CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the 2022 Annual General Meeting of carsales.com Ltd. My name is Pat O'Sullivan, and I'm the Chair of the company and Chair of this meeting. On behalf of the Board and the company, I would like to acknowledge the traditional owners of the land on which we meet today. Here in Melbourne, that is the Wurundjeri people of the Kulin Nation, we pay our respects to their elders, past, present and emerging. It's great to be able to welcome those of you who have been able to attend this meeting in person, something that was not possible for our last two general meetings. We also welcome those joining us on our live webcast. We are pleased to be able to extend this meeting to you all. Today's meeting is a hybrid meeting being held physically here in the carsales offices in Richmond, Victoria, and online via the Computershare meeting platform, which allows shareholders, proxies and guests to attend the meeting virtually, ask questions and vote. I've been advised that a quorum is present and I now formally declare the meeting open. As the notice of meeting has been circulated to shareholders, I propose that the notice convening the meeting be taken as read. Is that agreed? Thank you. At each item of business in today's meeting, there will be an opportunity for shareholders to ask questions. Those in physical attendance may move to the microphone in the center of the room and please wait to be called on. Please state your name and the shareholder you represent if you're a proxy before asking the question. Online attendees may submit questions at any time. To ask a question, select the Q&A icon, type your question into the text box. Once you finish typing, please hit the send button. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that questions may be moderated or if we receive multiple questions on one topic, they may be amalgamated together. If due to time constraints, we run out of time to answer all questions, we will answer them in due course via e-mail or posting responses on our website. To ask a verbal question, please follow the instructions written below the broadcast. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. If you are attending online and are eligible to vote, once voting opens, please press the vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen. You can change your vote up until the time I declare voting closed. For those of you here in the room with us today, you will have received a physical voting card, which can be completed at any time. Shareholders need to mark a box beside the motion to indicate how you wish to cast your votes. Please ensure you print your name or indicated and sign the voting paper. When you finished filling in your voting paper, please lodge it in a ballot box or with a member of the Computershare team to ensure your votes are counted. Proxy holders have attached to their submission card a summary of proxy votes which details the voting instructions for business items on the appointment documents in your favor. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. In respect of any open votes, a proxy holder may be entitled to cast, please mark the box beside the motion to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form, attached to the voting paper for further information. Scott Hudson of Computershare will be the returning officer for today's meeting. Does anyone have any questions about the procedure I have just described? As always, the results of all resolutions will be announced to the ASX following the meeting and placed on the carsales investor website. I now declare voting open on all items of business. I would now like to introduce my fellow directors. Cameron McIntyre is our Managing Director and CEO, appointed to that position in March 2017. Cameron has been with the company for 15 years, and we'll give a presentation on business performance shortly. Wal Pisciotta has been a member of the Board since carsales' inception and led the company as Chair for 18 years. He is currently a member of the People and Culture Committee and is joining us virtually today. Kim Anderson has been a member of the Board since 2010, is the Chair of the People and Culture Committee and a member of the Audit and Sustainability Committee. Edwina Gilbert was appointed as a Director of the company in 2016. Edwina is the Chair of the Risk Committee and a member of the company's People and Culture and Audit Committees. Kee Wong was appointed as a Director of the company in July 2018 and is the Chair of the company's Sustainability Committee. He's also a member of the company's people and culture and the Risk Committees. And David Wiadrowski was appointed as a Director of the company in 2019 and is the Chair of the company's Audit Committee, is also a member of the Risk Management and Sustainability Committees. I would also like to introduce Steve Kloss, who is Alternate Director; and Nicole Birman, who is our Company Secretary and General Counsel. Also in attendance of this meeting are Lisa Harker, representing our auditors, PricewaterhouseCoopers; Jonathan Wenig, representing our lawyers, ABL; and Scott Hudson, who I mentioned, who's the Returning Officer representing our share registry, Computershare. The formal business of this morning's meeting will be conducted in 2 parts. Firstly, as I mentioned, our CEO, Cameron McIntyre, will present to the meeting, and there will be opportunity to ask Cameron questions about his presentation. We will then move to the formal business of the meeting, where we have a number of resolutions to put to shareholders. There will be further opportunities during this part of the meeting for shareholders to raise questions pertaining to each resolution. I would now like to invite Cameron to address the meeting.

Good morning, everyone, and welcome to the carsales office. It's actually nice to have some people in this room for a change. So it's good to have you here this morning. So look, once again, it's been a hugely eventful year and a significant year for the company as we celebrate our 25-year anniversary this year. We've continued to evolve considerably across many different fronts from managing through the pandemic and the way we work and collaborate as a business to developing new products and expanding further into global markets. Through all this, the company has performed exceptionally well, and I'm really looking forward to taking you through my presentation in a moment. But before I do so, in keeping with some tradition, we did -- we would like to play a short video for you. We attended the Australian Automotive Dealers Association Conference this year, and we do have a video presentation to them. So what we'd like to do is share that video first. And once that's played, I'll give you my presentation. [Presentation]

And that's literally just what we've done in Australia. That does include all the stuff that we've done in our international businesses as well over the past 12 months. Maybe if we just move to the next slide. So as the CEO of the company and also as a shareholder of the business, it's always great to start on this slide. So as a business, we've continued to perform exceptionally well and delivering really strong total shareholder returns over a long period of time here. As you can see, the gap between the performance of the company, which is the dark blue line there and the broader market continues to widen over time, which is fantastic. Just also good to report to shareholders that the financial performance of the company in FY '22 landed at the top end of the market's expectations for us. Once again, we've seen the resilience we have in trading through economic cycles. And the importance of diversification continues to play in our overall growth. We're also very happy with how the teams managed through the significant disruption that we've had over the past couple of years and the volatility caused by COVID-19 while at the same time, staying absolutely focused on driving our business strategy. With adjusted revenue up 16% year-on-year to $510 million, adjusted EBITDA up 7% to $272 million, adjusted NPAT or net profit after tax up 27% to $195 million, we're exceptionally pleased with the performance outcomes that we've delivered this year. Over the last 12 months, we've also seen just in terms of overall market, the vehicle markets traded very strongly, whether that be consumers continuing to move into lifestyle assets such as RVs or recreational vehicles and power sports or buying their next car. Used car prices have continued to rise significantly throughout the year. particularly dealer used cars driven by ongoing new car supply challenges and strong demand against pre-COVID-19 levels. Strength in market conditions continues to be reflected here in that slide, along with our ability as a business to build on our market position, while at the same time, delivering excellent performance results for our customers. And this is reflected here in things like the shorter time to sell and lead volumes that you can see there performing strongly against pre-pandemic levels. Look, part of our strategy for many years -- for those of you that have been coming to these AGMs for a while, has been to invest in large, high-growth markets, where we can leverage our intellectual property and our technology to create long-term sustainable value for carsales shareholders. And we've been highly effective at that with our investments in South Korea and Brazil historically. With the acquisition of Trader Interactive in the United States, that strategy has continued to play out. Nearly half our business revenue, as you can see there, now is being delivered from large, high-growth offshore markets, and we've been able to achieve good industry diversification as well into nonautomotive markets like RVs and others, which tend to be less digitally mature than cars are. With the diversification through now geography through industry mix and business models, we're in excellent shape to continue to grow into the long-term future. We've presented this to shareholders before, but we do operate in very large growing total addressable markets with emerging opportunities that have accelerated [indiscernible] COVID. We see significant room to increase our share in these markets, which will continue to drive long-term shareholder growth. Look, in terms of realizing some of those growth opportunities over the past 12 months, the team has performed exceptionally well. Some of the key Australian highlights you can see there have been the great progress that we've made on our digital retailing capability as a company. Our volume growth in Instant Offer, yield uplift from dynamic pricing, the repositioning of our media business and growth in dealer finance has all been exceptional. Our international businesses have all made great progress as well with the launch of new branches in South Korea for our guaranteed product and growing our dealer customer base in the United States as part of Trader Interactive. We're also pleased to announce that we have achieved a carbon-neutral certification in respect of our Australian business operations from Climate Active in the last financial year, and we're now working with our international partners to achieve a similar certification in those markets as well. Look, it's also very pleasing to see the execution of our strategy also delivering or contributing to the financial performance outcomes in FY '22, both in Australia and across our international businesses with double-digit adjusted EBITDA and revenue growth. This pro forma view that you see on the slide there normalizes the acquisition of Trader Interactive, which we actually closed on 30th of September this year, and the TyreConnect business as well that we acquired. And so this is reflected on an underlying basis. Looking at our outlook statement for FY '23. So we're very pleased with how the year started across our Australian and our international businesses. On a pro forma basis, we expect to deliver good growth in adjusted revenue and adjusted EBITDA on an actual basis with the inclusion of the 51% of Trader Interactive from October, from the 1st of October, will deliver very strong adjusted revenue, adjusted EBITDA and adjusted NPAT growth into FY '23 for shareholders. In terms of margins, we expect to see our margin expand across the group in terms of EBITDA, both on a pro forma and on an actual basis in FY '23. Just looking at our group financial performance, and it's clear that the evolution of our business strategy is paying dividends for us. We've continued to build shareholder value through sustained growth across adjusted revenue, EBITDA and NPAT, and that's always a nice slide to look at, and we continue to be well positioned coming into FY '23. Just looking at adjusted net profit after tax and the major movements below EBITDA. So as you can see, the growth in cost of goods sold, that reflects the operating expense due to increase -- the acquisition increase in operating expenses due to the acquisition of TyreConnect, which is a wholesale tyre business that we bought in the last 12 months. Depreciation has increased by 21% year-on-year, and that reflects the ongoing investment in further developing our software capabilities and supporting our growth-generating initiatives that we have as well. Profit from associates there was up 826%, and that really reflects the inclusion of Trader Interactive results and Webmotors, our Brazilian business has performed exceptionally well to over the last 12 months. The group delivered adjusted net profit after tax, I mentioned earlier of $195 million, which was 27% higher year-on-year, reflecting the strong underlying performance of the business and the addition of Trader Interactive as an associate. And finally, the Board declared a dividend of $0.24 per share, which is up 9% on last year. And we're particularly pleased about this, particularly given the equity issuance that we've done over the past 12 months to acquire Trader Interactive. Just looking at cash flow and our balance sheet, and the company generated strong operating cash flows again in FY '22 with an EBITDA to cash flow conversion ratio of 99%, which highlights a strong working capital profile that we have as a business and most marketplace businesses like our sort of do as well. From a CapEx perspective, the company continues to invest in a number of key products, which are all supporting both our current and our future revenue growth and customer experience. The increase in CapEx in FY '22 is also reflective of less employee churn and then higher wage costs, particularly in technology versus FY '21. And as pointed out in the slide, I think at the bottom point there, I mean, we do expect our CapEx rate to moderate in FY '23. From a funding perspective there, we have refinanced our debt facility, our syndicated debt facility, which we did as part of the acquisition of the remaining 51% of Trader Interactive at the end of September. And post completion, we now have leverage of around 2.7x net debt to EBITDA, and we plan to delever over the course of the next 2 years and get that back to around 2x net debt to EBITDA. Just looking at our Australian business. And look, as already mentioned, we have had a great 12 months. Our Australian business revenue grew by over 10%. What you're looking at here is our dealer business, and that grew by 6% for the full year and 10% in the second half of the year, which was a solid outcome overall in what's been an eventful and a buoyant year in the automotive industry. Demand for new and used cars has remained robust with excellent performance in our key underlying metrics such as audience, time to sell and lead to sale conversion, all enabling us to deliver strong results for our dealer customers. On the right-hand side there, you can see our Media performance, our Media business, and it was great to see that part of the business finishing the year very strongly with revenue growth of 15% on PCP. What's working for us here is the ability to diversify our customer base towards a larger share of nonautomotive customers and continued enhancement of key products across native advertising, programmatic and brand terms. Looking at private seller and our data business. So private seller on the left-hand side there has had an excellent year, growing exceptionally fast with revenue growth of 26% on PCP, and that was driven by sellers continuing to have the ability to command higher prices and sell their cars quickly. In addition to private seller ad volume strength, we have made some advertising price changes and launched a product called Dynamic Pricing, which led to yield increases by about 19% year-on-year. Alongside private seller, we have a product called Instant Offer that you might have seen advertised recently, which has performed exceptionally well, with growing consumer awareness, helping us to achieve around 3,000 cars being purchased through Instant Offer on a month-to-month basis and supporting the strong double-digit revenue growth that we saw overall in private seller. And looking at the right-hand side of the chart there, our data research and services revenue was up slightly by 3%, and that we felt was a resilient effort and given market conditions. And H1 revenue growth from RedBook in particular was exceptional. This is our car sales investments, and we restructured our reporting this year to separate these investments so you can get a clearer picture of them. But they do stand apart from the rest of our Australian operations. And they include, as you can see there, our tyre business, which is Tyresales and TyreConnect, RedBook Inspect which is our inspection business and Placie. So the biggest contributor to this segment is our Tyre Business. And we saw around 150% revenue growth here on PCP, primarily driven by the inclusion of TyreConnect. But without that inclusion, we still saw underlying revenue growth of 8% on PCP, which was a solid outcome. In terms of RedBook Inspect. I mean that business underwent a re-brand this year, if you're not familiar with that brand. And that was challenged with lockdowns, particularly in the first half of the financial year, but it has bounced back nicely, particularly around rideshare volumes, which is exceptionally pleasing. And finally, Placie, which is a platform that we launched about nearly 2 years ago, around 2 years ago now is a longer-term play for us. It's made good progress in building relationships in the important rideshare segment. Looking at our international businesses now. And overall, in FY '22, we've continued to deliver in our offshore markets, where you can see we have delivered 15% revenue growth on PCP. And to be honest, it feels like we're just getting started in these overseas markets. So looking at Trader Interactive, and they've had an excellent year with revenue and earnings up 11% and 16% on PCP, respectively, and that's on a constant currency basis and EBITDA margins expanding through the operating leverage that we have from 54% to 57%. All verticals grew but RV recreational vehicles and power sports. So jet skis and quad bikes and other things were the standouts through that growth in yield, customer penetration and rising inventory levels. And the business is really well positioned coming into FY '23 with average yield uplifts of around 7% from March and April this year. Inventory levels are continuing to improve, which you'll see in a little bit in a moment, and the execution of our synergies are all supporting incremental revenue growth into next year, which we'll talk a little bit about now. So just looking at -- so as I mentioned, we recently completed the trader acquisition of the remaining 51% of the business. So we wanted to provide shareholders with an update on how the business has been performing over the first quarter. And overall, as you can see here, the business has continued to deliver excellent financial performance through Q1 of this financial year, both at a revenue and at an earnings level. In addition to this, we're anticipating further incremental growth, as I mentioned before with synergies through the delivery of products like a new dealer auto response product that we've just launched. We've got good momentum with dealer package upsells, improving inventory conditions across all verticals and dealer customer acquisition now at record levels, which you'll see in a moment as well. There's also the potential for further yield optimization over the coming 12 months. Dynamic Pricing in private seller, which we're looking at launching in the second half of FY '23. And we've also achieved some great cost synergies combining the carsales and trader supply arrangements that we have. Look, Trader as a business overall. I mean, it's quite a countercyclical business, and it has those sort of countercyclical characteristics. And while we've seen metrics like traffic, as you can see on the top of that slide, come off a little bit since the highs of FY '21 and the COVID era. There's still remaining a long way above pre-pandemic levels of FY '19. As a result of the changing market conditions in the United States where we're seeing inventory levels begin to rise, which you can see down the bottom right-hand side of that chart. And all major verticals are still below FY '19 levels in terms of inventory, but that's growing, and that's a good thing for us. Also dealer customer counts are also growing as well, which is important and supporting that we're now at over 10,000 dealer customers, which is a record for the trade attractive business. So very pleased with how that's all going for us just a couple of months in. In terms of Asia and Encar, we've again delivered a strong financial performance outcomes while investing in long-term future growth opportunities that we have revenue growth of 17% on a constant currency basis was underpinned by strong execution across three key product areas. So Guarantee Inspection revenue grew by 30%, which was impressive, and that was driven by branch network expansions with an additional four new sites that we launched and growing customer penetration with now around 40% of all cars on the Encar site now being inspected with guarantee that guaranteed product. And we also saw our dealer direct product remain focused on building dealer penetration and volume, which were contributors to the 76% PCP growth we saw there, and our Encar home product grew by 65% on PCP, which was also pleasing as we continue to refine the consumer and dealer experience of that product, which is a retail -- digital retail buying experience. Looking at Brazil and Latin America, and Webmotors had an outstanding year across the business, finishing with revenue growth of 26% and EBITDA growth of 23% on PCP. And again, on a constant currency basis, Dealer revenue growth was strong and underpinned by new customer subscriptions across the country, along with yield growth, the result of an increase in lead fees that we put through an improvement in chargeable leads and the sale of premium dealer products such as our CRM product that we have over there. Our regional expansion too, which is expanding to other parts of Brazil recommenced in half 1, and that's been a nice driver of new dealer subscriptions through various parts of the country. Looking at Chile and Mexico with Chileautos and soloautos, and it has been a challenging year for those markets, particularly dealing with COVID, but the teams have done an excellent job in collaborating, working together and keeping costs under control and looking for growth opportunities as market conditions begin to improve. Chile is beginning to show some promising signs of recovery and where we're seeing consistent double-digit revenue growth being delivered by our Chileautos business month-by-month. Mexico does remain a challenge at the moment with new carsales still being around or slightly below pre-pandemic levels. So the focus here is remaining on holding back cost while waiting for improved market conditions. This particular slide was in our Investor Day deck, I'm sure some of you saw back in December. And it is important because it reflects what we're trying to achieve, which is to build on our traditional sources of growth, while adding material new growth drivers to meet the demands of a changing landscape and to keep the company in a strong position moving forward into the future. At the same time, we've diversified our sources of growth within large addressable markets, which -- with trend tailwinds and industries where we can leverage some of the best IP and technology in our class, clearly, which is ours. Just a couple of examples of some of the things that we've been doing, so SELECT, which is our digital retailing experience, and we've been making solid progress here since we launched this back in August last year and we're pleased with the outcomes that we're seeing and delivering for our customers. We've sold around 6,000 SELECT cars so far through the site with around 2,300 SELECT cars available on the site for sale today. We're gradually bringing more dealers on to that product, and we've evolved the product from our initial offering in August. We now have integration of trading and finance capabilities there as well. And over the coming months, we are going to be doing more to improve our offering here, but we're pleased with how it's performing so far. And just another example, I mean, Instant Offer as this product has been in market for around 5 years. It's a product we've tweaked and pivoted several times over the journey. But as we're trying to ensure that we're building the right buyer and seller experience as we've gone along -- over the past 12 months, so we felt the products in the right place for us to start increasing consumer awareness, which is what we've been doing through above-line advertising, which has brought more sellers to the Instant Offer product, and we're now selling around 3,000 cars a month, which I mentioned through the platform. The other thing we've done here is in the last few months is we've been able to optimize the service that we're now providing -- to enable us to quickly adjust things like pricing as market conditions change over time. And the outcome of that is, as you can see on the far right there of the slide, we're getting more private seller volume through that, and we're selling more cars through there as well, which has been fantastic. It's a great product because it's simple, easy and convenient and fast for a consumer to sell a car, which is what we're trying to do. So that brings me to the end of my presentation for today. In summary, look, we're very happy with how the business is performing. We're executing well and driving the business strategy. We're very excited about taking full ownership of Trader Interactive. We have lots of confidence in the future growth opportunities of the carsales business. And finally, I'd just like to say thank you to all of our customers for their ongoing support over the last 12 months and also to our outstanding global team of people that we have for the incredible job that they do for us each and every day. So thank you very much for your attention.

Hi. My name is Peter [indiscernible], and I am a shareholder. I've been a shareholder since 2013. So it's 9 years so far. Sorry, I've been a shareholder since 2013. My question -- a very good presentation. My question isn't on the presentation as such. It's about the renounceable rights you had earlier in the year. And my situation was that I participated in about half my rights because I didn't have the full money to pay for all. Why was it a non-renounceable issue as opposed to a renounceable issue? Because from my point of view, as a smallest shareholder, it just would have -- because of my personal success, I'm sure there are other shareholders in this situation, it would have been easier if it was a renounceable issue rather than a non-renounceable issue. That's my question.

So let me address that question. So thank you for the question and others have asked the question. It's probably worthwhile just giving you a little bit of context. Okay. And just to give you some context, I guess, around the acquisition of Trader Interactive yet, which will come with the crux of your question, which is a very reasonable question. You may recall when we acquired the first 49% Trader Interactive we did, let's call it, [indiscernible]. When we had the opportunity to acquire control of Trader Interactive, we move very quickly. And the reason we moved very quickly was because, a, we saw great opportunity for us, and we didn't want to pay twice for the benefits that we're going to bring to that business. So that was the reason we moved quickly. We bought the first 49% of the business in the height of COVID. So Cameron, our executive, never got to meet face-to-face with the Trader Interactive people in the U.S. yet. When we were able to meet with those people, what struck us right away was the cultural fit between the two organizations, which as most people would appreciate as one of the challenges doing M&A, particularly internationally. And also the fact that we really believe that the synergies that the team had identified were available to us. So we took the view as a Board that if Cameron and the management team were comfortable recommending to us moving quickly, we would move quickly. The challenge at the time was the fact that equity markets were incredibly choppy. So we set our investment banks the task of doing [indiscernible] and we launched into that process. The reality was we debated, given the choppiness of the equity markets, do we just wait and secretly find a time when it would be better and easier to do and therefore, do [indiscernible]. Hindsight, this is a May conversation, hindsight now sitting here in October and in November as the markets are choppier probably than they were back then. So what was put to us was the opportunity of going to market, being fair to retail and institutional shareholders by not doing a placement, giving everybody rights to pick up their rights but absolutely acknowledging that we were not able to provide that additional step that [indiscernible] offers to our shareholders yet. So we still think it was the right thing to move early. You can see from Cameron's presentation, we now own 100% of the business. We're really excited about the business. We think long term, it will deliver great value to shareholders. And if we go back to market, it won't be tomorrow. But when we do go back to market to raise equity for another opportunity, we'll start with the same premise that we want to do [indiscernible] to give those rights to shareholders. So thank you for the question. And that is the reason why we collectively and what the management team took the decision that we did.

My name is Henry [indiscernible], and I'm from the Australian Shareholders' Association. We've got about 200,000 proxies. I've got a couple of questions about Trader Interactive. There are many academic studies that highlight the lack of success of acquisition strategies. And according to a recent Harvard Business Review article I read, between 70% and 90% of acquisitions fail. Can you explain why you're so confident that this acquisition will be successful? Can you also make a comment about the technology in Trader Interactive and compare it with the Australian subsidiary? Is the technology as good as what you got in Australia? And if not, will you have to improve it? Do they offer all the various products that you've just described like SELECT and Instant Offer and all that? Do they have all that? And the third question I've got is, what are the growth opportunities in Trader Interactive over the next few years?

Great question. So I mean, why am I confident? So if you reflect on what we've done in other offshore markets, and there was a couple of slides in one of the decks that we did around the Trader acquisition. So our Korean acquisition has shown exceptional long-term growth with the shareholders. Our Brazilian business the same. So I mean, going into this Trader Interactive deal, we had a -- we have a good formula in terms of how we do acquisitions. So the process is normally, we treat each individual market as an individual market. We don't impose what we do here in Australia as being the only way a market should function and operate in terms of our technology and our IP and the way we apply it. We support local management, and we provide the input that they need to keep growing. Strategy has always been to acquire assets that are #1 in their market already. So they have strong consumer awareness and brand and performance. So we're never starting from position of #3, which is hard to win. So we're always starting in a winning position. And we go in with the expectation that we're there for the long term. And as you can see from -- if you did see slides that we've had great success over a long period of time in investing in these international markets. So going into Trader Interactive, what gave us the confidence that we'd be able to do it again, aside from the fact that we've done it several times before. But as I said to you before, Henry, we are familiar with the business. We looked at the business in 2017. So we had -- we're part of the process of acquiring it, but we missed out on it because we're focused on an acquisition in Korea. So we had good familiarity with the business itself. We have very good familiarity with the market that Trader operates in. So it's very familiar with -- carsales is a multi-vertical business. So we have car sales, bike sales, boat sales, truck sales, farm machinery. This Trader business is everything about cars. So we know these marketplace businesses and how they operate. So for us, it gave us a lot of confidence going into it from that point of view. And then we look at, as you mentioned before, around intellectual property and technology, what do they have that we don't have and vice versa, right? So we looked at their business and we look at things like how much yield do they extract from the customer base there relative to us? What's their customer penetration rates like relative to ours? Where are they at in terms of product sophistication like we are? And you mentioned [indiscernible] things that we have in automotive and our commercial model in all of our businesses, a lead-based model and there's a subscription-based model. And we look at all of that and we look at their retail website and how their retail website functions and go, there's just a lot of opportunity there for us to make some significant change. We have a big media business here in Australia. They haven't invested in media. So they don't have the media product, the expertise that we have, so we can inject that into that business and create something that's significant. I mean the U.S. market is 16x larger than our market, those same verticals. So we look at it and go, there's great opportunity for us. But we don't mandate things, as I mentioned before. So if they need some product or some tech or some IP from us or they need some input from our people, some training, we'll provide them with what they need, but it's based on the requirements of that market as opposed to how we've managed to do things here in Australia. So we're exceptionally confident. Does that answer the question?

We have a question from online. This has been partly asked and answered that there is a new element. So this question was submitted by [indiscernible]. A question for both the Chair and CEO to address. Why did you [indiscernible] capital raising structure adopted with the 2021 raise and instead go with the non-renounceable we see where retail investors were banned from applying for any additional shares, guaranteeing a profitable in-the-money shortfall for the underwriters and the unknown institutional sub-underwriters? On reflection, do you now agree that this is a mistake and who should take a majority of the blame, management or the Board?

So I'll take that question, [indiscernible]. Thank you. And it's a follow-up to the question raised earlier. So the response in addition to what I said earlier was if we are doing a future capital raise, we'll go down [indiscernible] structure. If we were to do [indiscernible] structure, we would allow retail to do overs. And there's no apologies, no regrets needed. The deal was done at $17.75, the share price is tracking at $20 today. So hopefully, everybody is feeling pretty good about it.

That's it for the online questions, Pat.

Okay. And thank you, Cameron, for that business update. So I will now proceed to a discussion around the formal business of the meeting, where a number of resolutions to put to shareholders. As I mentioned earlier, voting for all resolutions is open, and you may submit your votes at any time. The proxies received for each resolution will be visible on the screen. I will also give you a warning, but before I move to close the voting. So I'll now move to the first item of business. The first item of business is the financial report. I now table the June 2022 annual report containing the financial report, which includes the directors' declaration, the related directors' report and auditor's report. Copies of the 2022 annual report are made available on the company's website or if you elected to receive a hard copy, a hard copy has been sent to you. So I don't intend to read out the directors' report to the meeting. The Corporation Act requires the financial report to be laid before the meeting. There is no requirement in the Corporations Act or the company's constitution for shareholders to vote on, approve or adopt these reports. To date, the company has not received any questions for our auditors, PricewaterhouseCoopers, so the matter is now up for discussion for shareholders in the room. Are there any questions in the room? Nikki, are there any questions? Thank you. I will move to the resolutions to be put to shareholders. I now table the remuneration for the company is contained in the 2022 annual report. As I have already noted, copies of the annual report are made available on the company's website or sent to you if requested. So again, I do not intend to read out the remuneration report to the meeting. Section 250R2 of the Corporations Act requires the remuneration report to be put to the vote. The Corporation Act also provides that no votes may be cast on this resolution by key management personnel whose remuneration amounts are included in the report or our closely related parties. I will only be loading proxies for unrelated parties. The matter is now open for discussion by shareholders. If any shareholders in the room wish to comment or ask questions on this item 2? Nikki?

We do. We have a question from John [indiscernible]. On Page 37 of the annual report in the KMP framework, you indicate that carsales is enabled by best-in-class data and technology. What are the specific metrics that are used to determine they are best-in-class?

Excellent. I'll let Cameron respond to that question.

Thanks, Pat. Well, I guess we are now one of the biggest in class in the world. So we've got a pretty good handle on the IP and the technology in our industry. We also spend a lot of time talking to peers globally in terms of where their product evolution is at. And frame of reference is, these sessions that we tend to have with these peer companies tend to be organized by the peer companies wanting to talk to us about what we're doing in our market. So a lot of it is them talking to us about what we're doing and wanting to get a handle on that for their own markets. Clearly, in terms of financial performance, top and bottom line, as you saw in our presentation, there aren't many, if any, that I can think of in our class outside of ourselves that are growing at the rate in which we're growing at. So in terms of performance for shareholders, that's a pretty good data point.

There is another question from John [indiscernible]. On Page 43 of the annual report in performance against STI measures, you indicate that the payout is 103%. How is it possible to get a payout in excess of 100%?

Thanks for the question, and I'll get Kim, Chair of [indiscernible] to respond.

Thanks, Pat. About 18 months ago, shareholders might recall, we introduced an outperformance measure for our STI, particularly on our financial measures. So it is possible to overachieve 100% on 70% financials. And that in last year, that was indeed the case. The performance is 119%. However, when we took into account the overall performance of the STI and the fact that, that overachievement only applies to a portion of the 70%, it comes back to 103%.

Any other questions? If there are no further questions, I now ask Nicole to inform the meeting of the valid proxies that have been lodged for this motion.

Thanks, Pat. For the resolution, we have 262 million votes, against it is 12.4 million, Open and usable is 4.2 million, abstain is 162,000, and excluded is 1.4 million.

Thanks, Nikki. I now put the motion that the remuneration report the financial year end of June 2022 be adopted. If you haven't already done so, please vote on the resolution to adopt the remuneration report now. The next item of business is being Item 3A and 3B relates to the reelection of directors. Item 3A relates to the reelection of Kim Anderson. Kim has been a director of the company since 2010 and has over 30 years' experience in various advertising and media executive positions. Her knowledge and experience in the media, marketing and communications industry has been vital to the company. The Board greatly values her insights into consumer preferences as well as her extensive experience in the area of executive remuneration. Kim's reelection is unanimously and wholeheartedly supported by the entire board. As is our custom, each director up for election will make a brief address. So I now invite Kim to address the meeting.

Thanks, Pat, and thank you, everyone. I'm delighted to stand before you today to be reelected as a Non-Executive Director of carsales. Since starting the Board in 2010, the company has grown from a $1 billion market cap to $7 billion. And during that time, we've transitioned from a founder-led business to a well-established global executive leadership team headed up by our CEO, Cameron McIntyre. And not only has that team maintained a highly collegiate nature, but it's also been a high-performing culture. And it has taken us from Cameron's will outline today from a domestic business to a global business with more -- or just about 50% of our revenues coming from offshore. During that time, I've served as the Chair of the People and Culture Committee, and I have been responsible for the Board's oversight of the implementation of a really robust, consistent and fair remuneration framework, ensuring that remuneration outcomes are always aligned with shareholder outcomes. In addition, my extensive background in media and marketing I hope, continues to serve the carsales business, along with my experience as a CEO and as a Non-Executive Director. I very much look forward to continuing to work with my fellow directors, and I thank them for their support with the leadership team at carsales and Cameron and also to you, the shareholders. So thank you again for your support.

Thanks, Kim. The matter is now open for discussion by shareholders. Are there any only shareholders who wish to comment or ask questions on this item 3A in the room?

Henry [indiscernible]. I'd like to make a comment about this motion. In general, the Australian Shareholders' Association believes that directors should not be on a Board for longer than 12 years. And that after that period, new talent should be brought on the Board. We try and keep directors moving on, so they don't get too cozy with management. We think it's a very important issue. But I've had in discussions with Pat that we've kind of vote for you this time because the companies are -- we've accepted the company's arguing that she's been asked to stay on for another term to provide expertise around people and culture with regard to the Trader Interactive acquisition. So we think that's a very good idea. Certainly not a good idea not to elect her given that she is the key person on the Board for people and culture and she's an expert on remuneration. We are also conscious that she brings the necessary diversity to the Board. And as a result, the ASA will support her reelection for this term. And we hope that you can find a suitable female next time around. That's all I want to say.

Thanks, Henry. Any questions on the floor? Any questions online?

We do. This is a question from Stephen [indiscernible]. Thank you for disclosing the proxies to the ASX 90 minutes before the AGM commenced. Well done on receiving strong support for all resolutions but the biggest protest was 12% against Kim Anderson's reelection. What drove that? Did one of the proxy advisers recommend against and what was the rationale?

Yes. So the short answer, Stephen, is one of the proxy advisers wouldn't take a meeting with us. So I spoke to all of the shareholders who are potentially -- who are generally global shareholders that I could reach out to in a short period of time to speak about Kim's reelection. To give everybody just a bit of backdrop as to what Henry raised, we've gone through over the last 15 years as a listed company, a number of board refreshments, if you like, and we look at a whole bunch of things. We look at skill set, we look at what do the directors bring in terms of specific markets, specific skills. We look at tenure, we look at the company history which has been really important. As you look at the directors before you today [indiscernible] the board at the very beginning of the meeting, you'll see that there's a real difference between Wal, myself, Kim who have been on the Board for years, long periods of time. And then Edwina, David and Kee, who've been on the Board more recently. And we think that renewal is really, really important. The reason Kim is standing for reelection today is because we asked her to stand again. She had told shareholders and proxy advisers last year, that she probably would not stand again. But given Kim's expertise as Henry outlined across a whole broader of ranges, the importance of getting the Trader Interactive acquisition done properly, bearing in mind that was owned by private equity. Somebody of Kim's expertise and understanding of the whole remuneration structure as well as having run around business in the U.S., excuse me, Kim brings huge experience to this board. So in terms of the so-called protest so, Stephen, it is due to ISS, not taking a meeting with us and me being able to explain that situation. Every shareholder I spoke to who did listen to that argument has voted in favor of Kim's reappointment. So in my view, Kim is unanimously appointed as a director of this company, she brings huge value.

There's another two questions from Stephen [indiscernible] on these items. So I might ask both of them. The first one is when Kim voted in favor of launching the 1.2 billion non-renounceable, one for 4.16 share offer at $17.75 earlier this year. Was she aware that your 19,000 retail shareholders were banned from applying for additional shares [indiscernible] non-renounceable offers by ASX 300 companies? Was she expecting that only 8,000 of your shareholders would rationally participate in the $362 million retail offer by taking up their rights, either partially or in full? What does she think about the fact the two Wall Street underwriters and their sub-underwriting clients, made more than $10 million in profits from the entirely predictable retail apathy and nonparticipation in addition to the $24 million fee they were paid to underwrite the offer? Will she apologize for this dreadful treatment of retail shareholders?

Stephen, I hope you're not getting blisters on your fingers by typing all these questions at. In terms of the answer to the question, the answer to the question, I've already answered it, which is we went down a path, it's not a preferred path. I said if we were to do [indiscernible]. So I think we put that matter to rest.

The next one is well done to Kim for contributing to the fabulous performance of carsales during her 12 years on the Board. The only blemish was this year's capital raising structure, but at least the deal has clearly added value overall, as the Chair pointed out earlier. Does Kim agree, it was foolish of CVC to sell the controlling stake in carsales for less than $5 a share almost a decade ago? And that PBL media would not have gone broke if CVC had retained its shareholding. Regarding tenure, is this going to be Kim's last 3-year term? And what does she believe have been the company's three best moves during her 12 years on the Board?

So in terms of the question around CVC. CVC aren't represented in the room, so I'm not going to have to speak for CVC in terms of the decision. In terms of Kim and her tenure, as I said earlier, we have asked Kim to do another term because we think she adds huge value to the Board. So she is doing that, and we appreciate that. And in terms of the last question, Kim, do you want to comment around favorite moments on your time at carsales Board?