Aussie Broadband Limited (ABB) Earnings Call Transcript & Summary

Good morning, everyone. My name is Adrian Fitzpatrick, and I have the privilege of being the Chair of your company and will be the Chair for today's meeting. It's my pleasure to welcome you to the 2022 Annual General Meeting of Aussie Broadband. It's now 10:30 here in Victoria, the time appointed for the meeting. And as we have a quorum, I want to clear this meeting open. Before proceedings begin, I would like to start by acknowledging the traditional owners of country, of the many lands we are meeting from today throughout Australia and recognize their continuing connection to lands, waters and communities. We pay our respect to past, present and future traditional custodians and elders of this nation and the continuation of cultural, spiritual and educational practices of Aboriginal and Torres Strait Islander peoples. I'd like to recognize, in particular, the land that I'm standing on today, the traditional land of the Wurundjeri people of the Kulin nation. Today's annual meeting has been convened in accordance with the Corporations Act and the company's constitution. We are delighted to offer our shareholders the choice of participating in today's meeting in person or via the online webcast. If you're joining us online, you may cast your vote at any time during the meeting, and voting will remain open for 5 minutes after the close of today's meeting. Please ensure your vote is cast in time. The agenda today is on the screen. Before you -- with addresses from myself and Managing Director and following -- followed by consideration of the financial statements and 6 resolutions. It's my duty as Chair to ensure the shareholders in attendance as a group have a reasonable opportunity to discuss the management of the company and the items of business before the meeting. Only shareholders, validly appointed proxies and corporate representatives are entitled to vote at today's meeting. Shareholders attending in person today need to obtain the yellow voting card when you registered. Please see the registration desk since you require a voting card. Those shareholders voting online, please refer to the instructions contained in the virtual online meeting guide available on the screen in front of you. Only shareholders, validly appointed proxies and corporate representatives are entitled to ask questions at today's meeting. If you are participating virtually and did not submit a question before the AGM, you will be able to submit questions at any time during the meeting by registering as shareholder or proxy holder and selecting the Ask a Question tab or by asking your question over the phone by pressing star 1 on your keypad. I will request questions from the phone attendees first, followed by online questions and then invite questions from the floor. If you'd like and ask a question in the room, please approach the microphone at the appropriate time and display your yellow or blue attendance card. When I call for questions, please state your name and the organization you represent, if applicable, and please keep questions courteous and concise. Questions may be merged if we receive multiple questions on one topic. Please note, there will be time for shareholders to ask you general questions after we have dealt with the formal business at today's meeting. All questions should be connected with the general business of this meeting. I'd now like to introduce my fellow directors. Mr. Richard Dammery, Non-Executive Director and Chair of the People and Community Committee; Vicky Papachristos, Non-Executive Director and Chair of the Audit, Risk and Compliance Committee; Patrick Greene, on Vicky's right, Non-Executive Director; Phil Britt, Managing Director and Executive Director; and Michael Omeros on the end, Executive Director. Our Company Secretary, Brian Maher is also present as well as the company's auditor, KPMG, represented by Suzanne Bell today. Suzanne, thank you. And we'd also like to thank KPMG for hosting us in this facility today. The auditor will be available to answer questions on the conduct of the audit and the audit report for the year ended 30 June '22. I'd also like to welcome Julie Stokes from our share registry, Link Market Services, who will be the returning officer for the poll to be taken on the resolutions at today's meeting. Before we get down to the business of this year's meeting, I'd like to take a few moments to reflect on the last 12 months for Aussie. The completion of another successful year for Aussie comes off the back of hard work the team has put in to ensure strong results were delivered in FY '22, while completing the acquisition of Over the Wire and positioning our company for a substantial increase in earnings expected in this financial year. Aussie has come a long way from our early days as a Residential Internet provider in regional Victoria. Today, we provide a complete communications and technology solution across multiple sectors and geographies. Aussie continued its rapid growth in Business and Residential segment in FY '22. Residential broadband revenue increased 36% with EBITDA up 39%, whilst the Business segment grew revenue by 54% and EBITDA by 62%. The integration of Over the Wire has been progressing as planned, bolstering Aussie Broadband's Business segment product skills and capability. Our new operating structure revolves around 1 team, 1 budget and 1 big ambition: to become the fourth largest provider of communications and technology solutions in Australia. We're excited by the future growth opportunities we see for our combined businesses. Aussie has maintained its market-leading service reputation reflected in the multiple awards received during the year and also retained a high customer satisfaction score of 8.1 out of 10. We believe our ability to deliver strong customer support and a superior high-speed tier product will continue to support lower levels of churn going forward. Over FY '22, we also developed new capabilities to provide Wholesale and white label broadband and voice services. We see significant opportunity in providing end-to-end support for third parties with large existing customer bases. This new segment grew to include approximately 60,000 white label connections in 12 months and generated $26 million in revenue and $1.5 million in EBITDA over the last 12 months. Our rapid growth across the last 12 months could not have been possible without our amazing people here at Aussie. We strongly believe that looking after our staff ensures that our customers are also treated with market-leading service. Strong growth often brings challenges, but we continue to focus on Aussie Broadband's culture of family, ensuring all our staff feel included and feel comfortable to bring their whole self to work. We are excited to include the Over the Wire team as part of this family. Following the completion of the acquisition of Over the Wire, we were delighted to welcome Michael Omeros, the previous Managing Director and Group CEO of that business to Aussie Broadband's Board as an Executive Director. Alongside Michael's appointment to the Board, John Reisinger stepped down from his board responsibilities, while, continuing with his executive responsibilities as Aussie's Chief Technical Officer. John is here today. John? On behalf of the Board, John, I would like to acknowledge your outstanding contribution to our business over the past 18 years as a co-founder, from the original formation of Aussie Broadband's predecessor company through the significant growth in recent years, culminating in the Over the Wire acquisition milestone. John oversaw the development of our award-winning software and network infrastructure, which has been the foundation of our rapid expansion. He is one of the most creative technical minds in the industry, and we are delighted to have him continue as part of the leadership team of the enlarged Aussie Group as we deliver on our Aussie 2.0 strategy. Thank you, John. We are immensely proud of the culture we have built at Aussie with our values at the forefront of what we do. These values will continue to be at the forefront of every decision our staff make and our strong guidance to how we continue to conduct ourselves across every business line. As the company continues to grow, we are focused on continuing to uphold Aussie's status as the most trusted telco in Australia and that our culture continues to thrive. If this is maintained, I have no doubt the successes that we have experienced so far will only continue. I'd now like to hand over to Phil Britt, our Managing Director and Co-Founder, to provide an overview of our operational performance in FY '22 and the growth outlook for Aussie. Thank you.

Thanks very much, Adrian, and I'd like to extend Adrian's welcome to everyone here today. It's good to have everyone in person and actually able to do something face-to-face for a change, which is good for us Victorians. We'll jump to the next slide. So look, at Aussie, we do things a little bit differently, and we believe this is a key part of the success of the company today. Why? Why we show up every day to work essentially, is we're in business to change the game. But we're not just in the business to change the telco game because we believe changing that telco game in Australia, the bar is fairly low. And so we've achieved what we've achieved in telco, but there's many other games that we want to play in as well, which is changing the way the business interacts with community, our deep care for our people and our team. And as Adrian mentioned, the family approach or a tribe, if you prefer that sort of name. And ultimately, there's a whole range of things that we believe that we do differently that shows up and why our customers love the business and ultimately, why people have chosen to invest in the business. Our values are fairly, I guess, probably noncorporate as well. When we came up with these values several years ago, we realized afterwards they were actually instructional and our staff lives these and breathe these values in the business today. And probably the one that a lot of people love the most is the no bulls*** value. And it gives them a license to talk freely and openly about what goes on. And I believe this is a big part of how we interact with our customers today because we don't beat around the bush with the way that we interact and treat our customers. If we get it wrong, we own up to it and it's a real key element. But these values, they're a core part of how the DNA operates within Aussie. And our game is ultimately why we're all here and why we're playing and it's an evolving game, but the game we're playing at the moment is to be, by 2025, the fourth largest communications provider within Australia. And that goes bigger than just telco. That's into various cloud infrastructure and a whole range of different services. So that's sort of why we're in the game. If we jump to the next slide. Our evolution has evolved over time. Next year, Aussie will be 20 years since John and I founded some of the original companies and Pat was a co-founder of [ Westwicke ], which was the other company that made up Aussie. And it's evolved from being a Residential broadband provider into a company that now provides a wide range of services. When we added Over the Wire to it earlier this year, we sat down probably nearly 2 years ago and looked at what are the key things that Aussie needed to be able to take the next step. And a couple of the key things that we identified was security, cloud and that managed services piece. And we started to look at, well, how are we actually going to add those components to it. And ultimately, we looked at do we buy individual organizations that do that, do we build it ourselves internally, what would the time be required to do that. And we started to look at all the options, and we had a whiteboard essentially of opportunities. And we looked at it all and we came back multiple times Over the Wire, and this is the organization that ticks the boxes that we need, all in one fell swoop. And so the journey to acquiring Over the Wire probably took about 18 months in the end from when we started to identify, from when we had our first conversations with Michael and Brent to where we ended up actually completing the deal and completing the scheme. And ultimately, what that is now leading to is Aussie had a very large network that had a lot of peak time, evening type traffic on it. And the key strategy with Over the Wire is we have a lot of capacity during the day that sits there idle. And so by adding the Business and enterprise components to it, it allows us to use that network that's largely sitting idle. And so by adding the further services is the key. And that's what's created now what we call Aussie 2.0, which is this integrated telco business that's focused on enterprise, government, Business and, of course, Residential will always be at our core. Jump on to the next one. If we look at our growth over the year, the key metrics are there. This was already released in the annual report. But the things that's not shown on the page is actually how we did this. And if you look back to the last 12 months of the last financial year, Victoria was still in lockdown for half of it. The due diligence team that went and did the due diligence on Over the Wire in Queensland couldn't actually fly there because Queensland was locking us out. So that team ended up traveling to Darwin in a very small window when Victoria was able to travel to Darwin. Spent 2 weeks in Darwin, getting rid of the Victorian COVID stench, if you like, and then basically flew into Queensland and spent 8 weeks in Queensland doing the [ DD ] process. The other thing that went on during all that time is our call centers were locked down through a lot of it. And so when I sit back and look at everything we've achieved over the last 12 months, I go, how the hell did we actually do that when we had all these things working against us. But we have done that, and I'm incredibly proud of the results that we did. You don't see any other telco on the ASX let alone in any other thing growing as quickly as what we have. If you look at the -- we'll jump on the next one. If you look at the revenue and growth, I particularly like this chart because ultimately, resi accounts for a decent chunk of the revenue and well over 75% of it. But if you look at the EBITDA and where the profits are going to come from, over 50% of that is coming from Business and enterprise. And if you fast forward to how that looks in FY '23, that Business and enterprise stream is going to really change it. And so ultimately, we look at this and go, Residential is the foundation that essentially pays for the network. The cream and ultimately, the future profits that are going to come from this, come from the Business and enterprise space. If we look at the awards and so on that we've won, a few key call outs there. Most trusted telco. Telco is one of the most distrusted industries in Australia. And we come out as the most trusted telco. And when you look at our ranking in terms of brands across all brands across Australia, we're significantly higher than the rest of the telco field. We have continued to back up year after year, things like Best Customer Service, the Customer Service Excellence Award, which is an award category that's not just telco. This is every organization around Australia can participate in these awards, yet we've won that now twice in a row for the large business category. And innovation awards for things like our carbon platform and our fault detection systems and so on that help. So it's not just customer experience. We create really, really good products. If we look specifically into the strategic achievements over the last 12 months. Obviously, the acquisition of Over the Wire was a big component of that. And we've delivered $5.2 million of annualized synergies so far, and there's still quite a bit more to unlock there. We've launched the white label solution and onboarded origin with 58,000 services during the financial year. We expanded our offering into the business in [ A&G ] space. We've developed innovative software solutions that have actually lowered our staff cost. Operating a business solely onshore in Australia has a different cost base to a lot of the organizations that have offshore call centers and things like that. But our software automation is what allows us to do that and still keep margins at similar levels to what the offshore operators do. We completed a 1,200-kilometer rollout of optic fiber through Australia. And we did that in 18 months, which is again an incredible feat. Again, during lockdowns for most of it. And the key part with that is we now own the highway from the key data centers to 83 NBN POIs. So as our business grows over time, we're not paying incumbent carriers to carry that traffic. And our network infrastructure was enhanced ultimately to be able to carry us to 1 million subscribers and beyond. So again, a fantastic set of results for the year. If we look at where things are currently trading in this financial year, we've added another 25,000-odd services since the financial year finished, up another 4.3%. So if you annualize that out, we're going to add another 100,000 net adds this financial year. Again, fastest-growing telco on the ASX. Our revenue was $184.4 million for the quarter, again, up $8.1 million or 4.6%. And so revenue is growing faster than what the connection rate is. And this is the story that we want to start telling because a lot of the market is focused on this connection number. And the business isn't actually about connections anymore. It's ultimately about the [ A&G ] revenue stream and the margins that are going to get delivered by that. So we want to -- we actually want to step back this whole connection number piece and disclosing that to the market because it's not the key metric. Ultimately, the ACCC will release the connection numbers anyway. So we go, well, we need to do it. But the actual focus here needs to shift into the benefit that the business and [ A&G ] space is going to deliver. If we look across the segments for the quarter, our resi and Business, ABB branded services grew -- continued to grow strongly and were consistent with the fourth quarter. Mobile had a decent jump during the quarter, and that's off the back of new mobile plans, a renewed focus around marketing and so on. And white label was a bit softer. Origin has been replatforming their business onto a new software system, but we've started to see them grow late in the quarter and continue to grow into now. And so we think that white label will pick up again in the new quarter. And if we look at the market share of things, ultimately, we now have 6.73% of all NBN services and continuing to grow. And since December last year, we've taken more net additions than the rest of the industry combined. And so the growth is well and truly still there. If you look at the chart on the right-hand side, the major for telcos are in decline rapidly around their subscriber growth, and it's because of the challenges like us that are having that dent in the market. We've reaffirmed the FY '23 guidance that we put out at the annual results part, which is revenue of $800 million to $840 million and EBITDA margin of 10% to 10.5%. The other key observations we make today is CVC, which is the volume-based charge that NBN charges to the network is running under budget for the quarter. Traffic usage from customers seems to have stabilized. Normally, we see that grow consistently year-on-year, but it's actually stabilized a bit at the moment, and that's helping to keep the CVC cost down, which is improving margin. Churn through has remained consistent through the period as well. So we haven't seen any fundamental change to the churn profile now for nearly 24 months. In the market, there's intense price-based competition. You're seeing major carriers come out with [ exhaust ] the 6 months type deals and running that quite heavily. We've done very little of that during this quarter, and we've maintained our sub growth without needing to discount to do it. So people are seeing that the brand is holding up and they want to be with Aussie even though the price might be a bit higher than the other deals that are in market at the moment. The mobile growth that I've already called out has been pleasing, and I hope that will continue. It's a tricky thing in the mobile space. There's probably more competition going on in that space than anything else because that's where the major carriers have got really control of their margins and so on. Another big part is we've completed the one team integration. So Aussie and Over the Wire are now Aussie Broadband and that is one team, one structure, and we're starting to see the revenue benefits of it. We had -- it was interesting, yesterday, we had a phone call from one of the major carrier sales guys and said, you guys have done really well in this quarter in the enterprise space. You've taken X number of customers from us, and we can't work out how to beat you because you didn't win them on price. And so that's a really interesting little anecdote, I think. And we'll see white label continue to grow during the period as well. So if we look forward to FY '23 and what our strategies are today, ultimately, we'll continue to bed down the Aussie 2.0 model. Whilst the team is integrated and so on, there's still more work to do in there and fully productizing, getting the automation in that we want to bring into the systems and so on. We'll get the rest of our cost synergies out of the Over the Wire acquisition. The next we've done the easy stuff, we've moved the voice, we've moved all the company costs across and so on. We've got the slightly harder stuff to do, which is move their connections onto our network and so on. But that's started and continuing. We'll continue to invest in the data voice and cloud infrastructure. We'll increase the growth across all the segments. We're running 4 clear segments internally being Residential, Business, enterprise and government and Wholesale and white label. And there, we're wanting to grow all 4 of those segments simultaneously. We'll develop and launch new products and services and ultimately keep our game-changing advantage. And that's really in our software systems that our people use and also our customers. We'll unlock further operational efficiencies. We're looking through all the ways that we run our call center and ways that we can basically further automate and further optimize the way that they interact with our customers. We'll continue to be one of the best places to work in Australia, and we'll continue to focus on our community involvement and so on and want to finish our pathway to becoming a Certified B Corp. So that's really the key focus and where we're going and what we've achieved over the last year. And I'll hand over to Adrian, I think.

Thanks very much, Phil. There's a lot happening. It's very exciting, and I'm sure there will be some questions you'll have for Phil later in the meeting. Notice of this meeting and explanatory information was sent to all shareholders prior to the meeting, and I propose that the notice of meeting be taken as read. I now turn to the business of today's meeting. There are 6 items that require a shareholder vote and to ensure the views of shareholders are considered, I advise that I will be calling a poll on all the resolutions. If you're present in person, you will have a yellow voting card, which you will be asked to complete and hand to the registry staff at the appropriate time. I will advise you when it is time to complete your voting card. If you need assistance, please ask one of the registry staff at the back of the room. If you have a yellow card and need to leave early, you may, if you wish, hand your completed voting card to the staff at the registration desk as you leave. To cast, you will vote using the online platform, please click the get a voting card button and follow the prompts. You may cast your vote at any time during the meeting. I will give you 5 minutes warning before we close the online voting platform. You will see a red bar appear along the top of the online platform with a countdown timer of how long you have remaining to cast your vote. I can confirm that I propose to vote those proxies left to my discretion as the Chair in favor of all resolutions. Proxy votes received prior to the meeting will be shown on the screen for each item of business to be voted on today. Please note that resolutions 1 and 5 are subject to voting exclusions as outlined in the notice of meeting. The first item of ordinary business is the consideration of the financial report, directors' report and auditor's report for the year ended 30 June 2022. These were circulated as part of the annual report, which members received via printed hard copy if they so elected or were able to access on our website. I'll now hand you over to our CFO, Brian Maher, who will give an overview of the financial performance for FY '22. Brian.

Thanks, Adrian. Good morning all. As Adrian said, my name is Brian Maher, I'm the CFO and Company Secretary at Aussie Broadband, and I'm delighted to present an overview of the financial results for June 2022. FY '22 saw Aussie continuing strong growth with Residential revenue increasing by 36% and Business revenue 54%. Wholesale revenue increased by almost $25 million following commencement of our first white label customer. Over the Wire contributed $38.5 million of revenue for the 3.5 months post acquisition. The acquisition also boosted the gross margin percentage in the second half of the year, with a like-for-like margin modestly lower due to the CVC cost increasing as a percentage of revenue, which we've seen some mitigation of this quarter, as Phil talked to. Employee expenses increased faster than revenue, partly due to the acquisition with Over the Wire having historically higher employee expense to revenue ratio than ABB, but also in part due to investments in acquiring additional skill sets to underpin future growth and the impacts of a challenging labor market, which have continued into FY '23, and I think most businesses are experiencing. Marketing expenses increased at a rate lower than revenue, but did increase $5 million year-on-year. We did -- we also did yield some modest operating leverage in our administration costs. Depreciation and amortization expense, excluding those related to the intangibles we acquired through the Over the Wire acquisition, increased as we continue to invest in network infrastructure, most notably the rollout of the fiber network that Phil walked you through earlier. In terms of the financial position of the company, that's changed significantly following the completion of the acquisition, which is most notable in plant and equipment, right-of-use assets, intangibles, lease liabilities and deferred tax, all very exciting stuff. The increase in plant and equipment include $30 million of spend on the fiber rollout. And whilst trade debtors are up year-on-year, debtors days remain low at about 19 days of revenue [ endeavors ]. The acquisition was funded in part by cash we raised during an equity raise right about this time last year, and partly by a new $175 million syndicated debt facility. And net debt at the end of the year was $138 million with a pro forma leverage ratio of 2.1x. It's worth noting that while a significant portion of the debt funding was classified as current in the financial statements, post year-end, we did extend the tenor of one of the facilities of $40 million with an extended maturity date of March 2025. The deferred tax liability arises from the tax effect of the intangibles acquired with Over the Wire, but it's net of tax losses of $2.8 million despite the profitable result for the year due to our ability to utilize current tax concessions, allowing us 100% deductibility in the financial year of our fiber rollout costs to the extent that they relate to completed legs of that network. And so we've got more deductions of that nature coming through this year. So in summary, FY '22 was another solid financial performance, and we'll -- so there was a question -- we do have a question in advance of the meeting. But just to cover off, there was a question that came through online asking about the ACMA fine we received the $213,000, and whether that was accrued at year-end. And if not, how did we deal with it from a post-balance sheet event's position. There was an accrual for that fine at year-end based -- which we based on [ precedent ] fines issued. We were aware there was a possibility of a fine being levied. The accrual was not -- was less than the ultimate fine, but the difference was immaterial. And therefore, the position we took was that there was no requirement to disclose either -- to adjust the accounts or disclose from a materiality perspective. So that's just the answer to that question. So I hand it back to you.

There is no requirement for shareholders to vote on these reports. However, you now have the opportunity to ask questions other than the one that Brian just already dealt with in relation to the financial statements and report for the year ended 30 June 2022. Please state your name or organization you present before doing so. As a reminder, I will request questions from the phone attendees first, followed by online questions, which we have the one, and then questions from the floor. Each resolution, I'm going to do this. Phone operator, are there any questions on the financial statements?

Chair, there are no phone questions.

Thank you. Brian, are there any other written questions other than the one you've already dealt with?

No, Chair.

Thank you. Are there any quick questions from the floor? Thank you.

Good morning, Mr. Chairman. My name is John Whittington, and I'm a volunteer for the Australian Shareholders' Association and a happy Aussie Broadband customer. I'd like to thank you, the Board and all Aussie Broadband employees for putting in the work to produce such a strong financial performance for shareholders during the year. Mr. Chairman, I've got 2 requests to make regarding your reporting and governance. As the company is growing, we would like to encourage you to come more into line with normal practice for larger ASX companies like you would aspire to be, with greater independence and diversity of the Board as well as an improvement in the diagram you currently call a skills matrix. So we'd encourage you and we're happy to work with you on that. But I know the background, but we would encourage you to move that way. And our other request is one of the most common requests we get from retail shareholders is a 5-year table of key financial metrics and -- financial and operational metrics. You have an abbreviated version of this in your remuneration report, but we encourage you to have a more complete one somewhere in your main report. Aussie has a great story to tell and such a table would both do this and be appreciated by retail shareholders.

Thanks very much. John, wasn't it? John, in relation to the Board composition, diversity, I think we'll deal with that as part of the discussion around resolution 5, but thank you for raising. We will make a note of the table. Of course, we've only been listed now for 2 years, but we look forward to growing that table and extending it out. And those were the key points, I think, and thank you for your comments.

Good morning. My name is Ian Munro. I'd like to ask a general couple of questions, if that's okay.

In relation to the financial statements, Ian, or would you like to do the general questions as part of general business?

General business, yes. Would you like me to...

[indiscernible] Thank you. Appreciate you coming up. I'm not shutting you there, let me -- Ian's eager to get behind that microphone. Thanks, Ian. I'm sure we'll welcome you back shortly.

Peter Collier, I am a shareholder. Just a question about the increase in the current interest rate environment we're going through. What effect will that have on Aussie Broadband's debt and the repayment of that in the future?

Brian?

Yes, sure. Thanks for your question. So we secured our debt a year ago. It is a floating rate arrangement at the moment. One of the things on our agenda is to consider hedging arrangements we might want to think about going forward. We don't currently have hedging. Obviously, we prefer the interest rates to be not going up, but they are. And it's a challenge to future cash flow forecast in that. So it's something we're aware, we're monitoring. We've got plenty of headroom currently in our debt covenants, particularly the interest rate covenants. There's plenty of room on that. So there's no concern from that regard, but it is obviously an additional cost, and we have to be conscious of it and manage accordingly.

Thank you. Any other questions specifically in relation to the financials and reports? If not, if there are no further questions or comments on the financial statements and reports, I'll declare them as considered and received. We'll now move on to the resolutions on which shareholders, representatives and attorneys of shareholders and proxy holders are being asked to vote. Resolution 1 is a nonbinding ordinary resolution and relates to the adoption of the remuneration report for the year ended 30 June 2022, as set out in the notice of meeting and displayed on the screen, which is as follows. That for the purposes of Section 250R, Subsection 2 of the Corporations Act and for all other purposes, the remuneration report as contained in the directors' report for the year ended 30 June 2022 be adopted. The results of the proxies received prior to the meeting are displayed on the screen. Phone operator, are there any questions on resolution 1?

Chair, there are no phone questions.

Thank you. Brian, are there any written questions in relation to resolution 1? No written questions. We do have one from the floor, though.

Yes. Mr. Chairman, John Whittington from the Australian Shareholders' Association again. We are uncomfortable with your long-term incentive scheme that has no performance hurdles attached to it and is only over 3 years, which isn't really that long term. And it's based on options, which are difficult to value properly. Now your past year IPO, we'd like to suggest that now is the time to start planning for a 4, 5 or even more year scheme with performance hurdles paid with rights, which are more transparent rather than options.

Thank you very much, John. And for that question, it's a very, very valid and relevant question. And I'd like to hand over to Richard Dammery, Chair of our People and Community Committee, which also includes remuneration, nomination, which he'll talk to the deliberations we've had on that very issue. Thank you.

Good morning, John. Good morning, everyone. Thanks for the question. Thanks for the comment, by the way, about the skills metrics. Duly noted. So we're evolving a number of things in Aussie, as you would expect, as a relatively newly listed company and one of them, obviously, is our approach to remuneration. So in fact, we've signaled in the last 2 remuneration reports, as I'm sure you know, that we're intending to move from a long-term incentive scheme based on options towards performance rights, a more conventional performance right scheme over time. We haven't made a decision as a Board yet about whether we're going to do that in one hop or whether we're going to do that progressively. That's something to think about carefully. As you know, one of the virtues of an option scheme is that it's very attractive for high-growth companies. It creates the right incentives. It creates a perfect alignment between the executives' interest and the shareholders' interest when you are in growth mode. And you don't want to be seen, by moving from an option scheme to a right scheme, that you're signaling to the market that your ex growth. And we're not ex growth, as Phil has described. But we are in a world where our earnings and revenue mix is changing and going to continue to change. So we think now is the right time to move to a right scheme. That's one of the things on our to-do list as a committee this year. And I imagine we'll be in a position to talk to shareholders more about that at the next AGM. I should just say in relation to your comment about there not being any hurdles in relation to options, the Board doesn't actually see it that way. We see the share price -- the issue price of the option is obviously being an in-built performance hurdle. There are no -- obviously, no other KPI measures set around potential vesting as would occur with a right scheme. We're very aware of that, and that will be one of the things we'll carefully take into consideration.

Thanks, John. Thanks, Richard. Any other questions in relation to this resolution? If not, I now formally put the resolution to the meeting and move to resolution 2. Resolution 2 relates to the changes of the constitution as set out in the notice of meeting and displayed on the screen and which is as follows: That for the purposes of Section 136, Subsection 2 of the Corporations Act 2001 and for all other purposes, the company's constitution be amended in the manner outlined in the explanatory memorandum of this notice. As was announced to the ASX on 5 October 2022, after issuing the notice of the 2022 AGM, we became aware of reservations expressed by certain proxy advisers and shareholder groups about the use of fully virtual meetings by listed companies. While the amendments to ABB's constitution proposed to be moved at the 2022 AGM included amendments that would permit ABB to fully convene virtual shareholder meetings, ABB only intended to rely on those provisions in exceptional circumstances. There I say the word pandemic. In light of these reservations expressed and given the importance of the proposed amendments to the constitution relating to ABB's certification as a B corporation, the company has determined to withdraw that proposed amendment regarding fully virtual meetings, so as to allow the resolution to be approved so that the other constitutional amendments can proceed. And there's been a number of companies do that. And John, I'm sure, he's nodding in the background, is well aware of that as well. The withdrawal of the proposed amendments to the constitution relating to fully virtual meetings have not affected the validity of proxy forms or any proxy votes submitted before the date of the 2022 AGM in respect of resolution 2 or the remaining items of business to be considered at the 2022 AGM. The Board maintains its recommendation that shareholders should vote in favor of resolution 2. I, as the Chair of the meeting, intend to vote all available proxies in favor of resolution 2. Shareholders who have yet to submit their proxy votes on resolution 2 should submit their votes by voting on resolution 2 as it opens now. The results of proxies received prior to the meeting are displayed on the screen in front of you. Again, I'll ask phone operator, are there any questions in relation to resolution 2?

Chair, there are no phone questions.

Thank you. I love hearing that. As there are no other phone questions, I'll ask, are there any written questions, Brian, in relation to this resolution?

No, Chair.

No questions. Any questions from the floor? John?

Mr. Chairman, just picking up on your point, we would like to thank you for holding today's meeting as a hybrid meeting and also for the removal of the virtual-only or the changes to allow virtual-only meetings. We note that you joined a long line of companies that have withdrawn such resolutions. Hybrid meetings are great, but virtual-only meetings have significant problems, which are yet to be resolved. So we applaud you on the withdrawal.