prior year at around 50%, up from 30% with the timing of individual orders subject to customer delivery schedules. This increase is largely driven by a recently secured USD 4.6 million order for precontract activities related to 1 of the 5 pipeline opportunities we disclosed at our FY '26 result. This order is an important step towards converting that opportunity. However, we have not formally been selected as yet as the supplier for the ongoing program. In Motorsports, following 45% growth to record revenue in FY '26, we expect to maintain that higher baseline in the coming year based on the current pipeline. For OEM, we expect around 20% revenue growth supported by programs entering production with the precise growth rate dependent on customer production timing. And in aftermarket, as the shift in product mix continues, we expect modest growth. At a group level, FY '27 revenue growth is largely driven by aerospace and defense. Inclusive of investment and startup costs in Poland of less than $1 million, we expect an improvement in our statutory NPAT margin of 2 percentage points in FY '27 to 12.5%. In FY '27, outperformance above 12.5% NPAT margin will be reinvested in mobilizing resources in anticipation of pipeline opportunities converting, that will be subject to timing of recruitment of headcount. Over the medium term, we continue to expect our statutory NPAT margin to trend back towards our 2024 reference level of 17.8%, over the years FY '28 to FY '30. This will be driven by operating leverage. The foundations are now in place and momentum is building. Our priorities remain unchanged, improving operational performance, strengthening returns and executing our strategy with discipline. I'd like to thank Matt Bryson for his stewardship as acting CEO and the executive and leadership teams for guiding PWR through an important phase of investment and change. But most of all, I thank our team globally. They have embraced change, embodied our culture, supported our customers and kept the high standards that are synonymous with our PWR name. So thank you, team. We'll now invite questions from shareholders about the company. There will be an opportunity to ask questions about specific resolutions as each resolution is presented. You may also direct questions to our auditor at this time. We ask that you come up to the microphone in the middle of the room to ask your questions. If you're unable to come up, please raise your hand and we'll bring a microphone over. Questions will be limited to 2 questions per shareholder.

Thanks. I thought I'd get the all wrong, nobody else is going to be the first of the ring. [indiscernible] Olofson. I'm also a member of Team Investor, I'm not speaking on behalf of that group. Just 2 questions. What's actually in the building in Poland at the moment? Is it just like this was a huge open space? And where is the equipment coming from to populate that assuming it is empty?

Yes. At the moment, it is an empty space, but is largely fitted out with the electrical needs and IT needs that we need. So the infrastructure is there. We've got equipment coming from a number of different countries. The commitment should -- the equipment will be landing around November, December. So at the moment, we have a lot of tape on the floor ready for that equipment to arrive.

And talk about a reduction in debt. Is the intention to go to 0 debt? Or are you just happy with the level that it's at the moment?

One of our hallmarks historically for PWR has been being net cash as a company. we'd like to get back to net cash, although we would be willing to lift our leverage those circa 1x. So we will carry debt for the right thing, but aspiration, we'd like to be net cash.

Hello. My name is Susan Bailey, I'm representing the Australian Shareholders Association. And it's a pleasure to be here, and congratulations on a successful year. Now that I'm restricted to 2 questions, I'll have to be choosy. There's been a lot of turnover this year especially with Lisa Dalton, retiring. There's been 2 company secretaries. And I'm just wondering if you could comment on what's caused that turnover?

I'm happy to comment if other directors wouldn't like to or -- yes. Yes. No, you go Sue.

Thanks for your question, Susan. It's not unusual to have someone turn over at the executive levels. And sometimes the timing doesn't always happen when we'd like it to. However, suffice to say, we were very quick to make sure we were able to recruit an excellent Company Secretary and General Counsel, fairly quickly afterwards and actually had very little disruption during that period. So turnover is inevitable, but on this occasion, we were quite happy that we were able to react quickly and really get an excellent replacement in color.

And my second question is around the request for a hybrid AGM meeting. As we're all aware, the lunch is fabulous and the factory tour is fabulous even though I missed out today. But the people that can't be here, miss out on all that and they miss out being able to ask questions live. I'm wondering whether the Board might consider a hybrid meeting for next year?

Yes, It's something we'll take away and discuss for next year. We are pleased to be able to present to people online, et cetera, but take your point around making it hybrid.

Will I get the chance to ask questions about the remuneration report at a later stage?

Yes, you are welcome to come back up. Susan coming back up. Come on up, Susan. Do you want to take the rem report, Sue?

Again, I have to be choosy. I've been away for a month and my partner from the Australian Shareholders Association has asked me to present these questions today. I just arrived back myself from a trip a little bit vague. But the ASA prefers that at least half the short-term -- the STI hurdles to be financial in nature. However, only 20% of the measures on the corporate scorecard are directly financial with the remainder based on innovation, sustainability and culture. What -- while the other measures are important, why does the Board place such a low weighting on financial metrics?

Again, thanks for your question, Susan. What's important to recognize is within our short-term incentive scheme, we actually have a financial gate or an NPAT gate that's set at 90% of NPAT. So there is no STIs paid unless the executive team actually reached that 90%. So we think that's an excellent financial measure that there's a starting point after that, because of the nature of our growth and our focus on innovation, global growth, we've actually focused on key areas that fit with our strategy as opposed to having additional financial measures that sit underneath that. And we think that each of the measures that sit under our card are actually very well aligned to our strategic growth initiatives.

Right. And also along those same lines, the STI profit gate was lowered from 100% to 90% in FY '26, which was met, of course, what was the rationale behind the decision? And why was that rationale not disclosed in the annual report?

Again, a little before my time, but I understand the working of it was that it was 90%, then 100% and then 90%. The year that was 100% was increased due to the Stapylton move and the increased costs that went with that. In that year, the STI was actually -- the STI gate was not achieved in any event. So it's a theoretical number in any event, but it's back to 90% of NPAT, and that's where we intend to stay.

We have a number of questions we received prior in advance of today's meeting. So we'll address those questions, grouping some of the questions together that had similar topics. Sue can I please ask you to respond to the first question? The first question is, why doesn't PWR include a return on capital measure, such as ROIC or ROCE in its long-term incentive plan?

It appears remuneration is the hot topic for today. I'm happy to answer the question. The Board continually reviews the metrics that it uses for both a short-term and long-term incentive programs and each year, we have a look at them. There are many measures there that you can use for LTI or the long-term incentive program. We believe that EPS and TSR are the most important, most relevant measures because we are a company in growth mode. So if you actually have a look at our strategic growth initiatives and also our focus on investing in innovation they relate best to an EPS and a TSR return, and we think that they are appropriate measures to be achieving long-term shareholder value.

Second question is U.S. segment margins have declined since FY '22. How much of that is due to intersegment transfer pricing versus underlying business performance? And how does the Board assess returns on capital invested in the U.S. operations? So firstly, on the reported margin, it is correct to call out in a segment transfer pricing as the comparison between FY '22 and FY '26 isn't entirely like-for-like, as our transfer pricing approach has evolved over that period. Also, the U.S. business today sells a materially greater value of product that's manufactured elsewhere within the group than it did several years ago. This impacts the portion of the group profit that's recognized in the PWR C&I segment. Secondly, on return on capital. The Board and management considers this at a group level. which includes the financial and strategic returns generated and enabled by our U.S. operations. Indianapolis gives us manufacturing capability and proximity to customers. This is critically important for A&D. Over 90% of our A&D revenue is to the U.S. market. And in some cases, the products must be either invoiced or manufactured in the U.S. by U.S. citizens. So our U.S. presence is critical for PWR, particularly as we continue to develop our aerospace and defense activities. We have another question. What would happen to PWR's operations if geopolitical tensions in Eastern Europe were to escalate? So we certainly recognize that investing in Poland introduces a different geopolitical risk profile to our existing operations that has been considered as part of the investment decision. Poland is a stable European Union and NATO member, and currently, the Australian government's smart travelers advice for Poland is exercise normal safety precautions. This is the lowest of the 4 advisory levels and the same rating applied to most of Western Europe. The United States and Canada also maintain equivalent assessments. Nevertheless, given the broader geopolitical environment, we are approaching risk management for the site appropriately. This includes physical and cyber security, business continuity planning and the resilience of our broader manufacturing network. Poland does not create for us a single point of dependency. We have capabilities across our entire group that have duplicated a number of times over. So it won't be a single point of susceptibility. Now the benefits of PWR Poland are numerous and support our execution of our strategy. We can't eliminate geopolitical risk but the Board and management believe it can be appropriately managed, and we'll continue to assess that risk as circumstances evolve. Jason, I'll ask you to respond to the fourth question. Given the increase in audit fees and KPMG's tenure, when was the audit last tended and does the Board intend to test the market?

Thanks, Sharon. The audit engagement was last tendered in financial year 2024, so only a couple of years ago. I think 5 audit firms, including our current auditor, KPMG, we're invited to make a proposal. And then the Board assessed at that time that KPMG represented the best value for money and lowest risk of the engagement. And made the decision to reengage with KPMG. More recently, the board asked management to do a benchmark fee analysis of the audit fee and comparing it to publicly available information of companies of similar complexity and geographic coverage and the nature of the business. And we were well within benchmark range and very comfortable with the fee as it stands. The fee over time has increased from year-to-year as the complexity and size of the business has increased and is not unexpected.

Thanks, Sue and Jason. Any more questions from the floor before I hand over to Carla to begin the meeting procedures? Okay, been listening to me long enough. So over to Carla, I'll come off of this.

Thanks, Sharon. Before we put the resolutions to shareholders, we'll go over some meeting procedures. All resolutions at today's meeting will be decided by way of poll. If you're voting shareholder or proxy holder, you should have received a blue admission card with the resolutions on the back of that card. When we open voting for each resolution, you'll be asked to cash to vote directly on the card. Your completed cards will be handed to Computershare representatives at the end of the meeting. Results of all resolutions will be released to the market immediately after the meeting. A reasonable opportunity will be given to shareholders to make comments and ask questions about each resolution before it's put to the vote. The proxy votes received prior to the meeting for each resolution will be displayed on the screens. Now I'll move on to the formal business of the meeting. In addition to receiving and considering the 2026 annual report, there are 10 resolutions to be considered today, followed by general business. The first item of business is to receive and consider the 2026 Annual Report comprising the Financial Report, Directors' Report and the Auditor's Report for the company and its controlled entities for the financial year ending 30 June 2026. There is no requirement that shareholders vote on, approve or adopt the annual report. If you have questions on this resolution, please ask them now. Thank you. We'll move on to the formal resolutions to be considered by the meeting. I'll hand over to Kees.

Thanks, Carla. The first resolution is for shareholders to consider and adopt -- the adoption of the Remuneration Report for the year ended 30th of June 2026. I'll ask Carla to read out the resolutions.

Okay. Thanks, Kees. Resolution is -- Resolution 1 is as follows: to consider, and if thought fit, to pass the following resolution as an ordinary resolution in accordance with Section 250R subsection 2 of the Corporations Act, that the remuneration report for the year ended 30 June 2026 be adopted. The directors with Sharyn Williams and Matthew Bryson abstaining, unanimously recommend you in favor of this resolution. I note that voting on this item is advisory only and does not bind the directors of the company. The screen shows details of the proxies received on this resolution.

If you have any questions on this resolution, please ask them now.

Just a couple of questions, seeking clarification really. On the EPS growth side of things, the Page 80 of the Annual Report sets a 3-year average growth of $0.232 out to 2028. And that puts it well below the FY '24 figure.

Is this a question for the resolution? Or is this something else?

It's a question about the Remuneration Report. So these are figures in the Remuneration Report. And it just seems like there was a very low hurdle given the outlook provided by the company. Even the stretch figure of $0.271 out to 2028 compared with 2024, isn't very impressive. I just wondered how these amounts were arrived at? Maybe it's more a question for Sue?

I guess I've got to be politically correct here and answering the appropriate way. So I'll ask Sharyn or Sue to answer your questions.

Yes, I'd certainly hate you to be politically incorrect, Kees.

Yes. Thanks for the question. FY '24 certainly was a very good year for the company. As you look strategically at the investment needed by the company, you start to see that flowing through in FY '25. So our cost base has substantially stepped up. So when the remuneration consultants had to look at what would be an appropriate EPS approach to measure off a smaller base, the average EPS concept was flagged. So we had an EPS of say, 9% -- sorry, $0.09 in 2025. If we were to use a CAGR on that, you'd be talking some really big CAGR growth. So whilst we appreciate measuring against FY '24 at those high profit levels is a good comparison and aspirational figure to get back to, that average EPS is actually quite a stretch when you're looking at the FY '25 number. The business has absorbed a much larger cost base. If you look here, a $4 million increment just to move into this facility and have more capacity. So looking at that average EPS, the average doesn't really reflect the year-on-year growth that's expected. So there's substantial CAGR growth when compared to the FY '25 year in those average numbers you're talking about. So if you looked at the third year, you're talking about very large growth on the starting of FY '25. We haven't disclosed those year-on-year numbers, but they are in line with market expectations and consensus, and there is stretch growth in there as far as the numbers.

Just the second 1 on relative shareholder -- total shareholder return. It's -- the Annual Report states that it's in line with the group's growth strategy. Relative shareholder return -- total shareholder return encompasses other company share prices and returns. And of course, PWR has no control over what others are doing, let alone that company's own share price. Just wondered how adopting a total -- relative total shareholder return has got anything to do with the growth strategy? Growth strategy is 1 thing, but relative total shareholder return seems unrelated to me. So I'm just trying to work out why that statement was made about it being related to growth strategy?

Yes, certainly, get your point there about the connection being the 2. When we look at relative total shareholder return, given results that you'd see from other companies, one, expecting them to be positive. And also, if you look at index overall, there is historical growth rates expected in that barring anything unusual, then growth such as that would be in line with our strategy. But I get your point that there is a lot outside of our control. So we'll take that on for next year.

No further questions on the resolution? Given there are no further questions, please cast your vote on Resolution 1 by marking your voting card. [Voting]

Madam. The second resolution is for shareholders to consider the election of Matthew Bryson as Executive Director, who, as Executive of [indiscernible], was appointed to the Board in July this year, and I'll now hand over to Matt to say a little bit about himself. Thanks, Matt.

Thank you. Thank you, Kees. Good afternoon, shareholders. For those of you who may not know me, I've spent almost 30 years working in engineering, advanced manufacturing and Motorsport with 23 of those years at PWR. My career began as a special class fitter and machine toolmaker while I was also studying mechanical engineering. Following roles in design engineering and running my own race engine building business, I joined PWR as a design and manufacturing engineer. And since then, I have been fortunate to grow alongside of the company. Over the years, I've held a number of leadership positions, including serving as engineering manager for 15 years, where I hope to lead the development of PWR's product portfolio, advanced manufacturing capabilities and engineering solutions for customers around the world. Today, as Chief Technical and Commercial Officer, I am responsible for our technical and commercial operations across Motorsport, OEM, industrial and the high-performance aftermarket. My focus is on driving innovation, advancing our manufacturing capabilities, strengthening our customer relationships and supporting the delivery of sustainable long-term growth for the company. Having spent over 2 decades working across virtually every aspect of the business, I've developed a deep understanding of PWR's technology, operations, customers and strategic opportunities. It's a privilege to serve as an Executive Director and I remain committed to helping the company extend its leadership position through engineering, excellence, innovation and disciplined growth. I've had the pleasure with Kees and the team of making my passion, my profession throughout my time at PWR across multiple roles through competitive spirit and a drive for innovation and success. I thank shareholders for their ongoing support and respectfully ask for your support for my election as a Director of PWR. Thank you.

Resolution 2 is to consider and if thought fit, pass the following resolution as an ordinary resolution, that Mr. Matthew Bryson, who having been appointed by the Board on 1 July 2026 as a director in accordance with the company's constitution and being eligible, be elected as a director. The directors with Matthew Bryson abstaining unanimously recommend you vote in favor of this resolution. The screen shows details of the proxies received on this resolution.

If you have any questions regarding this resolution, please stand now.

Susan Bailey, speaking again on behalf of Australian Shareholders Association. Obviously, Matt's technical credentials are outstanding and undisputed. We're just wondering why though he already can offer advice to the executive through his role. Why does he need to be given a board role?

Why not? My question to you is why not? And I'm a little bit bewildered on that question. Matthew Bryson has been with this company since 2000. He has been a pillar. You obviously weren't listing when I said that earlier on.

I was listening.

He is a pillar of this business, an absolute outstanding gentlemen. To lose Matthew as a role in PWR would be a mortal sin for the Board to have a first of his capability not join the Board. Now our Board members, we -- today, we have a very, very good board. And our Board members all have a role which they bring to the table. Now as you will know, I haven't been well. And it is our duty as a Board to make sure that we have a backstop. And that's 1 of the reasons that I personally asked Matthew Bryson if he would join the Board. Matthew didn't come up and say, I look like to join the Board. Matthew is a substantial shareholder. What I would call substantially heard more shares than most people in this room put together. So I think it's an insult of that question. I'm very straightforward as you come to be aware. I'm very straightforward, and I think it's -- let's say, I think it's an insult to myself and to our Board to ask that question.

So I certainly didn't mean to be insulting, and I apologize.