Service Stream Limited (SSM) Earnings Call Transcript

Good morning, ladies and gentlemen. I'm Brett Gallagher, the Chairman of Service Stream Limited. It's my pleasure to welcome you to Service Stream's 2022 Annual General Meeting, and it's nice to be back in person, but we have also online. So running a hybrid meeting today. Before we commence today, I'd first like to begin by acknowledging the traditional owners of the land on which we meet today, The Wurundjeri people of the Kulin nation and pay my respects to their elders, past and present. Under Service Stream's constitution, a quorum is required for this meeting, and I've been advised that a quorum is present. So I declare the meeting is open. A significant number of shareholders have already voted and appointed proxies ahead of this meeting, and we thank them for doing so. Prior to the formal aspects of today's meeting, I'll take the opportunity to make some general remarks on the 2022 financial year. Following my remarks, the Managing Director, Leigh MacKender, will provide some further insights into the company's performance and outlook. My address and Leigh's presentation were released on the ASX earlier this morning. After the Managing Director's presentation, we'll move into the formal aspects of the meeting and respond to questions that have been raised in the room through the Computershare platform or received prior to today's meeting. While every effort has been made to ensure that today's AGM runs smoothly for our shareholders, if any technology issues do arise, a recording or a transcript will be available on our website. Before we begin, I would like to introduce my fellow directors who are all here in person. I'll start by Leigh MacKender, our Managing Director. We have Peter Dempsey, Non-Executive Director and Chair of our Remuneration and Nomination Committee. Next to Peter, we have Deborah Page, non-Executive Director and Chair of our Audit and Risk Committee; followed by Greg Adcock, our non-Executive Director and Chair of our Environment, Health, Safety and Sustainability Committee. Next to Greg, we have non-Executive Director, Liz Ward, and joining us for the first time today, we have Martin Monro, Non-Executive Director. Also joining us today and available to answer questions in the end, we have our Chief Financial Officer, Linda Kow, and in the audience here, Trevor Johnson from PwC. Also on the front row, we have a full quorum of our executive team. So welcome all. The Company Secretary has advised that no apologies have been received. By joining our hybrid Annual General Meeting today, you as a Service Stream Limited shareholder or your appointed proxy will have the opportunity to ask questions and submit votes, if you haven't already done so. The voting today will be conducted by way of poll on all items of business, and Computershare will act as the independent returning officer. For those attending the meeting online and who are eligible to vote, as the polls open, a voting icon is available on your screen. Select this icon, it will bring up list of resolutions and present you with options. For those voting online, you are free to submit your votes at any time. To cast your vote, simply select 1 of the options. There is no need to hit submit as the vote is automatically recorded. Please ensure you cast the vote for all resolutions. You receive a vote confirmation notification on your screen. To change or cancel your vote, click the link, Click Here To Change Your Vote at any time until the poll is closed. The votes may be changed up until the time I declare voting closed. For shareholders, proxies and corporate representatives in person, I'll ask you to vote once we have gone through all items of business today to be completing -- to be completed in the blue voting card that was provided to you on admission. White cards for visitors only and cannot vote or ask questions. Shareholders with pink cards are not entitled to vote on certain items of business. I'll provide a warning before I move to close voting at the end of the meeting. It's my duty as Chairman to ensure that shareholders have the opportunity to ask questions and discuss items of business during the meeting. We ask that all questions and comments be concise, be confined to the particular item being discussed, and to the matters relevant to shareholders as a whole, be informative and respectful. Given this is a hybrid meeting, I'll first take questions from those physically present at the meeting, followed by audio questions from participants, who have joined us online and finally written questions. If you're attending the meeting in person, only shareholders with validly appointed proxies and corporate representatives, who are given a blue or pink voting card are entitled to ask questions. When I call for questions, please raise your blue or pink card, state your name or organization you represent before asking your question. For those attending the meeting online, and wish to submit a written question, you may do so at any time during the meeting via the speech bubble located on your screen. Type your question in the chat box on the right of the screen and then select Send. Confirmation that your message has been received will appear above. Please note that while you can submit written questions from now on, I'll not address them until a relevant time in the meeting. While time constraints may prevent us from answering all questions, we'll do our best to address all the questions during the meeting. If you're asking a variable question, please state your full name before asking your question. Please limit your -- please limit your questions to 1 at a time and then rejoin the queue to allow others to ask questions. Okay, with all that, I'd now like to make a few general comments on FY '22. Fellow shareholders, on behalf of the Board, I'd like to acknowledge the hard work and dedication of all Service Stream personnel throughout 2022. I'm particularly delighted by the way, management, led by our Managing Director, Leigh MacKender, have navigated the complexities of the Lendlease Services acquisition and the challenges of the current economic conditions, which Australian businesses are encountering. The welfare of our people and the community we serve remains the Board's highest priority. Pleasingly, in 2022, the businesses continued to maintain its history leading health and safety performance. Turning to our financial performance. Despite the impacts of the many flood events experienced on the Eastern Seaboard, and a one-off margin impact associated with our major project in Queensland, the business delivered a solid EBITDA from operations in the financial year 2022. The result was further underpinned by an exceptional cash flow performance, a better-than-expected contribution from the rebased telecommunications division and contributions from the Lendlease Services business, in line with our expectations. Management continues to successfully manage the lingering impacts of COVID-19, including the challenges associated with the resource constrained environment we're in, and the pressures of rising inflation. Following the acquisition, the business contracted pipeline of ongoing work across its blue chip client base, now exceeds $6 billion. This sets the business up for future long-term growth, providing certainty and continuity for our workforce and management. The Board is delighted with the significant progress made by management in FY '22 on the integration of Lendlease Services. The successful exit from the transitional services agreement and the delivery of forecasted synergies ahead of schedule were notable highlights. A multi-network essential service provider, I'm particularly excited at the opportunities now open to the consolidated Service Stream as the infrastructure investment continues to grow in the telecommunications, utilities and transport markets. We will provide a further update on the status of the integration, along with business' current performance later in the meeting. The Board is aware that many of our retail shareholders invest in Service Stream on the expectations that the company will return a portion of its earnings to shareholders via dividends. I'm pleased that we've resumed the payment of dividends for the full year 30 June 2022. The Board anticipates the continuation of dividends in FY '23 subject to business performance. The Board is also aware, acutely aware, I should say, of the fall in our share price over the recent period and is disappointed like many of our shareholders. The Board and management remain focused on continuing to deliver on objectives that provide strong and sustainable returns for our shareholders. The Board remains of the view that this focus will assist in reestablishing market confidence and delivering a longer-term growth and value to our shareholders. Board renewal. As part of our board renewal process, I'm delighted that Martin Monro agreed to join the Board on the third of October of this year as a Non-Executive Director. Martin brings to the Board extensive operational, contracting and commercial expertise gained across large-scale infrastructure projects, both in Australia and overseas. His skills will be advantageous to the business as it enters its next growth phase. I, along with the rest of the Directors, strongly support Martin's election today. The business has also recently announced that Greg Adcock will retire as a Non-Executive Director at the conclusion of today's AGM. Greg joined the Board in 2016 and was appointed Chair of the Health, Safety, Environment and Sustainability subcommittee in 2017. I, along with the other directors of the Board, would like to thank Greg for his substantial contribution and service to Service Stream during his tenure as a Non-Executive Director, and we wish him every success in the future. Thanks very much, Greg. The Board renewal strategy will continue throughout FY '23, and I anticipate to be in a position to make further announcements in the very near future. Remuneration. During the year, the Board engaged with Ernst & Young to conduct a review of the Service Stream incentive framework against the market practices. We consulted with our investor community and obtained feedback on proposed amendments and have since revised our plans. The Board is of the view that the changes are appropriate, encourage and reward management take a longer-term view of the business, drive behaviors, which will ultimately deliver the long-term sustainable value to shareholders and ensure that the business remains market competitive. However, the proxy voting on the remuneration report that we will present at Resolution 1 today will show an against vote for more than 25%, which means we will likely incur our first strike. Naturally, we're very disappointed by this. However, we have heard your concerns. The Board will use this feedback from shareholders on our remuneration approach and review what changes, if any, we should make going forward. The Board will continue to review the structure of the company's incentive plans to ensure that they remain relevant, market competitive and mostly importantly, align with shareholder expectations. Looking ahead, while the consolidated business offering broader capabilities to new and existing clients in new, current and adjacent markets, the business remains strong -- in a strong position to continue to grow its operations and diversify its revenue streams in the coming years. As a large shareholder in the business, I'm excited for what the future holds for the consolidated service stream. I would like to thank my fellow Board members for their contribution and commitment over the course of the challenging but successful year. Their dedication to the continuing growth and success of the company is considerable and greatly appreciated. And finally, I'd also like to thank Leigh, his executive team and all of our valued staff and contractors for their hard work and dedication during the year. I'll now hand over to Leigh MacKender, our Managing Director, to present to you our view of operations over the last 12 months and our outlook in the future. Thank you.

Thank you, Chairman. Good morning, ladies and gentlemen. I, too, wish to welcome you, and thank you for joining us today at our Annual General Meeting. Can I also say genuinely how pleasing it is to be back operating in a face-to-face environment in these traditional settings, but also facilitating those shareholders joining us virtually. As per the Chairman's introduction, I'll now run through a brief presentation on the business. Presentation largely will reflect an abridged version of what was released to the market on 23 August, but does also provide a short business update on our trading performance thus far. I'll start with a brief overview of Server Stream for those who may be new to the business and not as familiar with the group's operations. Service Stream is an essential network service provider. Our organization designs, constructs, operates and maintains the essential infrastructure, the moving of Australians depend on each and every day. Service Stream plays an important role in partnering with our valued clients and maintaining their critical infrastructure networks right across the country. In terms of the business operations, the group has 3 operating divisions represented on the screen here, utilities, telecommunications and transport. Utilities encompasses gas, electricity, water, industrial customers as well as new energy services. Telecommunications incorporates both fixed and wireless networks, and transport was largely focused on road infrastructure has recently expanded into the rail networks as well. We have a large multiskilled workforce of approximately 9,000, and that's broken up with about 5,000 employees and about 4,000 skilled contractors operating across the business at any one time. Over the last year, the business has conducted over 40 million property visits in support of our clients. We have Australian-focused operations with 80 offices strategically located across the country. And as per the Chairman's comments, one of the highlights of the results that I'll talk through later. Work in hand just exceeded $6 billion at 30th of June. And importantly, 80% of that work is secured with government or government-related entities. Business had a number of positive highlights during FY '22, and I don't generally use the word transformational, I think it's overused often in business, but I do think it's appropriate when we consider the significant year that was, specifically when we consider the major transaction that was undertaken. After the business completed detailed due diligence, we progressed to successfully acquire, complete and then make significant progress on the integration of Lendlease Services. The transaction is significant. And over the past 12 months, the business' revenue has doubled. It significantly increased our earnings. It's doubled the number of employees operating across the business. And most importantly, the acquisition has substantially expanded our capabilities, our service offerings, and the markets that we're operating across. In terms of the financial or broader -- sorry, I'll just go back one. In terms of broader performance highlights, the business generated $91.1 million in EBITDA from operations. That was up 13% on the prior year. FY '22, as per the Chairman's comments, was another strong period in terms of cash flow generation, and we had a conversion rate of 108%, well ahead of the group's 80% target. Business secured significant work in hand, as I just said, just exceeding $6 billion. And we concluded the year with a robust balance sheet, and we're very pleased to resume the payments of dividends. I think another highlight of the business over the last year was our ability to continue to demonstrate resilience in effectively managing some of the headwinds that Chairman touched on earlier. They included COVID disruptions, labor availability constraints, as well as labor and operating cost pressures. I'm very, very pleased to say that the business was able to pull on various levers and offset all of those challenges that were thrown at us or many of the challenges we run over the last year. During FY '22, the group revenue for the year was $1.56 billion. That was up 95% or an increase of $760 million on the prior period. As I stated, EBITDA from operations $91.1 million or 13.7% on the prior year. The group's EBITDA for the year was 5.8%. That did reduce from 10% in the prior year, and that reduction was attributable to the expected dilution associated with the Lendlease Services operations being integrated into the company, as we had foreshadowed during the transaction. Expected reduction, again, foreshadowed by management across our legacy telecommunication operations, as we came off those prior year peaks with nbn build Mark 1. Growth in utility works, which have traditionally been at a lower margin, and we also had some adverse weather impacts that impacted specifically across our utilities and telecommunications divisions. Net profit after tax for the period was $31.4 million. That was down 19% on the prior year. As I stated in my opening comments, I think one of the strengths of the business over the years has been the strong cash flow generations, reflective of our Tier 1 client base, coupled with the business's ability to ensure that we've got optimal processes to support that timely billing and cash flow generation. Cash flow was $98.7 million for the year. We finished 30 June with net debt of $81.3 million. That reflected a leverage ratio of about 1.5x. And as we guided in the transaction, we expect to get that leverage ratio down to about 1x EBITDA over the sort of 18- to 24-month period. As per my opening comments, the acquisition of Lendlease is certainly one of the major milestones and key areas of focus over the year. The acquisition is aligned with our strategy of growing and diversifying our group operations across key markets and effectively transforming Service Stream rather into that diverse multi-network service provider. The graphs on the bottom of the page just illustrate that progression over time. You can see here in FY '21, we had $800 million of revenue across the group -- across 2 divisions and a small number of contracts. That's significantly expanded in FY '22, when we look at pro forma revenue, $1.9 billion, and we start to incorporate those additional contracts from the Lendlease Services group. And then further improves as we look ahead at Work In Hand to say at over $6 billion and a much more even split across our 3 markets. I think importantly, with the Lendlease transaction, that future work that we've incorporated into our business is akin to annuity style. It's maintaining, operating essential infrastructure or undertaking minor capital works on behalf of our clients. The transaction has assisted in reducing our dependency on any single market or customer. And we continue to hold, I think, an enviable client base, as I stated earlier, with 80% of our work secured with government or government-related entities and the remaining 20% held with major industrial asset owners and operators across the country. I stated earlier, another strength of the group was that Work In Hand. Not only has that increased to over $6 billion this year, but that Work In Hand importantly, that we reference here, reflects only initial term of what are often multiyear contractual agreements. It equates to about 3.2x our FY '22 pro forma earnings. And we're really pleased that this year, we secured $1.5 billion of works across the full year. And again, those majority of works were secured around operations and maintenance of essential infrastructure or minor capital works, which are short, smaller projects. On the graph at the bottom of the page as I said just depict both our Work In Hand by segment and type. Given the current economic climate, we provide additional detail in our full year presentation with regards to the contractual agreements and the business's ability to attempt to manage those inflationary pressures in terms of labor and operating costs that we talked about earlier. A few points to note, 87% of our revenue is subject to an adjustment mechanism. That is either a fixed price CPI, WPI mechanism that is incorporated in those agreements or for minor capital works, they're priced on application. Those are shorter projects, 3 to 6 months' duration, typically, where we can take into account rising labor or operating costs into the work that we're bidding. We have limited exposure to fixed-price lump sum D&C or design and construction works that is over a 12-month duration. And as per my prior slide, the majority of that work is a lower risk schedule of rates type arrangement. We've provided detail here around the insight across each of our strategic business units. So you see 85% of the Work In Hand across our telecommunications area is subject to an annual review. That's not a prescribed mechanism of CPI and WPI, but more so a process where we collectively engage with our client. We review our overheads and rates and seek agreement on those rates moving forward. It's far more prescriptive in our utility area, where 95% of our Work In Hand is subject to an automatic adjustment, CPI or WPI. And in transport, about 70% of our work in hand is subject to either a quarterly or an annual review. It's important to note there's no silver bullet in terms of aligning the application of these mechanisms as to when the business may see increased costs. Many of these reviews take place on the anniversary of contracts. And the business, therefore, and importantly needs to pull in other levers to try and manage those inflation cost pressures as they present. Moving to safety. As per the Chairman's comments, the health, safety of our workforce, our clients and the community that we operate across is genuinely our highest priority. With have more than 9,000 resources operating in the field at any time, we really place great emphasis in striving to drive continual improvement across our operations and particularly focused on those higher risk work activities and tasks that are undertaken by the business. During FY '22, the inclusion of Lendlease Services was a factor in some of these leading indicators that are presented on the graph here, shifting backwards. We identified that during due diligence, we understood and expected that to be the case. But I think it's important to say that that's not a reflection that the business is operating in a less safe manner or it doesn't take safety seriously. It's more attributable to the differing nature of the operations that we've incorporated as part of Lendlease, such as operating in live transport settings, maintenance of poles and wires, which have different risk profiles to our traditional business. I and many other executives have been really pleased with the positive aspects in terms of health and safety that the acquisition has brought in, specialist industry experience, strong and proactive HSE culture, and leading HSE management systems, one of which that was incorporated across the entire Service Stream business just recently came from the Lendlease Services acquisition. Business continues to deliver strong safety performance, and we are very, very pleased to see an industry-leading lost time injury frequency rates still maintained below 1. And our focus for the year is per my opening comments is certainly on those higher-risk work activities and looking to implement improved controls and driving continual improvement. As we look at continual improvement, I think a great example of that is the innovation with Service Stream's safety tower net system. Working at heights is one of those higher-risk work activities and the system, which was designed and developed in-house by employees, enables an inflatable safety net to be installed on telecommunication monopole tower. The device provides yet another layer of protection, reducing the risk that any item should fall from the tower whilst we're undertaking our works. And I congratulate our telecommunications and our HSE teams on their innovation and developing and bringing that device to market and deploying it across our contract operations. During the year, the business made measured yet meaningful progress in terms of improved sustainability outcomes across our operations. We have a sustainability strategy, which targets 5 key pathways as indicated here. They include health and safety, environment, people, governance and community. It's important to note that these pathways are directly relate to the specific nature of our operations. We don't take a quick color approach in terms of our sustainability strategy. And these also reflect alignment with the materiality assessment that we conducted in 2021 across all of Service Stream stakeholders, including some shareholders. I note that the group's sustainability report was released on 1 September and would encourage many of our shareholders to visit our website if they'd like to obtain and download a copy. Some of the highlights that I'll touch on as referenced here throughout the year as we continue to deliver that continual improvement across health and safety. And one aspect of that is the launch of our new Enablon HSE management system that I referenced earlier. This year, the group aligned our sustainability reporting to the UN Sustainable Development Goals framework, which is referenced throughout the report. We adopted a science-based targets framework across our Scope 1 and Scope 2 emissions, and we're targeting a 50% to 60% reduction by 2035. I'm really proud of the continuing support that the business provides to aboriginal and Torres Strait Islanders and our business is shortly to release our first reconciliation action plan and innovate level, which will be out over the next month. Of course, given the importance that our people play in our business is our greatest asset, a significant body of work was also undertaken to look at enhancing our employee value proposition. They included a review of nonfinancial and financial benefits, looking at increased training and development, expansion of our graduate program, improved communications and enhancing our support networks across the business, just to name a few. I'll now briefly work through each of our 3 strategic business units just touching on some of the results and highlights, again, as referenced in our full year presentation. Utilities division generated revenue of $697 million, representing an increase of $284 million on the prior year or 68%. EBITDA from operations was $19.5 million, a decrease of $9.5 million on the prior year. And unfortunately, as we outlined at the full year results, this division did experience some challenges, which negatively impacted our EBITDA. They were associated with 2 aspects across our legacy operations that we've discussed at the full year results, but I'll summarize as well here today. The first one is a project in Queensland, where we're responsible for the design and construction of a 27-kilometer pipeline and the construction of a water transfer or pumping station. Unfortunately, in that project, our design partners experiencing some challenges, which support the timely completion and approval of the design and gaining client approval. We were further hampered by prolonged wet weather events that have been apparent across the latter part of last financial year on the East Coast and latent conditions. As a result, the group at 30 June recognized a $5 million onerous contract provision. We wrote back a small profit that have been recognized throughout the project to date. And I'll provide an update as we move through the presentation on the status of that. The second area that impacted our utility operations was associated with some of our legacy metering operations. We have discussed over and during the COVID outbreak that one of the areas that we were seeing impact was a reduction in the reconnection and disconnection of electricity and gas services. That had started to come back. We had obviously a slight rebound, but it had not recovered back to those pre-COVID levels. And I think that's understandable. No one was going to be disconnecting customers during COVID. And after COVID, we've certainly seen, I think, a hesitancy from some retailers to move forward disconnections given significant price increases that are being passed through. The impact of that was we reviewed our Energy & Water segment, and that I just discussed, coupled with a review of our weighted average cost of capital meant that the business took a $38.2 million noncash impairment of goodwill. Those 2 aspects, as I said, did hamper our utility results. I think there was a number of really positive aspects to our utility operations. We've referenced one here with Southeast Water where during the year, our business was successful in securing up to a 10-year term, 2 5-year options with Southeast Water. We're providing support around their water, their sewer infrastructure and their mechanical network, and that contract has successfully gone live on 1 October. Our Telecommunications division had another very positive year, generating revenue of $640 million, $61.5 million of EBITDA and an EBITDA margin of 9.6%. I think it's important to note that whilst that margin was down on the prior year, and you can see that as evidenced in the graph there, management had advised that, that was to be expected. The reduction in scale of our legacy telecommunication operations was one aspect that hampered that margin or impacted that margin. And we also saw a lower margin work associated with Lendlease Services, and that dilutionary impact flowed through to the division. Really pleased with the progress the division made in terms of integrating our combined operations. This was the first area that we focused on in terms of our integration plan and consolidating effectively the Lendlease and Service Stream operations once we completed the transaction in November. Really pleased to have that expanded depth and experience across the business. And I really think our telecommunications division is now uniquely placed. We hold fixed and wireless operations and maintenance agreements with all major telecommunications clients across the country. One of the major areas of focus over the year has been supporting and mobilizing the nbn upgrade program. That's associated with deploying fiber across the legacy copper networks. That program is approaching its expected peak. I'm pleasing that we know there's an opportunity, as outlined by the incoming federal labor, the current federal labor government for that to be expanded to an additional 1.5 million homes, which will also be upgraded with fiber in the years to come. And finally, touching on our transport division. Transport operations understandably were part of the acquisition of Lendlease Services and represents a new reporting segment for the market. Over FY '22, we delivered $220 million of revenue, $9.9 million of EBITDA and resulting in EBITDA margin of 4.5% for the 8 months of which we contributed earnings to the group. Operations were unfortunately impacted by prolonged wet weather events, which caused some disruption to road maintenance activities across both WA and some of the East Coast. Understandably, it's very difficult to re-sheet roads, fix pot holes if you don't have those weather windows where we have dry weather and are able to undertake those operations. But over the course of the year, the business has made solid progress on improving or exiting some of those lower-margin operations that were inherited with the business. We note the decision by Main Roads WA, one of our key clients, to start to in-source some aspects of their maintenance programs over the course of the next year. That will reduce our revenue as we move forward, but it will support an improved margin across the division. It was effectively a breakeven or a slight loss in terms of those operations. I think pleasingly, as announced in March, our businesses regenerate Rail consortium was appointed as a preferred supplier for the Calgary -- sorry, the Gary to Cargo section of inland rail, I knew I'd get that wrong. Importantly, our role in that process as a preferred supplier is to provide specialist operations and maintenance services as part of a 25-year maintenance period. We don't and are not involved in the construction of that. We have no liability associated with the construction of that tunnel. But we do expect to be able to provide a further update in terms of the nature of that opportunity and the status of our contracts over the coming months. Just touching now on the integration program. As the Chairman referenced at the outset, it's been a major focus for FY '22 and continues to be a focus in the current year as we look to finalize that program. So previously stated, I think a lot has been achieved, and we've been really pleased and excited with the progress made against our initial time line of 18 to 24 months. Some of the highlights over the year certainly was the exit of a transitional services agreement. That agreement was an agreement between Service Stream and Lendlease Group to provide back-of-house services and support for processing such as payroll, AP, AR, accounts payable, IT services, et cetera. So the exiting of that agreement on 30th of June, effectively enabled all of the systems to be moved into Service Stream's environment, and our business can now work to drive further efficiency. We can look to consolidate those systems into the future. And that's certainly what we are doing as evidenced by my comments on the HSE system earlier. Really pleased that at the start of the integration program, our business quickly moved to consolidate telecommunication operations, and we completed all the organizational restructures across our corporate support areas, HR, finance, payroll, safety, IT, et cetera. Moving forward, if we look to this year, our focus is on the remaining restructure of our utility division. That's well underway and looks to be concluded by the end of this calendar year. The integration of those key systems I talked about will be a major focus, and we'll also look to continue to drive cost savings across our group procurement items as well as consolidate some of our property footprint that's been inherited from the business. The integration remains on track. We're really pleased to see that we're not only on track in terms of delivering to our synergy number that we outlined, we're actually ahead of target at 30th of June. I'm very confident we will deliver the synergies that we outlined when we announced the transaction. Looking forward now, I wanted to just provide some insight into the promising areas I think the business will be looking to grow into the future. As I mentioned earlier, the acquisition of Lendlease has significantly enhanced not only our capabilities and our service offerings, but some of the markets that we're operating across. They include, but not limited to, the management of poles and wires across the electricity network and enhanced capabilities to manage water infrastructure and also shutdown and maintenance support for industrial customers as well as our transport operations. As you can see here, the size of our addressable market, and that's just considering the maintenance-related revenues, has increased over $25 billion and will increase to almost $27 billion, $28 billion over the coming years. It's forecasted to grow at a rate of about 5% to 6%, and we are continuing to see a trend in outsourcing of these services to professional companies like ourselves. I think generally, our growth will be driven through 3 areas with the adoption of technology and the digital transition, aging infrastructure and population growth as well as the renewable energy transition. And I've outlined a few of those specific programs here, some of which, such as those with nbn, are already underway and some will continue into the future. But certainly, if I think that the business is in a really positive position given those enhanced capabilities and the markets that we operate across now. And finally, we move to a trading update and group outlook. Very pleased to report the group trading performance over Q1 has been in line with management's expectations. We're seeing strong performance across the integrated telecommunication operations over this period, as I mentioned. The position taken at the full year with respect to that Queensland pipeline project, I discussed, remains appropriate. We do expect a second half bias in terms of our revenue and earnings in line with our historical client work programs and the business cycle. And as we released at the full year, the group expects continued revenue and profit growth during FY '23 on the back of the contribution from Lendlease Services. So understandably, we need to manage and successfully navigate through any extreme wet weather events, continuing labor and resource challenges and those inflationary pressures. But as I stated, I think the business last year had performed very well and we'll continue to strive to do so in the year ahead. That concludes my presentation and the update. I'd like to again thank you. I'd also like to extend my thanks to our Chairman and the Board of Directors for your support and leadership over the year, to the executive team and also thank our staff working right across the country for their valued contribution. Appreciate it.

Thanks, Leigh. Before I move forward, I was -- it was remiss of me to overlook in our introduction, the most important person on the table, which today wouldn't happen without him, is our company Secretary, Chris Chapman. So apologies, Chris, for leaving you out there. I'll now move on to the formal business of the meeting. The Notice of Meeting was distributed to all shareholders on the 15th of September 2022, and copies are available on our website. I'll take the Notice of Meeting as read. The minutes from the previous Annual General Meeting held on the 20th of October 2021 were approved by the Board and signed by me. Should any member wish to inspect those minutes, a copy is available at the registered office for that purpose. Now to the advertised business outlined in the notice of meeting. There are 5 items of general business as stated in the notice of meeting and on the proxy form. I, as Chairman, will be voting all undirected proxies in favor of each item of business. There are voting restrictions for some resolutions, as outlined in the notice of meeting, which will apply to those who have an interest in the resolutions or their related parties or associates. Section 317 of the Corporations Act requires directors of a public company to lay before the Annual General Meeting, the financial report, director's report and an auditor's report for the year ending 30 June 2022. The members of the company have received these documents. Please note that a vote on this resolution is advisory only and does not bind Directors or the company. I'll now move on to the items of business. The proxy position on all resolutions will be shown on the screen once I put the resolution to shareholders. Item 1 on the agenda is the adoption of the company's remuneration report. The resolution is now being displayed on the screen. We'll now display the proxy position on the screen. And as stated and as I mentioned earlier, we're very disappointed to receive our first strike, but we understand. We've spoken to many investors and shareholders, and we'll certainly take that on board in the coming year when setting those metrics. Moving on to the next item of agenda. Item 2 on the agenda is the election of Martin Monro. The resolution being put to the meeting is now displayed on the screen. I and all other directors recommend the election of Martin. And before we move to the proxy position, I might invite Martin to just say a few words in support of his nomination and election. Martin?

Thanks, Chair, and good morning, everyone. I was aware of Service Stream from afar for a while and had been very impressed. And I suppose the onboarding and induction process that I've been through over the last couple of months has really only served to enhance that impression. So it's with great pleasure that I'm presenting for election today. As you heard from the chair, I've had 30 years of experience in the construction space. So I do understand D&C and construction risk. And I'm looking forward to bringing that experience in a way that is helpful to the company and complementary to the skills that are already here on the board. So I'm looking forward to getting into it. Thank you for your support.

Thanks, Martin. Now we'll just put the proxy position up there. Moving on to the next item of business. Item 3 on the agenda is the increase in the maximum annual remuneration pool of nonexecutive directors. The resolution is being put up on the screen now. And we'll display the proxy position on the screen now. And then we'll move on to Item 4 on the agenda is the acquisition of securities by Leigh MacKender under the FY '23 tranche of the company's short-term incentive plan. The resolution is up on the screen now. And we will move to the proxy position for item 4. Thank you. And now on to the last item of business. Item 5 on the agenda is the acquisition of securities by Leigh MacKender under the FY '23 tranche of the company's long-term incentive plan. The resolution now is up on the screen and the proxy position. Thank you. Now we'll put up all proxy positions, which as mentioned earlier, Resolution 1 did not pass, but Resolutions 2, 3, 4 and 5 have passed. So congratulations Martin.

Now I'll open the floor to questions, and we might start with inviting any questions in the room. Do we have any questions? No. All right, then we might move them to any phone or audio questions. Do we have any there?

Yes, Chair. we have one on line from Jeff Rogers, and I'll just read that out to you, I think, probably more for the Managing Director. The entry into rail is pleasing to note, though, it was a surprise. Is the escalation of rates to CPI adequate when wages are probably going to rise faster than CPI due to skill shortages, low unemployment and multi-company wage bargaining, as it's most likely to pass through the senate before the end of 2022? So that's the first question. And then the second component to that is, how far away on average is the opportunity to reset the rates to above CPI by renewing or not renewing the contracts as they expire?