Aveng Limited (UG8.F) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Good afternoon to you in a time zone other than South Africa and its zone. I have the pleasure of welcoming you to the 80th Annual General Meeting of Aveng Limited. My name is Philip Hourquebie, and as Chair of the Board of Aveng, I shall chair this meeting. The quorum for this meeting is a minimum of 3 shareholders provided that such shareholders virtually present or by proxy at this meeting constitute at least 25% of all of the voting rights that are entitled to exercise at the meeting. The Company Secretary has informed me that the necessary quorum is present, and I therefore declare the meeting properly constituted. Notice of this meeting has been given in terms of the Memorandum of Incorporation and the Companies Act. The notice convening this meeting, together with the integrated report was posted on the 31st of October 2024, and I suggest that the integrated report and the notice be taken as read. Thank you. It is appropriate that the motions relating to the business of the meeting be decided on a poll, and I accordingly direct that a poll be taken on those motions. Such poll voting shall be conducted entirely electronically as contemplated in Section 63(2) of the Companies Act through the electronic online facility provided by the transfer secretaries of the company being Computershare. For the purposes of the poll, I nominate the representative of the transfer secretaries present at this meeting to act as the scrutineer. I'll now open the voting on the electronic online facility, and voting can be performed at any time during the meeting until I close the voting on the resolutions. You will be able to type in your questions on the platform and view the webcast whilst the poll is open or dial the number provided to ask a verbal question. I will allow any questions pursuant to the motions to be discussed after I have tabled the last resolution on the agenda. The integrated report and the notice of the meeting deal fully with the matters to be considered -- to be considered at this meeting, and I have nothing further to add to the information contained in the integrated report and notice of meeting. Nicholas Bowen, the Chair of our Safety, Health and Environment Committee, our Risk Committee and our Tender Risk Committee; Bridgette Modise, the Lead Independent Director and Chair of the Audit Committee; Bradley Meyer, Chair of the Remuneration and Nominations Committee; and myself as Chair of the Investment Committee and the Aveng Board are present and will answer any questions regarding these committees. In addition, our Executive Directors, CEO, Scott Cummins; and CFO, Adrian Macartney are present. David Noko, the Chair of our Social, Ethics and Transformation Committee, is not available today, and questions regarding this committee can be directed to me as a member of the committee. First on the agenda is the presentation of the annual financial statements for the year ended 30th of June 2024, incorporating the reports of the directors, auditors and Audit Committee. These are available online with a summarized version set out on Pages 11 to 40 of the notice of virtual Annual General Meeting and should be taken as presented. If shareholders have any questions concerning the annual financial statements as contained in the integrated report. If so, please send your questions via the chat box. Secondly, I refer shareholders to the report of the Social, Ethics and Transformation Committee available online as part of the sustainability report, which is taken as presented. Questions regarding the activities of the committee can be addressed to myself as a member of that committee. We will now consider the various resolutions as set out in the notice of the meeting [Technical Difficulty] this AGM are Scott Cummins. Details of all of our directors are available on www.aveng.co.za. I now propose ordinary resolution #1.1 as set out in the notice convening this meeting for the election of Mr. Scott Cummins as a Director of the company. Please complete your electronic voting in respect of ordinary resolution #1.1. In terms of company's Memorandum of Incorporation, myself, Philip Hourquebie, Bradley Meyer, Sean Flanagan, all retire as directors of this company and have offered themselves for reelection. There have been no further nominations. Details of directors' CVs again are available on www.aveng.co.za. I now propose ordinary resolution #2.1 as set out in the notice convening this meeting for the reelection of myself, Philip Hourquebie as a Director of the company. Please complete your electronic voting in respect of ordinary resolution #2.1. I now propose resolution -- ordinary resolution #2.2 as set out in the notice convening this meeting for the election of Sean Flanagan as a Director of the company. Please complete your electronic voting in respect of ordinary resolution #2.3. The next matter on the agenda is the appointment of members of the Audit Committee. In terms of Section 94, Paragraph 2 of the Companies Act 71 of 2008, the members of this committee must be appointed at the Annual General Meeting of the company. The Board has put forward the names of Bridgette Modise, Bradley Meyer, and Nicholas Bowen for appointment as members of the Audit Committee being satisfied with the skills, experience and qualifications of these directors. I now propose ordinary resolution 3.1 as set out in the notice convening this meeting for the election of Bridgette Modise as a member of the company's Audit Committee. Please complete your electronic voting in respect of ordinary resolution #3.1. I now propose ordinary resolution #3.2 as set out in the notice convening this meeting for the election of Bradley Meyer as a member of the company's Audit Committee. Please complete your electronic voting in respect of ordinary resolution #3.2. I now propose ordinary resolution 3.3 as set out in the notice convening this meeting for the election of Nicholas Bowen as a member of the company's Audit Committee. Please complete your electronic voting in respect of ordinary resolution 3.3. We'll now turn to the reappointment of the company's external auditors. I propose ordinary resolution #4 as set out in the notice convening this meeting for the reappointment of KPMG Incorporated as the company's external auditor for the ensuing year. Please complete your electronic voting in respect of the ordinary resolution #4. The next resolution is the approval of the remuneration policy. The Aveng Limited remuneration policy has been set out on Pages 62 to 67 of the integrated report and is taken as read. I now propose ordinary resolution #5 as set out in the notice convening this meeting in respect of the approval of the Aveng Limited remuneration policy as a nonbinding advisory vote. Please complete your electronic voting in respect of the ordinary resolution #5. The next resolution is the approval of the remuneration report. The Aveng Limited remuneration report has been set out on Pages 68 to 73 of the integrated report and is taken as read. I now propose ordinary resolution #6 as set out in the notice of meeting in respect of the approval of the Aveng Limited remuneration report as a nonbinding advisory vote. Please complete your electronic voting in respect of ordinary resolution #6. The next resolution is the adoption of the Aveng Limited long-term incentive plan, otherwise known as the 2024 LTIP. I now propose ordinary resolution #7 as set out in the notice convening this meeting in respect of the adoption of the Aveng long-term incentive plan, the 2024 LTIP. Please complete your electronic voting in respect of the ordinary resolution #7. The first special resolution concerns the general authority to repurchase company shares. I therefore propose special resolution #1 as set out in the notice convening this meeting in respect of general authority for the company and its subsidiaries to repurchase the company's shares as a special resolution. Please complete your electronic voting in respect of the special resolution #1. The second special resolution is for the approval of nonexecutive directors' remuneration as required in terms of the Companies Act 71 of 2008. For this purpose, I now propose special resolution #2 as set out in the notice convening this meeting in respect of the approval of remuneration payable to nonexecutive directors as a special resolution. Please complete your electronic voting in respect of the special resolution #2. The third special resolution requires the approval -- the approval by shareholders for providing financial assistance to related and interrelated entities. For this reason, I propose special resolution #3 as set out in the notice convening this meeting in respect of the approval for financial assistance to any person or to related and interrelated companies within the Aveng Group of companies as a special resolution. Please complete your electronic voting in respect of special resolution #3. Lastly, I propose ordinary resolution #8 as set out in the notice convening this meeting, granting signing authority to the Company Secretary and/or directors of the company to sign all such documents required to give effect to all resolutions validly passed by the meeting. Please complete your electronic voting in respect of ordinary resolution #8. The last item on the agenda is to transact any other business that may be transacted at an Annual General Meeting. Notice has not been received of any other business, and this, therefore, concludes the matters upon which we are required to vote. I will now allow any questions pursuant to the resolutions tabled at today's Annual General Meeting to be discussed before closing the voting. Do I have any questions?

Chair, there are no questions.

Can I have the first question.

So the first question on the financial statements is in the annual report, there were tax losses of $256.8 million -- on a dollar level, but the Aveng Group had an unused tax loss of $960 million. Can you clarify the difference between $956 million and $257 million? Is it not usable by the Australian and New Zealand division and it only applies to the South African division?

Would you like me to take? Thank you for the first question and I'll ask our CFO, Adrian, who just read the question to give you the answer.

Sure. Thank you. In Australia, we enjoy group tax rates, and hence, we have tax losses all recognized there for Australia, that we can utilize. We have a portion of unutilized tax losses that we will bring to bear as and when we believe that it is appropriate to do so in line with IFRS and in line with our utilization profile of those. We do recognize those, and you will see adjustments in the financial statements almost each year. With regards to South African taxes, taxes are at an entity level and not at a group level. The majority of those tax losses referenced as unutilized in a subsidiary called Aveng Africa PTY Limited. And that subsidiary, we do not believe that we can utilize sufficient quantities of those tax losses, and hence, they are not recognized on the balance sheet. And no, we can't move tax losses between those jurisdictions. The second question from the same person, [ Peng Lu ] is what is the time line and expected cost or payment of the Leonardo lawsuit in South Africa?

Would you like to answer that given that it is a lawsuit and it's in progress. So there's not a lot we can say, but tell us what you can say.

Thank you. Under -- with the Leonardo building is currently in the process of arbitration. It is probably inappropriate for us to comment any further than that other than that we are defending our position there and have made various claims against the employer in that regard and that we have a provision in our financial statements, we believe is adequate based on the advice of counsel and our experts around this matter. The matter is likely not to be completed. We would imagine until the middle of next year when the hearings and the outcomes are likely to be known. Third question from the same person. What is the current estimate of the cost of an ASX listing with Macquarie, Deloitte and law firm, Clayton News, et cetera?

In principle, similar to the last question is something that we're working through with management internally. So I don't think we are in a position at the moment to -- with any level of certainty, give that kind of information out at the moment. I think, Adrian, we're still working through our processes there. And when we -- at a point when we can announce any further developments from the announcements we've already made, we'll make those announcements.

A further question on the financial statements from [ Rene Petridis ] Can shareholders expect to see dividends in the near future?

It depends how near the near future is, but we have not planned to pay dividends certainly in the current and in all likelihood, the following financial year. Any further questions? And by the way, in that answer, it doesn't imply that we start paying dividends from the year after the live qualified. I'm just saying in the near future, we don't see -- we don't have a plan to pay any dividends. Are there any other written questions? Do we have any questions on the telephone line?

Chair, there are no questions on the telephone line.

Thank you. Just wait one more minute or so just to make sure we don't see any questions coming up, I don't see them. Well, this concludes the question-and-answer section and allows you to submit your votes. I will now close the voting, and the results will be shown shortly. [Voting]

Resolution 1 has passed as has all of Resolution 2, all of Resolution 3. Resolution 4 has passed; 5, 6, 7, 8 -- sorry, 7, then we go to special resolution 1, 2, 3 and then ordinary resolution 8. All our resolutions have passed. So ladies and gentlemen, this brings us to the conclusion of the Annual General Meeting. I would like to thank our shareholders for their support and particularly for their support at this Annual General Meeting in supporting our resolutions. In closing, I wish to thank my colleagues on the Board for their efforts during the year and particularly our CEO and CFO for their efforts during a challenging year. I would also like to pay particular tribute to our former CEO, who sits on our Board currently as a Non-Executive Director, who stepped down through the course of the year, Sean Flanagan. Sean, I'd like to just thank you for -- record our thanks as a Board for your contribution to the group in your role as CEO. And at the same time, I want to welcome -- it's probably the last time our CEO will be welcomed into his new role. He's been in it for a while now, but welcome Scott coming to the role of CEO, and we wish you well in that role. And lastly, our CFO also relocated from Johannesburg to Melbourne to be with the leadership team here. So thank you for you and your family for making that commitment to help build our new leadership team, Adrian Macartney. Last and certainly not least, I want to thank you, our shareholders, for your support, and thank you for your attendance today, and I declare this meeting closed.