Select Harvests Limited (SHV) Earnings Call Transcript

Ladies and gentlemen, good morning, and welcome to Select Harvests' 2020 Annual General Meeting. I'm Michael Iwaniw, Chairman of Select Harvests Limited. I'll be chairing today's AGM with the assistance of Brad Crump, Chief Financial Officer and Company Sector of Select Harvest; and Paul Thompson, our Managing Director. Both Paul and I will be making presentations today, following which, Paul Brad, myself and my fellow directors will be happy to answer your questions before overviewing the company's resolutions. This presentation will be recorded and uploaded on to the Select Harvests website. Joining me today in this virtual annual General Meeting are your directors, Michael Carroll, Fred Grimwade, Nicki Anderson, Fiona Bennett and Guy Kingwill. Please note the disclaimer and the basis of preparation of this presentation. Today, I'll provide you with an overview of our 2020 financial performance, our current and future strategy and our overall company and marketing outlook. Paul's Managing Director's address will include the 2020 sustainability report, the Almond division outlook, the Food division and corporate outlook, and our financial year 2021 priorities. The AGM resolutions will follow the presentations and after questions have concluded. We have some questions submitted prior to the meeting. Any questions that are not covered by the presentations, I'll address at the start of the Q&A session. Brad will provide an outline of today's procedures covering the meeting, questions and voting guidelines. Brad, over to you. Thanks.

Thanks, Michael. Virtual meeting guidelines. Today's meeting is held -- held online by the Lumi platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. The question guidelines. [Operator Instructions] Please note that while you can submit questions from now on, they will not be addressed until the relevant time of the meeting. Please also note that your questions may be moderated more if we receive multiple questions on one topic amalgamated together. Finally, due to time constraints, we may run out the time to answer your questions. If this happens, we will answer them in due course via e-mailing or posting responses on our website. Voting guidelines. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, we will shortly open voting for all resolutions. At that time, if you're eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time voting is declared closed. Thanks, Mike.

Thanks, Brad. I now declare voting open on all resolutions. The polling icon will soon appear. Please submit your votes at any time. I'll give you a warning before I move to close voting at the end of the meeting. I'd like to start my address by saying what an extraordinary year 2020 was from Select's perspective. In January, we were full of optimism with a good season, a promising crop, ideal harvest conditions and strong world demand and prices. Then the perfect storm hit with COVID-19, followed later by the announcement of a forecast record 3 billion pound U.S. almond crop and its consequent effect on the market. It's just over a year now since cover first appeared in Australia. We all look back over that period with much more knowledge than was available at the time. Although it's important to remember that businesses of all shapes and sizes had to quickly adjust to the new environment and largely work out for themselves the best way of doing so. I want to talk about this right at the start of my address because I think it's important that shareholders understand just how much the Select team was able to achieve in this environment because it is highly relevant in the company's performance. I said the Select team, and that was deliberate, because I met our people right across the company. In our annual report, we talked about some of the challenges faced by our various operating divisions during the year, especially with several lockdowns in Victoria, and border closures. Success in the environment of the past year was going to need people who understood the challenge, find solutions, compromise where necessary and quickly adapt operations for a situation nobody had faced before. Select has exactly that team of people, so amidst all the challenges, the business continued operating, received no job keeper government assistance, kept its workforce employed, and went on to make a major acquisition as 2020 progressed. I spoke to members of senior management numerous times, and on behalf of the Board, I wrote to all Select employees several times during the year to congratulate them on their resilience. And today, on your behalf, as shareholders, I'd like to formally acknowledge their efforts. You're aware that our NPAT at $25 million, EBITDA at $57.8 million, and earnings per share at $0.26 were all down versus the previous year. We have a strong balance sheet with a low level of debt, with net debt-to-equity of 14.2%, excluding our lease liabilities. The Board has maintained the custom and practice of a 50% dividend. The final dividend was $0.04 fully franked, bringing the total dividend to $0.13 per share. We had a DRP at a 2.5% discount, achieving a 41% acceptance rate, which we take as a sign of confidence in the company's future. The main driver behind this performance was the almond price, which dropped over $1 per kilogram to below $7 per kilo in the latter part of the marketing year. The COVID-19 pandemic created logistic issues that resulted in short-term reduction in export demand and some shipment delays. The bigger price influence, however, came when forecast of a record U.S. almond crop drove aggressive selling campaigns at reduced prices. U.S. crop has come in at just over 3 billion pounds, an increase of over 20% on 2019. Our early sales insulated our result from the worst of the price drop, and the international market did respond to trends. Importantly, our production increased to 23,250 tonnes, our largest crop ever. Additionally, we have maintained control over our cost base with our cost per kilo decreasing by 6.5%, excluding water, reflecting the increased maturity and yield profile of our trees. One important element in reducing cost per kilo is, of course, to produce more almonds, which is why this possibly is the most pleasing slide in the pack. You can clearly see how the orchards are performing well above the industry standard in all age cohorts and geographic regions, with yield delivery well above the industry average. Over the past last 5 years, significant focus has been placed on improving yields. This starts with our greenfield orchard development program, where we have selected high-yielding pollinated varieties like Monterrey,and increased the planting density, both drivers of improved yields. Two of the most critical inputs to almond yield and quality are water and fertilizer and, furthermore, two of the largest growing costs of an almond orchard. To enable the efficient application of water nutrients and to optimize the execution of the horticulture programs, Select has embarked on the employment of 2 critical technological tools, [indiscernible] series, over recent seasons, with approximately 5,000 hectares or 70% of the 2020 harvested area monitored by the technology. Both pieces of technology provide valuable data on management practices and taste stresses. In addition, we have installed 278 frost fans covering 4,170 acres of our farms. All combined, over time, our expectations of yield for mature trees have increased from 1.1 metric tonnes per acre to 1.3 metric tons per acre. And we are now achieving 1.45 tonnes per acre or better, as the chart shows. We believe this improvement is sustainable. We will continue to focus on improving yields by undertaking more of the impact of timing of irrigation on the harvest process, reducing the amount of crop lift in the orchard and maximizing churn away by managing the orchard drying and shaker efficiencies. I turn now to what I see as a highly significant step in our strategy to expand. Our acquisition of the 1,566 hectare Piangil Almond Orchard announced on the first of October 2020. The rationale for this acquisition is entirely in line with our strategy to optimize our almond base. It increases our area by 20% to 9,262 hectares, and we anticipate a lift in the crop volume of around 4,600 tonnes in the first year. Regarded as the top quartile orchard with further potential for improvement under our ownership, it has a similar maturity profile to our existing assets and is well-located geographically to optimize utilization of our processing facility at Carina West. We took possession of the orchard on the 18th of December 2020, and therefore, we'll receive the net income from the upcoming 2021 crop. I'm pleased to say that we've not encountered any surprises since. We have commenced investing the $10 million capital improvement we outlined at the time of the acquisition. Our teams have rolled out our occupational health care and safety systems and procedures. We have delivered the additional operational equipment required to make the orchard operate to its optimum. Over the next 3 months, we'll be embedding our financial and horticultural systems and programs. Select Harvest has now built up a quality asset base. With Piangil, we are now in a position where we own 56% of our orchards and lease the remainder. We also own and invest in a lot of water, or more accurately, water entitlements. Our total water usage is 171 gigaliters, which will increase to 127 gigaliters post the Piangil purchase. We often talk about water and the volumes of water we utilize in terms of production costs. However, it's important to understand the nature of water as an investment. The potential for these water entitlements as an investment is well documented. Water has no substitute, regardless of price, and this most fundamental fact creates demand for water that will not abate over time. Demand for water for a range of uses is clear and growing. What also seems clear is the available supply from the Southern Murray-Darling Basin is not likely to increase. We believe that Select's value to investors is enhanced by owning land and water assets that have proven to increase in value over the long term, optimizing production of almond crops to enable the company to return dividends to shareholders from positive cash flows, while strategically investing in land and water assets where capital appreciation is fundamental to creating long-term value. Currently, the market value of our own orchards, including Piangil, which is confirmed by an independent bank valuation, is $389.8 million. Water is commercially valued at $97.7 million, some $59.8 million above the book value in our accounts, bringing the total value of orchards and water to $486.7 million. This equates to $4.05 of value per share. Earlier this week, we announced the findings of a comprehensive strategic review of the growth options and supply chain solutions for the third division. The review considered multiple options, including upgrading the existing Thomastown facility, developing a new production facility, outsourcing value-added production or merging the Carina West and Thomastown facilities. The conclusion was that the Thomastown facility is not core for our future supply chain requirements, and our strategic focus is best directed to investing in our Carina West processing facility. Accordingly, we announced our decision to restructure the Food division to focus on Select Harvest's competitive advantage in growing, value-adding and marketing almonds in the domestic and export markets by expanding the Carina West facility. As part of this decision, we have appointed Kidder Williams to seek expressions of interest in the consumer brand business at Thomastown processing facilities. Concurrent with the sales process, we're working on a progressive 80-month transition plan to move more almond processing from Thomastown to Carina West. This will result in us investing in additional capacity, new technology and new warehousing. Investment will commence immediately, with the stock pad currently being increased and a new pace machine arriving in April. Some of this investment was already in our long-term plan, but we have brought forward due to the recent Piangil acquisition. Turning to the market outlook. Almond prices can be volatile and reflect the standard principles of supply and demand. California represents 80% of the global almond production any changes in production there will have a significant influence on world almond prices. Over the past decade, there's been an increase in plantings which culminated in production this year of a record crop of just over 3 billion pounds. U.S. almond -- markets reacted positively to the lower almond prices with demand increasing particularly from India and, to a lesser extent, China. The California almond position report released on the 11th of February showed year-to-year to date shipments were up around 16% on the previous year. And for the same period Australian shipments, up 48%, resulting in carryout numbers smaller than originally forecast. At present, it is too early to accurately predict future almond prices as there are too many uncertain factors. The size of the 2021 U.S. crop, which has just commenced blue, will demand particularly a continuation of the consumptive growth in India and China, shipping and logistic difficulties and the exchange rate. This uncertainty is causing nervousness among markets, resulting in some downward pressure on almond prices. The Board and management recognizes this is a tough time in the almond price cycle, although remain confident that the long-term outlook is positive. It is worthwhile noting that despite year-to-year price movements, both up and down, there is a clear overall upward trend in almond prices. In fact, during the past 30 years, almond prices have grown at a CAGR of approximately 3% per annum. In summary, we remain firmly focused on our core business, concentrating on improving orchard yields and hygiene, reducing costs and premium processing efficiencies, raising the quality profile of our almond brands, maximizing the value of our brands by developing new products, servicing our existing export and domestic customers, and developing new markets where appropriate. We'll also monitor opportunities to acquire mature almond launches and develop greenfield sites. I'd like to conclude this presentation with a brief focus on changes to your Board. As announced last month, Mike Carroll is retiring from the Select Harvest Board today. Mike joined the Board as a non-Executive Director on the 31st of March 2009 and was subsequently appointed to Chair the Remuneration Committee, which later became the Remuneration and Nomination Committee. It's a period of almost 12 years during which the company has experienced tremendous change in growth. I want to acknowledge Mike's enormous contribution to the Board and, indeed, the whole company. He has been truly exceptional, and we thank him for his time, his knowledge and his commitment. We have decided to split the Remuneration and Nomination Committee to two separate committees. So with effect from today, Nicky Anderson will chair the remuneration committee with Guy Kingwill and myself as members. The nomination committee will be chaired by me with Fiona Bennett and Nicky Anderson as members. Finally, I began this address by thanking the employees of Select Harvests for how they coped with the challenges brought by COVID-19. Obviously, they're not alone. People and businesses everywhere had to manage through this, but this does not and should not take away from our sense of pride in the people we have at Select, and I thank them all once again. We would all agree that the 2020 financial year was perhaps not the year we would have liked, and we went into financial year 2021 with some clear challenges. And at the same time, we also have started 2021 with a major achievement in the acquisition of the Piangil Orchard. Thank you, Paul, for your work and that of your management team over the past year. Thank you to our shareholders, many of whom chose to participate in our capital raising for your support of the company. I continue to be positive about Select Harvests for the year ahead. I can report that our harvest has just commenced with the earlier results looking good. On that note, Paul, I'd now ask you to present our 2020 sustainability report and business outlook.

Good morning, and thank you, Michael. Select Harvests' sustainability has been long embedded in our business and, more importantly, our culture. This report formalizes the ongoing heritage of operating a business with sustainability at its core. We plan and operate in a manner that leaves a legacy and resources for future generations. It's part of our DNA. Sustainability underpins both our strategy and decision making, it strengthens our competitive advantage and builds durable returns. Being sustainable is critical to be considered an employer of choice and to be a good corporate citizen. Sustainability, the triple bottom line. We have a triple bottom line approach to sustainability in both strategy and reporting. Planet, people and profit are interdependent platforms that are at the core of our sustainability strategy. Planet is about ensuring we have the resource efficiency, sustainable farm management, climate change and water and best stewardship in our plants. People is about embedding our culture, ethics and integrity, occupational health and safety and well-being, inclusion and diversity, human health and nutrition. And positive absolute shareholder returns, 20% or higher per share CAGR, over a 3- year period. Total shareholder return at or above the 75 percentile over a 3- year period and capital deployment of a ROCE greater than our WACC. Sustainability. This year, we have made significant change to our sustainability strategy while reporting by aligning with the global reporting initiative standards and the United Nations Sustainable Development Goals. This provides us with a globally recognized framework that helps guide our strategic development, mitigates risk and business goal setting. After consulting with internal and external stakeholders, the executive and the Board agreed our priority areas are: one, occupational health and safety. Select Harvests' policies and management systems ensure the workplace, health and safety of our employees and contractors; two, food safety, product label and quality. It goes beyond product safety into clients linking to being a leader in the supply of better-for-you plant-based foods; three, water management and stewardship. The effective management of existing processes and systems to ensure efficient use and consistent supply of water across all our sites; environmental impact, environmental management systems to effectively identify and manage our environmental impact including carbon emissions, change of land use and chemical management; five, climate change. Recognizing the impact of climate change on our business in our strategic and operating planning; six, financial performance and business strategy. Sustainable organizational growth strategy that prioritizes our almond-based optimization, brand, geographic and category expansion, enduring customer relationships and efficient use of resources to maximize value for our stakeholders; seven, labor practices, human rights, anticorruption, ethics and integrity, ensuring the organization, our supply chain and customers engage in fair and ethical practices across all of our operations and geographies. Our last sustainability report was published in 2017. We will be providing detailed sustainability reporting biannually, and we'll continue to provide annual updates in our annual reports. Today, we're releasing the 2020 sustainability report, which includes an expansion of the sustainability section of our website. Our website now includes the report, a series of videos outlining sustainability priorities, and their composting activities. I encourage you all to visit our website. The sustainability scorecard, people and planet. Michael has already covered the profit-related highlights, I would like to draw your attention to some of the planet, people and project highlights. Water is definitely one of the globe's most precious assets. Water is a huge part of our horticultural business, both from a planet and a profit perspective. Maximizing the productivity of water is our goal. This is done by minimizing use and optimizing the crop size and quality. In both of our processing facilities and all of our orchards, we manage and monitor every ledger of water we use and recycle what we can. We've invested in state-of-the-art technology to monitor our trees and orchard soils, allowing us to manage the distribution of water efficiently. Energy usage and sourcing is another important input we monitor. Today, 51% of our total energy needs are renewable. In the last 2 years, we've reduced our scope 2 emissions by over 50% and 27.5% in the past 12 months. Our biomass plant has reduced scope 2 emissions by 23%, with the equivalent of taking 7,200 cars off the road. Compost is part of our co-waste from the biomass plant is high-quality potassium. In the last year, we've created farm-specific compost blends utilizing the potassium and other processing waste. We have recycled 31,179 metric tons of compost into the orchard. This carbon-based compost assists us in improving soil structure, nutritional levels and irrigation efficiency. This is an initiative that we're extremely proud of as it closes the loop, is cost-neutral and delivers improved tree health. Zero harm. Our safety and well-being annual target is to improve our year-on-year performance by driving a 15% reduction in the number of incidents and reduce injury severity. The focus of our core strategy is to deliver a 25% increase in hazards identified and resolve the issues ahead of the incidence. Culture. During the year, the company completed an externally assessed culture survey, which provided affirmation of great -- an affirmation of a great people and safety-focused culture, along with constructive feedback on areas of further improvement, like collaboration. Labor management. Our industry is heavily reliant on contract labor. Select Harvests is aware of its obligation to ensure that all labor is treated and paid fairly. All contractors have agreed to comply with our ethical labor policy. We actively monitor compliance. We have several projects focusing on planet and people. We're continuing to invest in water efficiency and increased our water recycling activities. We continue to upgrade our drippers line systems to low-friction dripper tape to whilst in reduce distribution. We've completed the installation of 2 solar plants in South Australia and Victoria, which offset all of the energy consumed by our orchard hubs and on-farm accommodation. Innovation plays an important role in improving our business. We have lifted our monthly market share of Sunsol from 2.9% in January 2020 to 7.5% in January 2021 on the back of the Australian first instruction of probiotics into muesli. We've redeveloped 145 hectares at our Jubilee Orchard with the first crop due for harvest in 3 years. I'll now turn to the Almond division outlook. The outlook for Select Harvests is positive. The 1,566 hectare Piangil Almond Orchard was an outstanding acquisition and adds significant scale to our existing orchard portfolio. We integrated this orchard into the Select portfolio in late 2020, we are happy with its progress. Overall tree health across the entire portfolio is good, and we've enjoyed good growing conditions this year. Harvest commenced on the 15th of February, and the nut size and quality are in line with our expectations. We have harvested just under 20% of our crop. In the event that we have a wetter harvest, we have entered into an agreement with rice growers to drive 30% of our crop. While it's too early to accurately forecast the crop, we're expecting a crop in excess of 27,700 metric tons, 19% lighter than last year. We remain tightly focused on cost per kilo and have redesigned the harvest matrix to improve the productivity and cost. Favorable water price movements will deliver savings of $3 million in financial year 2021, with the water outlook still remaining positive. Carina West processing center has the main focus to commence the redevelopment of the site as part of the Food division restructure. Almond prices have been trading at a 10-year low over the last 12 months. As Michael explained, it is a combination of market access issues related to COVID-19, a large U.S. crop and the strengthening of the Australian dollar. Our current commitments for the 2020 crop are under 20% at $6.7 per kilo. We are forecasting a strengthening in the almond price from today's price which sits at below $6 a kilo. It's too early to accurately forecast the final crop price. You will find an updated pricing chart in the appendix of this presentation. 50% of the crop is being covered at an exchange rate of $0.72. Food and corporate division outlook. Financial year 2020 cash flow delays related to COVID have now been received, and we anticipate future crop cash flows will be consistent with historical patterns. Our strong industrial arm and business is well positioned to take advantage of increasing activity as economies return to normal. Currently, Woolworths -- recently, Woolworths has accepted 16 new Lucky lines, which will be on display next month. Sales of Sunsol continued to grow with further new products underway. As Mark hads previously advised, header Kidder Williams have been engaged to seek expressions of interest in the consumer brands, non-almond products and Thomastown processing assets. It's important that this process -- it's important during this process that we continue to grow the business and maintain high levels of customer service and satisfaction. People are our most important asset, and the protection of their safety and well-being is the #1 objective, the culture survey working from home -- the culture survey and working-from-home opportunities to improve collaboration across the business. We set out -- we have set our sustainability priorities for 2022 and are now formulating our specific goals in the 7 priority areas. Two of the most important goals will be establishing a carbon footprint and how we expect more value from our co-waste. Our 2021 top priorities are safety and well-being. Our #1 objective to ensure safety of our people; two, our horticultural programs, delivering optimal tree health and production, and setting a strong base for the 2022 growth. Cost reductions. Continue to reduce the cost per kilo across all production stages. The Piangil Almond Orchard integration. Invest in plant and equipment to improve yield quality, harvest risk mitigation and irrigation efficiency. The 2021 harvest and marketing program. Maximize the value of the 2021 crop. Manage our cash position. Manage cash, working capital and capital. Strategic growth. Assess organic and inorganic options to deliver additional growth. Almond sales. Continue to capitalize on the growing demand for value-added almonds. Capital investment. Prioritize investments to deliver improved quality and efficiency. Restructuring the food division. Commencing with redevelopment of Carina. Finally, I'd like to thank Andrew Kronan from PwC Audit. Andrew has completed his rotation at Select Harvests. Like Michael, I'd like to thank Mike Carroll on behalf of the executive and staff. Mike has seen the highs and lows of the business cycle. He's always passionate. He provides both challenge and support, which will be missed. Mike, all the best to Sally and the family. I would like to thank Michael and the Board for their support, all of Select Harvests their support; my executive team, Brad, Laurence, Suzanne, Peter, Ben and Urania; our advisers, Kidder Williams, PwC and Mintel for their energy and support. It's been a busy year, a year we should be proud of. Finally, on behalf of our employees, I'd like to thank you, our shareholders, for the faith you have in us. I'd now like to hand back to Michael.

Thank you, Paul, and thank you very much for your presentation. I will now move to the ordinary business outlined in the Notice of Annual General Meeting. The first item of ordinary business on the agenda today is to receive and consider the financial statements of the company and its controlled entities for the financial year ended the September 30, 2020, and the related directors' report and auditor's report. Company Secretary has been monitoring questions received from shareholders. Brad, are there any online questions relating to the financial statements or any aspects of the company's operations?

First one, we have a question that's coming. What current market situations or changes could have a positive impact on Select's almonds prices in 2021?

Well, I think I think the biggest change, obviously, is -- was not necessarily change, but I think the key -- the biggest key is the size of the California crop, which is now in bloom. So what -- at this stage, the forecast is below what last year's record production was, and we will just have to wait and see until that crop comes into being. The other thing, I think, is important is that this increase in demand we've seen from India and China is continuous and maintained. There are no holdups in the shipping, as we've had some logistics issues, particularly with the supply chain. And of course, one of the big key things is the exchange rate, a drop in -- a reduction in the exchange rate. Weakening of the Australian dollar will obviously have a major impact on almond prices.

Another question. Has China recorded orders for the next 12 months, which would match their 2020 trading?

We don't sell that far ahead. Almonds aren't sold 12 months ahead of time. We generally sell in a much shorter time shipping period. And from a commercial point of view that makes sense because we want those contracts executed. I think the key to that question is, if you look at the China -- the history of Chinese demand over the last 3 to 5 years has been growing. I would expect that to continue to grow, and again, we've seen some growth in Chinese demand in this financial year.

Third one relates to costs. Which of the crop cost per kilo outlined on Page 12 of the annual report does the company expect to be able to hold or reduce over the coming years?

I'll can answer that one, if you want. So just going through our major -- one of our major single cost is water. So we would expect our water cost to come down this year based on where the current water market is at. As I explained previously that we won't get the full flow-through of that cost reduction in 2021. But certainly, there will be a partial reduction in water. Similarly, electricity costs are down at the moment, so we're expecting our orchard costs to remain relatively flat, as we do with our harvest and processing costs on a per kilo Q1 basis. The only costs that may slightly rise, as it does each year is our rental cost, and that's based on CPI increases that occur each year. And that will be -- the final determination of that will be what our volume is that we produce this year from this year's crop.

The fourth one is based around the rem report. Has the company considered changing the annual cash payment for SDIs to include some shares to provide more alignment with TSR?

I think we're in a process of reviewing all our incentive payment structures. That process has commenced, and that will be one of the issues that we'll be looking at.

All questions are staged.

And we will now move to the resolutions outlined in the Notice of Annual General Meeting. The requirements of the Corporations Act and background to this resolution have been outlined in the explanatory notes. Shareholders should note that in accordance with the Corporations Act, members of the company's key management personnel, whose remuneration details are included in the remuneration report for the financial year ended the 30th of September 2020, and their closely related parties are prohibited from voting on this resolution. Any votes cast by those persons are void and must not be counted. Exceptions applied to me as the Chairman, voting as proxy on behalf of eligible shareholders, who have directed me on how to vote on the resolution. If proxy votes are open, I'll advise that all vote in favor. Resolution one. The remuneration report has being provided to shareholders, and I now propose the following resolution: To adopt the remuneration report for the financial year ended the 30th of September 2020, submitted as part of the director's report for the financial year ended the 30th of September 2020, pursuant to Sections 250 R Bracket 2 and 250 R Bracket 3 of the Corporations Act 2001. Are there any online submitted questions or comments? The company secretary will now provide the final proxy votes submitted.

Outcome of the proxy votes are as follows: Those in favor, 66,922,116. Those against 819,947. The open and usable votes, 571,121.

Resolution number two, Director election. As the next resolution covers my reelection, I'll hand over the Chair of this meeting to Mr. Michael Carroll.

Thank you, Michael. Resolution 2A is to elect as a director, Mr. Michael Iwaniw, who retires in accordance with Rule 63.1 of the company's constitution. And being eligible, offers himself for reelection, to be elected as a Director. Brad, are there any online questions submitted on this resolution?