AMA Group Limited (AMA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Anthony Day. Unfortunately, most technical issues happened very -- at the very start, but the -- my laptop just died on me, which has my speech on it. But anyway, I'm back again. So welcome to the 2021 Annual General Meeting. We have a quorum, so I'll declare the meeting open. On behalf of the AMA Group I'd fully acknowledge the many traditional owners throughout -- of the country throughout Australia and recognize their continuing connection to the lands, waters and communities. We pay our respects to Aboriginal and Torres Strait Island cultures and to elders past, present and emerging. I'm currently in Sydney, and I would like to acknowledge the tribes of [indiscernible] nation as the traditional owners of the country where I'am situated today. I'd like to start by outlining some of the procedural matters given that we are meeting in a virtual environment for a second consecutive year. While we have worked diligently to ensure the broadcast runs smoothly, should you experience any technical difficulties, a recording of our AGM will be available on our website following the meeting. If we experience any technical issues during the meeting, a short recess may be required. Should this occur, we'll communicate with you accordingly. As outlined in the notice of meeting, shareholders can vote and ask questions of the Board in real time during the business section of today's meeting via the Lumi AGM online platform. The notice of meeting was made available to all of you. With your consent, I will take that document as read. And I would like now to introduce the directors. Nonexecutive Directors, Nicole Cook, Kyle Loades, Simon Moore, Leath Nicholson, Paul Ruiz; and our Executive Director and Group CEO, Carl Bizon, join me in person today from our Sydney Office. Also online, members of the AMA Group's executive leadership team: Adam Twemlow, partner of KPMG, the company's auditor and representatives from Computershare and Lumi who are facilitating the online meeting today. The online platform is now open to shareholders' questions, which I encourage you to submit as early as possible. To ask written questions, please follow the instructions as displayed on the screen. Please note that while you can submit a question from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. For those shareholders who wish to ask a verbal question, an audio question facility is available during this meeting. To ask a verbal question, please follow the instructions as displayed on screen. Finally, due to time constraints, we may not get to answer all the questions. If this happens, we'll answer them in due course by posting responses on our website. Voting today will be conducted by way of poll on all items of business. Instructions on how to vote are displayed on screen. In order to provide everyone with the opportunity to vote, in case -- and in case anyone cannot stay for the whole meeting, I will now formally open poll on all resolutions. I will give you a warning before I move to close voting. I'll provide a brief overview of the 2021, and then Group CEO, Carl Bizon, will expand on the year and our outlook for 2022. After the address, I'll move to the formal business of the meeting. What a year it's been since our last AGM. Since that time, we've seen the ongoing effects of the global COVID-19 pandemic on the economy and our business as well as significant change across the AMA Group. During the year, the board embarked on a program of enhanced governance and capacity building, which led to several Board and Management opportunities and appointments. In February 2021, Carl Bizon was appointed Group CEO. That marked the beginning of a significant transformation for the business, which is well underway and continues into 2022 financial year. With Carl's transition from Nonexecutive Director to Executive Director, we appointed 2 new independent nonexecutive directors, Paul Ruiz and Kyle Loades in May 2021. These appointments were the result of a coordinated and thorough recruitment process, aimed at enhancing the diversity of skills and expertise on the Board. Further, they demonstrated our long-term strategy of growing the composition, capability and independence of the Board. I'd like to welcome Paul and Kyle for their first AMA Group AGM. They're standing for election today. In addition, Simon Moore retires in accordance with our constitution. Simon is a valuable contributor to the Board and is standing for reelection today. His reappointment is endorsed by the Board. Following the conclusion of today's Annual General Meeting, Simon is stepping down from his role as Chair of the Audit and Risk Committee and will be replaced by Paul Ruiz. Simon will remain as a member of the committee. I'll also note that Peter Taylor has nominated himself for election as a Director today. For the reasons outlined in our Notice of Meeting, Peter's election is not supported by the Board. I would like to acknowledge Leath Nicholson, our long-standing director, who is stepping down from the Board at the conclusion of this meeting. Reflective of the significant opportunities available to the group, we've engaged with Leath's firm, Nicholson Ryan Lawyers to retain his services as our outsourced General Counsel. Leath has been involved with the AMA Group since 2009 and joined the Board in 2015. He has been an invaluable contributor over that time. We're exceptionally grateful and has agreed to transition off the board to take up a position of outsourced general counsel. The Board is currently conducting a search for a new Independent Nonexecutive Director, which is expected to be completed later this year. As we have previously disclosed, the former Group Chief Executive Officer, resigned for business in January 2021. The company has commenced legal proceedings to recover company funds on behalf of shareholders. The matter continues in the courts. Turning now to a reflection of 2021 financial year. The year presented significant challenges to our business in the form of the ongoing impacts from COVID-19 related shutdowns. We adopted and continued to maintain stringent safety measures at our sites to ensure the well-being of our employees and customers. Extended COVID-19-related lockdowns in both Australia and New Zealand saw decrease in repair volumes at sites across our network at different times during the year. Careful management of these impacts included temporary standing down of some staff and hibernating selected sites in anticipation of an eventual return to normal operating conditions. Despite these COVID-19 related disruption, we took several steps during the year to focus on and expand our core business with a number of operational achievements. We are very proud that through the continued focus of the entire AMA Group team, we delivered a 50% reduction in lost time injury frequency rate during the year. We are committed to the safety of our employees and ensuring that the AMA Group provides a safe place to work, and this represents a significant improvement across all our operations. During the first half of financial year 2021, the group divested the ACAD and fully equipped businesses. Doing so, we ensured greater focus on the collision repair and associated parts supply operations. In line with our increased focus on the associated parts supply business, we completed the acquisition of Perth Parts Solutions in the first half of financial year 2021, expanding the geographic reach of our recycled older parts supply into Western Australia. Our Heavy Motor division is a strong contributor to our collusion repair business. We continue to expand our national network of Heavy Motor sites, to better service our insurer customers and their policyholders. During the financial year, we completed the acquisition of Western Trucks in Williamstown, Victoria and National Trucks in Newcastle, New South Wales. For the 2021 financial year, the AMA Group reported a normalized earnings before interest, tax, amortization and impairments of $71.5 million. This is an increase of 35% on the prior year. Revenue and other income from continuing operations was $919.9 million, an increase of 11% on the prior year. This improved result is largely attributable to a full 12 months of trading in respect of the Capital S.M.A.R.T. and ACM Parts acquisitions and the operational turnaround of ACM Parts. The Group received and fully passed onto staff wage subsidies from the Australian and New Zealand governments, which ended in the first quarter of the 2021 financial year. These subsidies, combined with the ongoing support and engagement of impacted staffs, supported employee retention and enabled the resumption of trading as restrictions lifted and repair volumes began to recover. The Group reported a net loss after tax of $99.1 million for the 2021 financial year. This result was significantly impacted by the $90.6 million noncash impairment of goodwill related to the Capital S.M.A.R.T. acquisition. This impairment reflected the risk and uncertainty associated with COVID-19 and related allowances in respect of revenue and earnings projections. The Group also reduced net debt by $53.8 million during the 2021 financial year, mainly for the proceeds from the sale of ACAD and fully equipped businesses. This asset sale related to debt reduction saw us close the financial year with a net debt of $173.3 million and $57.7 million in undrawn debt facilities. With a proportion of our debt soon to become current and ongoing uncertainty regarding the impacts of the COVID-19 pandemic on operations, in September 2021, we've launched a capital raising and bank facility amendment process to ensure that the company was appropriately financed for both the short and medium terms. By early October 2021, the AMA Group had successfully completed a $100 million accelerated for 1 to 2.8 pro rata non-renounceable share entitlement offer at an offer price of $0.375 per share and issued $50 million of convertible notes. We chose this structure to ensure a raising of the appropriate size to achieve the enhanced banking structure and have sufficient funds for working capital liquidity, including for COVID-19-related disruptions and to support growth initiatives. A significant entitlement offer component was chosen to ensure that our existing shareholders, many of whom are long term were able to participate. There was a particular focus on enabling as many of our shareholders to participate as possible, including those in the United States who are usually excluded from doing so. Both the Institutional and Retail Entitlement Offers attracted strong demand, and we thank our shareholders for their ongoing support. We're also humbled by the demand for the convertible notes and thank the investors who participated in that process. Net proceeds from the capital raising were used to repay $72.5 million in bank debt. The amended banking structure has no bank facilities maturing before October 2024. Further, the first covenant test is in June 2022, with testing in June and September based on annualized -- annualization of financial results from January 2022. Covenant testing will then revert to a standard last 12 months basis from December 2022. AMA Group recently released its first quarter activities and cash flow report to the ASX, with total available funding of $71 million at the close of the first quarter of the financial year 2022. Based on the first quarter's cash used in the operations of around $13 million, the Group has 6 quarters of funding prior to the inclusion of $46 million related to the retail entitlement offer that was received in early October, and assuming the continuation of trading conditions experienced during the first quarter. While the second quarter so far has been -- has significantly -- had been significantly impacted by COVID-19-related restrictions, we expect the -- an improvement in trading conditions as lockdown cease and the world returns to normal. We saw when the lockdown previously eased in Victoria in early 2021, repair volumes rebounded very strongly. We can already see an increase in traffic in New South Wales and Victoria, so are confident the repair volumes will also rebound strongly. Now turning to the AMA Group remuneration framework. Since I joined the Board, we have been working to improve both the remuneration framework and disclosure. The objective of our remuneration framework is to attract, motivate and retain key personnel within our business. It is also designed to align their interest with the interest of shareholders by matching long-term rewards with the long-term performance of the group. Following an extensive review process, we have made changes to the 2022 financial year long-term incentive, or LTIs, to enhance the alignment between executive remuneration and the shareholders experienced during the period of uncertainty for the Group. Additional information is included in the Notice of Meeting, and I'll cover off some key points now. First, the LTI includes re-weighting of the executive remuneration to reduce the maximum LTI opportunity for the year for the Group CEO from 150% to 100% of fixed remuneration. The earnings per share compound annual growth vesting conditions will be replaced by an absolute compound annual growth, total shareholder return vesting condition, with the condition applicable to 50% performance rights. The purpose of this change is to focus executives on shareholders' returns. The relative total shareholder return vesting conditions is now applicable to 50% of the performance right, an increase from 20% and the Comparator Group has been changed to measure performance against a broader group of companies, with which the group competes for equity capital. We've also made changes to the short-term incentive, or STI, arrangements for executives to drive a sense of business urgency. The STI structure introduces a 50% award deferral into equity to provide executives, particularly those who have recently joined the business with more connection to shareholders. We'll continue to consider and revise the terms of the remuneration framework to ensure they remain appropriate. Within enhanced banking structure, the successful capital raising and a fresh remuneration framework, we are well positioned for the future. On our behalf of the Board, I'd like to thank management team and all our people for their tremendous effort and the hard work of what's been a challenging year. I'd also like to thank our business partners and customers for their ongoing support. And most importantly, thank you, our shareholders for your ongoing support of the AMA group. With that, I'd like to hand over to Carl, who will talk more to the future of the AMA Group. Carl?

Thank you, Anthony. I'd also like to welcome everyone who is online for today's meeting. This time last year, I was a Non-Executive Director on the AMA Group Board with no expectation that today, I would be here speaking to you as the group CEO. Now after about 9 months in the role, I'm pleased to share with you my observations and thoughts on the outlook for the business. Before I do so, I would like to recognize the support of our shareholders, in particular, with respect to our recently completed capital raising. I was greatly encouraged by the level of interest and belief in our business, strategy and team. I see great opportunity for us and continue to focus on the growth of our collision repair and associated auto parts business. While the underlying business strategy is fundamentally the same, the management capability and business structure to operationalize it has significantly changed. I have previously described the 3 dimensions of value, procurement, production and partnerships, which provide a pathway for the business to deliver growth, margin expansion and cash flow generation. These 3 dimensions of value are supported by our new business structure in which we have aggregated areas of excellence and expertise by grouping like functions within our business. The first dimension of value for the group is procurement. Our consumables and paint purchasing have been done at a Group level for many years. However, the process for purchasing parts remains largely intermediated. The Group spends around $350 million on parts in a non-COVID-19 affected year, and we see enormous opportunity in this area. Whether those opportunities are in the form of organic growth in our existing Supply business, acquisition or alternative supply chain opportunities remains to be seen. We have been building out our procurement capabilities within the business, and I look forward to elaborating further as the team gets settled and we move towards finalizing and executing our procurement strategy. Next, within the production business units, we see the greatest structural change. We have group sites that compete the complete rapid repairs into the drive business unit, sites that address higher severity repairs and prestige vehicles make up our non-drive business unit. Finally, the heavy motor business unit repairs trucks and buses. This new structure delivers the greatest ability to share knowledge between like sites and in the process, maximize performance across the network. We will continue to focus on margin expansion through operational excellence and delivering compelling capacity to our customers with unrivaled depth of capability across repair and vehicle types. Further, we will continue to grow through acquisitions in a targeted manner, considering the needs of our customers and the quality of the opportunities that present themselves. Finally, partnerships. By building trusted relationships with our insurer and fleet partners and delivering the breadth of the Group in one economic consideration, we will constantly strive for win-win contracting arrangements. By providing a best-in-class, high-volume capability with all the governance and oversight expected by our partners, we are confident that we can offer a unique service proposition. Underlying the structure and dimensions of value, as always, are our people. At the heart of our businesses are incredibly talented and experienced panel beaters, spray painters, center managers, customer service officers, estimators and any number of incredibly skilled and capable people. These are the teams who drive the business and ensure that cars which come in to AMA Group sites are repaired and returned to their owners safe and ready for the road. Since becoming the Group CEO in February, I have been working to build out a leadership team with the depth of capability, experience and knowledge to facilitate the execution of our strategy. This team of senior executives, some with significant global experience, has the capability to run a complex business of this scale and is commensurate with AMA Group's current size and future potential. Now turning to the outlook. We recently released our quarterly cash flow and activities report for the 3 months ending 30 September 2021. This was a challenging quarter. Our 2 biggest markets, Victoria and New South Wales, experienced reduced repair volumes due to prolonged COVID-19 lockdowns. I believe that the $13 million in net cash used in the operating activities over the quarter reflects the fine balance of carefully managing cash while simultaneously maintaining our ability to quickly return to normal operations as COVID-19 restrictions ease and repair volumes return. This careful management, combined with the successful capital raise, saw us end the quarter with $71 million in funding available. With an additional $46 million from the retail entitlement offer received in early October, we had over $100 million in cash available at the end of October. In early November, we had 15 shops hibernated and 121 staff temporarily stood down. Weekly national averages for drive and non-drive showed approximately 37% and 16%, unutilized booking capacity on a normalized basis, respectively. In New South Wales, Drive and Non-Drive showed approximately 40% and 45% in unutilized capacity, respectively. In Victoria, Drive and Non-Drive showed approximately 52% and 26% in unutilized capacity, respectively. Apple mobility data indicates that Melbourne is at almost 90% and Sydney, just over 100% of their pre-COVID mobility rates in recent days. We have seen in the past that kilometers driven is correlated with repair volumes, so we expect to see our repair volumes build in the near term. While the first half of the 2022 financial year is likely to remain challenging as restrictions continue to ease and volumes return over time, we are well positioned to enjoy more normal operations in the second half of the 2022 financial year. We have an incredible team, both at the site and corporate level. We have a sound strategy and the management capability to execute it to unlock the value inherent in the AMA Group. While these strategies will take some time to bring to fruition, I look forward to the future of the group. In closing, I would like to thank the Board, the AMA Group employee team who are at the heart of everything we do, our insurer, fleet and other partners, our end customers and our shareholders for their ongoing support. I'll now hand you back to Anthony, who will take you through the formal business of the meeting.

Thanks, Carl. I confer -- so I'll just move to the polling business of the meeting. I confirm that Christina Piccolo from our share registry, Computershare has been appointed to act as returning officer for the purpose of conducting and determining the results of the poll. I have written advice on the proxies received today, prepared by share registry. Proxy votes received represent circa 60% of the issued share capital of the company. As Chairman of the meeting, I will vote in favor on all open proxies for all resolutions to be put to the meeting with the exception of Resolution 5. The notice of meeting was made available to shareholders on the 15th of October 2021. And unless there are any objections, I'll take the notice, including explanatory notes, as read. So the first item of business is to receive the annual financial report, including directors, declarations and accompanying reports of directors and auditors for the financial year ended 30th of June 2021. A copy of the 2021 annual report was made available to shareholders on the 25th of August 2021 and also available on the AMA website. There is no formal resolution to put to the meeting in relation to the adoption of the 2021 annual report. However, I will respond to questions from shareholders in relation to the annual report. Adam Twemlow of KPMG is also available online to respond to any questions relating to the audit and the financial statements. We'll also take questions about or any comments you may have in relation to the management of the company. So do any shareholders wish to comment or ask questions in relation to the management of the company or the 2021 annual report? So Alex?

We've got a written question from Mr. Steven Maine. Did any of the 5 main proxy advisers in the Australian market, ACSI, AXA, Ownership Matters, Glass Lewis and ISS recommended vote against any of today's resolutions, which is the proxy adviser [indiscernible] and has not been a material proxy protest vote against any of today's resolutions. Will you disclose the proxy guidance before the debate on today's resolutions, so shareholders can ask questions if there has been any?

So I think the way I'd answer that is, yes, there's a variety of responses from the various proxy advisers coming into today's meetings. There was some who had some issues in regard to some of the history around this company in regards to the remuneration. But there was no protest vote that I could see whatsoever in what was coming through. Some of which myself and particularly Nicole had a number of meetings with the proxy advisers, and they appreciated our improved disclosure that continues and where we sit. So yes, I think that there's nothing really there other than there was a variety of votes that came through from various proxies.

We have another question from Mr. Steven Maine. Treasury Wine Estates has voluntarily moved to annual elections to the directors in line with best practice that occurs in both the U.S. and the U.K. Dual listed companies like News Corp, BHP and Rio Tinto all do this due to the loss in the U.S. and the U.K. What does the Chairman and the new directors being elected for the first time today think about mineral resources and [indiscernible] typographical error intended to save AMA Group? Adopting this model at the 2022 AGM so that all directors can be all regularly accountable to shareholders.

I think, yes, you've seen some organizations that have moved to that where -- particularly where they have operations in other jurisdictions around the world. This is something that you constantly review over time as what is best practice. And at this stage, we haven't discussed it, but will be something that we'll continue to monitor and seek shareholders' views on what is applicable to our business at the time. So we'll make that decision closer to next year's AGM.

We have another written question from Mr. Steven Maine. What is going on with the substantial shareholder reporting on Page 114 of the 2020 to 2021 Annual Report? This is meant to be a list of beneficial shareholders above 5%, but has included 3 nominee shareholders with more than 5%. HSBC nominees, JPMorgan nominees and Citicorp nominees. You then go on to list UBS nominess is 4.55% and National nominees of 3.25% and now both below 5%. Please name any actual beneficial shareholders who own more than 5% and undertake to get this disclosure right in next year's annual report.

I appreciate you picking up something in the annual report and if there's some improvement to be made, we'll certainly address that. And we -- if there's something to come back to you and we'll address that also in a response after this meeting, but I don't have the detail regarding that right at this moment.

And we have another question from Mr. Steven Maine. Whose idea was it to limit the ability of the 4,000 retail shareholders to only apply for additional shares equivalent to 50% of their entitlement in the recent 47 million 1 for 2.8 [indiscernible] offer. Do you agree this unnecessary and unwarranted restriction attributed a 17 million shortfall on the 47 million offer with windfall gains going to the Swiss underwriting UBS and its unknown institutional clients? With the stock at $0.45 today, do you agree that retail shareholders have been collectively diluted out of $3.4 million in value. Are you prepared to launch a $30,000 share purchase plan for retail shareholders as the main [indiscernible] for this unfair structuring?

Yes. The structuring when you're going through these types of capital raising, is always difficult to make sure you get the balance right. Our view at the time was, we were very much focused on how do we protect our existing shareholder base, make sure that we rewarded them in the right way, but also be able to give an ability for a broader base to participate and get support. We're really pleased with the support we got across all parts of our shareholder base, but I think that we will continue to review how we do these in the future and we'll make sure we get the balance. But at this moment, we're very comfortable with the way it was run.

We have another question from Mr. Steven Maine. Given the interesting discussions across a range of topics today, could the Chair undertake to make an archived copy of a webcast, also full transcript of proceedings available on the company's website. [indiscernible] Chairman, Peter Costello, who appreciate the benefit of the parliamentary handset transcript where MPs don't have to scroll through all videos to find out what was said, made this change last week and had a full transcript of 9th AGM online before the end of the day.

Yes, it's something -- well, I'm not sure if technically, we can do that. But if we can, we'll certainly review it and see if that's possible. But as far as the transcript deals -- we have copies of that, both Carl's and mine speeches, as well as the process we've gone through onto our website. So you'll have that. But I'll talk to our people and see what can be done.

We have another question from Mr. Steven Maine. Could Leath Nicholson comment on how many millions of dollars his law firm Nicholson Ryan Lawyers has built AMA since first they involved in 2009. Has AMA been among the top 5 clients for billings in many years since 2009? For the Audit Committee Chair comment on how much has been paid by AMA to Nicholson Ryan Lawyers as related partner transactions since Leath joined the AMA Board in 2015. Over the 6-year period, to be able to put out legal workout tender. Finally, can you name any other comparable ASX-listed companies that haven't outsourced general counsel.

So in relation to -- we took on feedback at the end of last year and the AGM, regarding independents and so forth, and we made changes at that time in a number of areas. One of the things I talked to Leath is, he's got incredible experience in history of this organization, and he said to me, I think it's time that I moved off the board at the time at this year's AGM, which -- but I particularly and the other Board members wanted to retain his expertise and knowledge of the history, particularly as we've got a relatively new Board who doesn't have a lot to do with that. So I'm very comfortable with the role he'll be playing going forward and really thankful that he has agreed to do that. In regard to the amount of fees, in each of our annual reports that has been disclosed, the fees structure of Leath has come through, particularly in my time on the Board of what his organization has earned. So I'm not sure that it's worthy to go through all that at this point. But if there's any detail left to be clarified, we'll clarify the at the meeting.

We have a written question from AutoCo Propriety Limited. There is no one currently on the Board or an executive level that has experience running a smash repair business to understand the impact and operational level. Is there a plan to close this gap?

Certainly, we have -- Carl and I have lots of conversations about the type of experience that he has within his management team and in the Board itself, we've got quite a diverse experience. We do a metrics when we go through a search of the type of experience we need. Our alliance will be on Carl and his management team. We are very much -- many of them have come from various parts of our value chain, not just the panel industry, whether it be the motor repair industry, the motor industry, or the major customers, insurers. So we've got diverse skills in that team. At the next level down, we have hurdles of experiences where we need to and how to run the individual panel shops. And we're in one today, and I've just recently done a tour and looked at our operations here, and it's very much people who have a lot of experience in running those as well. So -- but I take it on Board that it's something that I know I've had discussions with Peter Taylor, who came and spoke to me a number of times. That's something that we will continue to monitor and make sure that we do have the appropriate experience going forward.

We have another question from WaterCo Proprietary Limited on similar vein. There's been an enormous amount of business IP and knowledge that has led the group at all levels, is there a plan to replace this where the...

So yes, we lost some of the key staff in one of our divisions, in particular, which were associated with -- didn't appreciate the operating model perhaps that we were going to run through for other reasons. So I think what we've found across the group, we're talking probably less than 15 odd that I think they're referring to. And of that, we have nearly over 3,500 employees across this Group, across many operations. And there's a lot of experience at that operational level on how to run these. So I have a lot of confidence and Carl does as well I'm sure in our ability to be able to manage those and to say that we don't have the expertise at the Board level or whatever. I think that there's enough expertise in understanding how this business runs.

We have another written question from WaterCo Proprietary Limited. I'm going to roll to these questions together here. So bear with me. How much do Capital S.M.A.R.T. make, how much does the gross profit of Capital S.M.A.R.T. compared to the original AMA panel division? And the second question if you normalize the accounts, removing JobKeeper and other subsidies, what are the profits in Capital S.M.A.R.T. and the AMA Panel division?

So we would normally not disclose that type of information. What we're looking at doing is recently is, as we've changed our operating model to Drive, Non-Drive and Heavy, we will start to look at what's appropriate to disclose to the market in regard to the performance of each of those and what are the metrics we want to measure them on. And that's a work in progress because we've only recently moved into those operating divisions, and we'll continue, and you'll see more information at our half year results coming forward. But we would not normally go down to that commercial in confidence information that we wouldn't disclose at that detail.

We have another written question from WaterCo Proprietary Limited. Do you expect to get the budget in the next quarter with volumes coming back?

I think there's early shoots coming through. And we've just recently this morning had a conversation with the Board around what we're seeing with the activity on the roads coming back. I caught off and say, it's raining and lots of cars on the road, that's a good thing for our business. And that certainly one of the things that's occurred in New South Wales and Victoria over the recent times. So we're starting to see some early shoots, but it's not where we need it to be as yet. And I think we're taking a cautious approach and working with our insurance partners to make sure that we're there ready. We have opened up many of our shops and the majority have come out of hibernation of recent times. I think not all at this stage because we just haven't seen everything come through, and we'll continue to monitor that. But as we hit this next quarter, I think we're hopeful that we'll start to be back to pre levels, but that's not a promise, that's just a hope that we'll get there, and we'll see how we track and we'll keep you informed as we get to our half year results.

We have a recent question from a shareholder, Russell Hill, who asks whether this Board has tabled or considered any offers to buy any or all of the company.

We have none.

We have an another written question from shareholder, Russell Hill, who asks how many sites were profitable in the 2021 financial year and also seeks a breakdown into Drive, Non-Drive and Heavy?

And that's -- we will break it down, as I've just mentioned into those new operating divisions and what are the appropriate metrics that we'll disclose and we'll come back to the market as soon as we're able to report on that basis. But we would never report at a site level because often the sites have got various dependencies on each other where we move vehicles around. So it's just not appropriate to report on a site level.

We had another written question from Mr. Steven Maine. How important is the Suncorp relationship going forward, both to the shareholder and to client? Have we explored potential strategic relationship with Insurance Australia Group and a 30% shareholder partner in New South Wales and Victoria, namely RACV Victoria, which is Australia's richest [indiscernible] worth an estimated $3 billion. If IAG, RACV report a 10% to 20% stake in AMA, have an incentive to direct their repair work in our way, does our existing Suncorp relationship undermine our relationship with IAG, RACV.

So to the start of that question, which is how our relationship is with Suncorp, we have a very strong relationship with Suncorp. They've been very supportive to us. We have ongoing dialogue with them on a regular basis. And now it's at the Group level as Carl's changed this structure, we're having that at a Group level across the whole business. And I would suggest that they're incredibly supportive. We're a supportive of them as well. There's always challenges with any relationship where -- but we're not dependent on them 100%. In regard to IAG, they're one of our major customers. So there is no doubt that we have good conversations with them where we fill in their ability to service their customers. And there is very much an openness to more and more business with IAG and we think there's a great opportunity there over time. But I don't think one excludes the other and we have multiple relationships with many insurers. And we'll continue to expand our distribution across many more insurers going forward. And we're not reliant on just 1 or 2.

We have another written question from Mr. Steven Maine. [indiscernible] 63.6 million in JobKeeper, 3,342 staff over 2 financial years, while we'll be paying executive bonuses in 2020, 2021 and which includes this government handout as revenue, particularly given shareholders have received such poor returns. Has this controversial move triggered [Audio Gap] remuneration drive today?

No, it hasn't. But I might ask, rather take a rest and ask Nicole to step in as the Chair of the Remuneration Committee to address that question.

Thank you, Anthony. Yes. So with regards to JobKeeper, the very first thing I'd like to talk about is the important retaining our team members. And all the money received in JobKeeper -- and so that we could enable the workforce to return to work when volumes return to normal. So as you might have experienced or seen last year with the brief return to normal, we quickly went into a talent deficit, and we needed to make sure that we have all of those workers back and ready to go when volumes return to normal. So that's the first thing, is that JobKeeper money went directly to the team. The second piece is that with the executive team that we have on board, we wanted to make sure that we were able to remunerate them for the year that they have had and the performance that they were able to deliver during that period of time. So we did consider that, and we were able to retain the executive team who are driving the business forward now. And finally, as disclosed in the first disclosure in the rem report, we have is our STI program. This is the first year that we've actually disclosed our targets, and we wanted to ensure that we were measuring and continuing to measure against those targets in a way that was transparent and incentivized all stakeholder groups to an outcome, not only for this year, but for future years. Are there any further questions on that?

Yes.

It's mine as well as well, answer them all well, we can.

Before the next question, the Australian Shareholders' Association requested a clarification and on proxy adviser as described in one of the early questions. They prepare voting intention reports and votes the undirected proxies it receives accordingly. They does not make voting recommendations. And with that, we have an audio question from John Wittington from the Australian Shareholders' Association. John, you'll be unmuted.

Hello, John.

I've got the written version of the questions as it seems that he's having some technical difficulties. So first question. My name is John Wittington. I'm the volunteer of the Australian Shareholders' Association. Today, I'm on proxies for over 275,000 AMA Group shareholders. Mr. Chairman, we would like to thank you and the whole AMA team on persevering through a very difficult year. Mr. Chairman, I thought the idea of consolidation was still lower overheads and increased margins, but your cost to income has increased over the past 8 years, and EBIT and EBITDA margins decreased over this period, albeit they are up a bit from last year. Is the consolidation strategy really viable?

Yes. So really appreciate it, John, and I know we had some very good conversations over time. So I think you're looking at it in isolation, I think that what Carl and his team has outlined as an operating model going forward is about realizing some of the benefits of a scale play. And I think the consolidation play that you've talked about is how do you bring that together as one organization. And I think Carl's strategy and the strategy of his management team is to bring the efficiencies across the whole group. And that's where we believe going forward, there is enormous benefit in our model and our ability to acquire the right strategic assets at the right time. And I think you'll see over time, and I know we're talking about a lot as an improvement in those results over time. But I think the new operating model provides us the best opportunity to realize the benefits of the scale pay.

And the other question from John Wittington from ASA. We appreciate the capital raising you held earlier in the year. It was a pro rata offer, which is much better to existing shareholders than the placements you've had in the past. That said, our announced full pro rata offer is even better. So why would the company consider using -- so the Board of the company consider using renounceable rights or entitlement offers in the future?

We'll look at each -- at the requirements at each time, John, and decide what's the best option for us. But we take your comments on Board and understand where you're coming from, and it's something that we'll continue to discuss as we look at future raisings should we need to do them, hopefully, not through a while now.

We have another written question for Mr. Steven Maine. Given that land values are surging at the moment, have we been able to rationalizing or redeveloping any of our sites a bit like the way [indiscernible] CSR make fortune from repurposing and selling of all site. What is the book value of our company on repair shops? What proportion do we lease? And other cleanup projects that we provisioned on the balance sheet?

So we don't own any of the sites. We lease all our sites. So that's an answer to that question. And we are rationalizing our sites over time depending on what our customer needs are and where we see the volumes coming in.

And we have another written question from Mr. Steven Maine. Will [indiscernible] election today, via same shareholders?

There was no reason to do so. But should there be questions of those candidates, they're available to.

There are no further questions on this item.

Thank you so much for your questions. And I really appreciate your interest in the organization. So I'll move now to the next item of business, which is the first resolution. So in accordance with the Corporation Act, a resolution to adopt the remuneration report is included in the 2021 annual report is required to be put to shareholders of the company. The vote of this resolution is advisory only and nonbinding on the company. However, directors recognize the outcome of the resolution as an indication of shareholders' sentiment in relation to the 2021 remuneration record. Do any shareholders wish to comment or ask questions on this resolution?

There are no questions for this resolution at this time. One's just come through. Mr. Chairman, we have -- sorry. We have a question from John Wittington from ASA. Mr. Chairman, this year's report is generally clean and understandable, and we appreciate the improvements from last year, although it is still missing a table of actual remuneration. Whilst we acknowledge that this new CEO's pay is lower than the previous one, we are still concerned about the level of pay. According to benchmarks for the Godfrey Remuneration Group, Mr. Bizon's base pay of $900,000 is closer to 75th percentile for similar sized companies and is likely on target total remuneration of around $1.8 million is considerably above the 75th percentile for similar sized companies. Director fees are also rather high when compared with similar benchmarks with all directors getting more than the 75th percentile for similar size companies. Why should shareholders be paying so much?

No, I think -- so first, in relation to the CEO's remuneration, we were very fortunate being able to attract a very qualified, experienced candidate that has taken on the business at a very difficult time and done an exceptional job in doing so. And I think we've been endorsed by doing so. And at the time of the conversation with the CEO, it was what type business we were really looking for, is it -- where we are today or where we want to take this business? It's a bit the same answer with the directors. Where are we today? But where are -- where do we want to take this business and what talent do we want to attract to take this business. Recognition by the Board and the company that the opportunities in this organization is enormous, and we need to attract the right talent to be able to take it there. And we're very comfortable with that. And that's why shareholders should support it.

We have another written question from Mr. Steven Maine. What is the proxy position on the rem report?

As I said to you previously, Steven -- Mr. Maine, there are varying views on the proxy report from the proxy holders on the report. I think it's a little bit complicated to go through each individual one, but there are some we are supportive of and some of them are not. And for varying reasons, whether it be historic rules they have in regard to previous actions, not in regard to what's happening today. But I think the majority who I spoke to were very supportive of the improvements we've made, but they had issues with certain parts of it.

There are no further questions on this resolution.

So if there are no further questions, please see the valid proxies received from this resolution on the screen now. Okay. So we'll look to the second resolution. Resolution 2 relates to the election of Paul Ruiz, who retires in accordance with the company's constitution and the eligible has offered himself for election. The explanatory notes in the notice meeting contains particular support skills and experience, which I will not repeat here. Do any of the shareholders wish to comment or ask questions on this resolution?

We have a written question from the Australian Shareholders' Association. Mr. Chairman, it's John Whittington from the ASA, can we hear the directors speak to their election. This is no listed company AGM practice, and it is the one change every 3 years for retail shareholders to be able to hear and assess their directors. In particular, we would like each director up for election to outline the skills, experience and approach they believe they bring to the Board that is directly relevant to the next 10 years of the company's strategy.

So John, I appreciate that. And I'll give Paul to make a couple of brief comments. Due to the virtual nature of this AGM, it was a decision we not have a long speech from each of the nominees. I know you've made that comment last year, John, and that was something we were planning to do. But unfortunately, the virtual nature makes it very logistically impossible, difficult, but I'll ask Paul just to make a couple of comments on -- perhaps, Paul how you've seen your first few months and what you're looking forward to?

Thank you, Anthony, and thank you, Mr. Whittington, for giving me the opportunity to speak, virtually today. And hopefully, next year, we'll be able to meet in person, if not before. As a fellow shareholder, it's a privilege to be standing for election today. I'd like to provide you with a little bit of background to my experience, and how I'd like to contribute to your company. So hopefully, I'll address your question in that way. By background, I'm a chartered accountant and spent all of my executive career with a Big 4 accounting firm, KPMG, initially in the U.K. and moving to Australia 25 years ago. I'm extremely fortunate to have had a wide range of different experiences in my career, much more so than is common in the professional. The latter half of my career was spent auditing large and usually financial services companies, but I'm extremely fortunate across a wide range of different industries, including smash repairs. I've also led a range of different engagements and projects, including capital raisings, IPOs and many M&A transactions. Since retiring from executive life, almost 5 years ago, I've held a number of governance roles, I currently sit on Board of a large life insurer, an international charity that's bringing an end to avoidable blindness and I also set an audit and risk committees for 2 New South Wales government agencies. I'm excited to be joining the Board. I think there's a tremendous amount of opportunity in this company and I'll bring audit, control, risk management and reporting expertise. I hope that I have the skills and experience to make a meaningful contribution to this Board. And on that basis, I seek your support today. Thank you.

Thank you so much, Paul.

We do have an additional question for this resolution from Mr. Steven Maine. Has Paul Ruiz had any dealings of external candidate, Peter Taylor? And if there was a litigation, would you potentially be a suitable director?

I don't believe Paul has had any...

Correct. That is correct.

However, I have met with Peter a number of times and explained the situation with him, and we'll continue to have conversations over the next period.

There are no further questions on this resolution.

So thank you very much. There being no further questions, please see the valid proxy received for this resolution on screen now. Thank you very much. We'll now move to resolution 3, relates to the election of Kyle Loades, who retires in accordance with the company's constitution and being eligible and is offering himself for election. The explanatory note in the notice of meeting contains particulars of Kyle's skills and experience, which I will not repeat here to save another questions from John, so we'll ask Karl just to make a brief comment, if you won't mind Kyle.

Thanks, Chair, and thank you all shareholders for the opportunity to speak to you. I bring to the AMA organization over 20 years of motor vehicle industry experience, beginning in a multi-franchise motor dealership, I later on started a new innovative business called Auto Advantage, which I started from scratch and build it up to the extent that it was sold as a trade sale to a listed organization in years. I was fortunate to join the NRMA Board. NRMA, the mutual, and I was on our Board for 12 years, and for 4 years as its Chairman. And during that time, I was also on the Board of other motoring organizations, Thrifty Car Rental that many of you would know of. I was fortunate to lead the organization through significant change, including the evolution of electric vehicles and also exploring where the world was heading in terms of autonomous vehicles, which are they're not here yet, which they're not really, they will be coming. Both of those trends will highly impact the AMA Group's future, and I'm very confident that I can add to the successful strategy as we continue to grow the organization. Finally, I've been involved with various community charities, medical research institute, a Westpac Helicopter Rescue Service. I'm the Chairman of a superannuation fund, a $14 billion fund. I'm on the Board of Australia's largest mutual bank, highly regulated organizations, and I bring to the organization significant governance experience. So I'm excited to be considered as a candidate to the AMA Group Board. I think, I can add value from industry experience, governance experience. I can add to support the Board and the CEO and the team to successfully grow into the future. Thank you.

We do have another question from Mr. Steven Maine. Did the directors have a line of sight in terms of who sub-underwrote the recent capital raising. Was Kyle aware [indiscernible] was one of the underwriters and Kyle himself [indiscernible] capital raising. Is he is going to buy more shares when the window is open?

So I, like Paul and other directors and shareholder, and I was part of the Board resolution to support the capital raising and individually and as a Group and as the Board will be in the future, and I'll consider those facts in the future if and when required to the Chair's earlier point, hopefully, we won't need to go down that part in the future, as we come out of COVID and successfully grow and achieve our desired results in the future.

We do have another question from Mr. Steven Maine. As a former chair of NRMA with direct auto experience, Kyle is an excellent appointment to the Board. Well done in securing his services and does he thinks the Suncorp connection limits our relationship with IAG, which was spun off from an NRMA almost 20 years ago?

Look, I think the Chairman spoke well on this issue earlier. I don't think the AMA Group can rely on any one relationship. Every one relationship is important. There's already incredibly strong relationships with Suncorp and NRMA and other insurers, and I'd support the Board and our CEO, Carl to further strengthen those relationships in the future.

There are no further questions on this resolution.

Okay. Thank you very much, and thanks Kyle. There being no further questions, please see valid proxies received for this resolution on the screen now. Okay. We have Resolution 4, which relates to the election -- reelection of Simon Moore, who retires in accordance with the company's constitution and he's being eligible to offer himself for reelection. The explanatory notes in the notice of meeting contains particularly Simon's skills and experience. We'll not repeat here. Okay. Simon, do you want to make first comment.

Good afternoon, ladies and gentlemen. It's my pleasure to offer myself for reelection to the Board of AMA Group. I've been a member of the Board now for 3 years, having been elected in the first instance in 2018. My background is set out in the materials, but just at a high level, I'm a financial person. I've been involved in initially investment banking and then private equity for the last 30 years, working extensively in New York, Asia and Australia. I established Carlyle Group's operations in Australia in 2005, ran that until the end of 2016, where upon established my own private equity firm called Colinton Capital Partners. In that time, I've served on the Boards of a number of private and public companies. In the public sphere, acting as [indiscernible] representative on the Board of Healthscope and Qube Logistics. I've also acted in private capacity on the board of Megaport prior to joining the AMA Board. I find myself as the Chair of the Audit Committee and have done since over the 3-year period. And at this point in time, I think the company is extremely well positioned going forward. Our position as Directors and my position as a Director is to be really a resource to management and to help management execute its plan where I can. We bring a slightly different mindset to directorships, and we do look at the business strategy and working with Carl and his team to try and assist them where we can either through our relationships, our networks and contacts both here in Australia and overseas.

Thank you, Simon.

We have another question from Mr. Steven Maine. Why is Simon Moore going again, given that he's a long-term director associated with past private equity investments in AMA and the performance in recent years has been so cool, good time and place.

I guess, like everyone is a shareholder, I would have liked AMA share price to perform better than it has. I think when looking at industries that have been afflicted by COVID, the panel repair business is right up there with the travel sector in the last 4 to 5 months in particular, you'll have to go out of your way to have a car accident either in Sydney or Melbourne, our 2 major marketplaces. Over that time, the business has made significant steps forward, and it's executed on some very important strategic maneuvers, including the purchase of Capital S.M.A.R.T., which I think strategically, over the course of the next couple of years will prove to be a very positive step for the organization.

And just from my point of view, I think Simon plays incredible role, and he hasn't been on for that long, the same time as me, which is 3 years. We came in at a similar time and his counsel has been very important to the Board and a great contributor to the board over that period of time. We've gone through an extraordinary 3 years. And I don't think any of us would have predicted that when we went into this, but we have an incredible confidence on what the future is. And Simon is very much part of that.

We do have another question from Mr. Steven Maine. Private equity firms are notorious for the giving up companies they own, and also often deploy leverage such as making long-term lease commitments rather than owning freehold land. What do you think [indiscernible] was the worst example. Could Simon comment on whether he was involved in a strategic decision for AMA do not own any freehold land? And is he comfortable that the lease held liability is [indiscernible] reported? Are there balloon payments in the back end of leases like what [indiscernible] did with Maya.

So I think his comment -- Mr. Maine's commentary doesn't relate to what we're doing. The decision for us not to own property occurred prior to us coming on Board, I believe. And I don't think that we've had a discussion in regard to that in the time that we've been on the Board. So I've been on the Board at the same time. So I think I can answer that question. And I'm not sure if there's anything further to add to that. So at this point in time?

There are no further questions.

With no further questions, we will -- thanks, Simon. We will see the valid proxies received for this resolution on the screen now. Thank you very much. And then we move to Resolution 5. Resolution 5 relates to the election of external non-Board endorsed candidate, Peter Taylor, who has self-nominated for election as a director in accordance with the company's constitution. The explanatory notes in the notice of the meeting of it contains particular Peter skills and experience, which I will not repeat here. I note the explanatory notes in relation to these resolutions have not been independent there, but substantiated by the company, and the company does not make any representation to it -- as to its accuracy. So I'm not sure if Peter is available. No, Peter, it's not available. I'm sorry, John, at this stage, is there any questions in relation to this?

There is a question. Could Peter Taylor comment on whether he believes the Board has treated in fairly in the way this contested election has been conducted. Was [indiscernible] notice of meeting censored? Was the full notice of meeting snail mailed to all shareholders who haven't signed up for the electronic communications? Did the Board provide access to the e-mail addresses of shareholders or proxy solicitation? How much did the Board charge for the share register, whilst he invited to prepare a video for the AGM and has he been invited to answer questions at today's AGM? Is there anything Peter would like to add to the discussion at this point? Peter was invited to join the AGM or is not on the line.

Okay. So on that basis, I think the only comment I'd make is when I was made aware of Peter's nomination, he made contact with me, and I caught up with him. I've had a further conversation within this week to keep him informed about where things were standing. And he understood where we were. He's shown interest in future, and I said that we would continue that conversation down the track. So as we review the skills that we require at the time. So -- but as I'm not going to repeat what's in their notice. Thank you very much. So as there's no further questions, please see the valid proxies received from this resolution on the screen now. Thank you. We're now into Resolution 6. Resolution relates to the ratification of the prior issue up to 499 convertible notes, having a very good face value of $50 million as announced to the ASX in September 2021. Do any shareholders wish to comment or ask questions on this resolution?

There are no questions on this relation.

We wait a couple of seconds. Okay. There being no further questions. Please see the proxies received for the resolution on the screen now. Thank you. Then move up to Resolution 7, which is the adoption of the AMA performance, right plan and the granting of equity securities under plan during the 3 years following the date of the 2021 AGM. Any shareholders wish to make any comments on this resolution?

There are no questions on this resolution.

Okay. Seeing no questions on this one, see the proxies received for the resolution on the screen now. Thank you very much. Resolution 8. Resolution 8 relates to granted of 2,004,900 performance rights to the group CEO. Carl Bizon in respect to the FY '22 long-term incentive in accordance with the terms of the AMA performance rate plan and the terms set out in the Notice of Meeting. Any questions?

There is a question from the Australian Shareholders' Association. Mr. Chairman, it's John Whittington from the ASA. I've got 3 questions on this item. Why did the company drop the EPS CAGR metric [indiscernible]. Would the company consider a longer performance period or holding lock that each company excluded from the relative TSR comparative...

I'll ask Nicole, the Chair answer those questions.

Thanks, John, for your question, on the first item, which is why we dropped the EPS. We had received previous feedback that EPS was not necessarily in line with shareholder interest. So we went into a review of the whole LTI structure and found after engaging advisers that using relative and absolute TSR, we're going to be better metrics to align with all stakeholder groups so -- and specifically aligning to the shareholders interest. So that's why we address that one. So second part of the question, Alex, can remember the second part is?

Will the company consider a longer performance period or holding lock.

John, it's something we might take under review. As you know, we've just gone through a review of the program. So it might be something that we consider in the future. And then the third part of that question.

Will you highlight each company excluded from the relative TSR comparator group or just provide the full list?

We're happy to provide the full list on request. We do have that available. We have eliminated those companies that don't necessarily align with AMA in the group, but we're very happy to share that on request from the company Secretary.

There are no further questions on this resolution.

Okay. So let's look at the proxies received for this resolution on the screen now. Thank you. We're up to resolution 9, which is the -- relates to the grant of 903,034 performance rights to the Group CEO, Carl Bizon, in respect to the FY '21 long-term incentive, in accordance with the terms of AMA's performance rights plan and the terms there's [indiscernible] any shareholders...

There are no questions.

Okay. We'll be moving through, there being no questions. Please see the valid proxies received for resolution on the screen now. Okay. Thank you. We're up to Resolution 10, which seeks the approval for the buyback of 206,975 shares from Marissa Harding-Smith as trustee for the Harding-Smith Family Trust for the nil consideration, which now company cancels the shares bought back. Any questions? So we'll put up the proxies received, the resolution on the screen. Okay. We'll move on. Slide 30, which is the selective buyback -- sorry, Resolution 11 seeks the approval of buyback of 206,975 shares from James Alexander Timuss as trustee for the James Timuss Trust for nil consideration, which now the company cancels the shares bought back. Any questions? No questions. So we'll put up the proxies received on the screen now. Resolution 12 is selective share buyback 1,039,501 shares from Stipe Steve Popovic and Ms. Betty Popovic as joint trustees for the S&B Popovic Family Trust for nil consideration, which now the company cancels shares bought back. Any questions? No questions. So being done, we'll put the proxy received by this resolution on the screen now. Thank you. Resolution 13. Resolution 13 seeks approval for the renewal of a takeover approval provision in the company's constitution for a further period of 3 years commencing from the date of the 2021 AGM. Any shareholders wish to comment or ask any questions in regard to this resolution?

We have a question from Mr. Steven Maine. Thank you for reading out all of my questions without any editing. Why are we bothering with this renewal when a partial takeover might be quite useful for an unlocked stock? Also, when disclosing the outcome of all resolutions, including this item, will publicly disclose how many shareholders voted for and against each item, similar to what happens with the scheme of arrangement. This will provide us a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative recently adopted by Metcash and Southern Cross Media after their AGMs. [indiscernible] Chair give us small disclosure when you like this one [indiscernible] to a transcript.

We'll look at exactly what we can disclose after it's -- when that's possible within a reasonable time frame, and we'll take that on Board. In regard to this takeover approval, [indiscernible] comment. I want to have it in the constitution, I believe.

Yes. I don't have much to add to that. I think it's a fairly customary approach. I don't think that that could present a win for shareholders to do the opposite. I don't think that's -- that they would consider that to be interested. This is really a concept that's meant to be in the interest of shareholders. And therefore, we'd anticipate we'll get fairly strong support.

There are no further questions on these resolutions.

Thank you. So we'll put the proxies up now received for this on the screen. Okay. And I think that concludes all our resolutions. So at this stage, that includes the formalities for the meeting today. If you've not already voted, please cast your votes now, as the poll will be closed shortly. [Voting]

The results of the poll will be released on the ASX company announcement platform as soon as they are available this afternoon. On behalf of the Board, I would like to thank all our shareholders for your support of the AMA Group during what has been a challenging year. I declare the poll in the 2021 Annual General Meeting closed. Thank you so much for your attendance and your interest in this group. We have a great future going forward, and I look forward to next year's AGM and hopefully, in person. Thank you.