CAR Group Limited (CAR) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to the 2023 Annual General Meeting of carsales.com Ltd. My name is Pat O'Sullivan and I'm 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. 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, ask questions and vote. On behalf of the Board, I warmly welcome all attendees those here with us in person and those joining us over the live webcast. We are pleased to be able to extend this meeting to you all. 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 all 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 might move to one of the microphones in them and please wait to be called up. Please state your name and the shareholder you represent if you are a proxy before asking your question. Online attendees may submit questions at any time. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please note that questions may be moderated or if we receive a multiple of questions on the same 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 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'll 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 names where indicated and sign the voting paper. When you've finished filling in your voting paper, please lodged in a ballot box or with a member of the Computershare team to ensure your votes are counted. Proxy holders have attached to their admission 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 vote in accordance with these 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, who's standing over here of Computershare, will be our 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, directly in front of me, Cameron McIntyre, is Managing Director and Chief Executive Officer, appointed to that position in March 2017. Cameron has been with the company for 16 years, and we'll give a presentation shortly on business performance. 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 Non-Executive Director. 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 Committees. Edwina Gilbert was appointed as a Director of the company in 2016. Edwina is the Chair of the company's Risk Management 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 is also a member of the company's Risk Management Committee. David Woodroski was appointed as a Director of the company in 2019 and is the Chair of the company's Audit Committee. He is also a member of the Risk Management Committee. And our newest member, Susan Massasso, joined our Board as a Director in June 2023. Susan is a member of the company's People and Culture and Sustainability Committees. I would also like to introduce Nicole Birman, who is our Company Secretary, and General Counsel. Also in attendance at the meeting are Sam Lovly representing our auditors, PwC and Jonathan Wenning, representing our lawyers Arnold Bloch Leibler. The formal business of this morning's meeting will be conducted in two parts. First, Cameron will present to the meeting, and there will be an opportunity to ask him 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 will now hand to Cameron to address the meeting.

Thanks, Pat. Good morning, everyone, and welcome to the 2023 carsales Annual General Meeting. Look, once again, it's been a hugely eventful and transformational year for us as a company. We've continued to evolve considerably over the last 12 months, whether that be through the acquisition of the remainder of our Trader Interactive business in the United States, or with the transformational transaction we've done with acquiring another 30% stake in our webmotors business to developing new product here in Australia and in our global markets. And through all this, the company has performed exceptionally well, and I really look forward to talking to you all about that through my presentation in just a moment. But in keeping with carsales AGM tradition, I'd like to play you a short video now just that talks a little bit about some of the things that we've been up to as an organization over the last 12 months, largely here in Australia. [Presentation]

Okay. Let's get into it. So I guess the first slide, if we can go to the next slide. And this is a slide I always like to start with as both MD and as a shareholder of the company. This slide in particular reflects how hard we've worked as a business and continue to perform in the delivery of strong total shareholder returns over a long period of time there. And as you can see, the dark blue line there is carsales total shareholder return measured against what's occurred on the ASX. And you can see over time that gap between our performance and the performance of the ASX has continued to widen, which is very pleasing, particularly over the last 12 months. Just looking at some of the financial highlights, and you can see here, it's been a fantastic year for the business, and we're very pleased with how our teams have operated and what they've accomplished. We've delivered excellent financial outcomes for shareholders, as you can see, whilst making strong progress executing on our strategy and our long-term priorities. We also acquired controlling stakes as I mentioned before, in our Trade Interactive business and webmotors, which was a milestone really for the organization as we now find more than 50% of our revenue comes from outside of Australia. Pro forma results here on this page are probably the best reflection of the underlying performance of the company as a they rebase our FY '22 numbers to fully include Trader Interactive and webmotors. And on that base, it was great to see 18% growth in revenue and 19% growth in EBITDA. Just as pleasing was the double-digit growth that we also saw in revenue and EBITDA across each of our Australian United States, Brazilian, Lat Am and Korean operations. In terms of some of the operational highlights, and we had a strong operational performance in the last 12 months as well. We continue to see good levels of trading activity in our vehicle marketplaces around the world, which reflects the strength of our business model and the value we deliver to our customers, particularly given we're operating in a higher interest rate environment at the moment, and it's a testament to the sustained investment that we're seeing in new product and marketing across the business. Just in terms of opportunity and market opportunity when it comes to investment. We've put our capital to good work in markets with significant long-term growth potential. And you're seeing us consistently realize that our potential once again this year. We've built an incredible Australian business over the last 25 years, and it's now complemented by an enviable portfolio of international assets, and we see a substantial growth opportunity in these large, attractive addressable markets over many years to come. On the right-hand side of that chart there, you can see in terms of TAM, which is our total addressable market, over the last 8 years, we've doubled that to around 9%, but we've still got a lot of opportunity ahead of us, and we're well placed to continue to grow that over time, given the strength of our capability and the quality of the marketplace business that we have. Just looking at the U.S. at the moment. We're very pleased with the progress of the Trader Interactive business since we completed that 100% acquisition in September last year. We're ahead of our own internal expectations that we set for ourselves in executing our investment thesis. And we've delivered well against all of our synergies that we identified as part of the transaction. And this has included the delivery of new product. We've seen good customer acquisition growth and investing in technology to drive future growth as well. The strong execution in new product combined with excellent customer acquisition seen revenue grow in the second half of the year by 16% on pcp. And we really feel like we're just scratching the surface in that with the opportunity we have with plenty of opportunities still to come with growing customer penetration, particularly at premiums product. Just looking at webmotors and since 2014, you've heard us up here toward the fact that we'd learn more of webmotors. And this year, it finally became a reality. And whilst we've only just transitioned to that controlling stake that we have in webmotors, where we've already started to deploy some new product initiatives through that business and seeing great outcomes. We launched dynamic pricing, which is a product we have here in Australia and in the United States in May and have already seen a strong uplift in private seller yield similar to our experience here and overseas. And our investments in increasing brand awareness in regional, highly populated cities are also starting to pay dividends for us as well, which you can see in the charts on the left-hand side there. So our focus in early '24 is going to be on our media business there as well, where there's significant opportunity to improve monetization through better use of carsales technology and product suite. So look, this slide here, it really captures the revenue and EBITDA performance of the business on a pro forma basis since 2007, and the message that it's delivering really is that as a company, we've consistently delivered growth through all economic cycles for shareholders since 2007. And the business actually has a lot of countercyclical attributes. And despite high interest rates at the moment, we're still seeing good growth in both our operational and financial metrics, which gives us confidence in our outlook statement in FY '24, which I'll talk to next. So just looking at the outlook statement, and we're 4 months in now to the new financial year, and we're very pleased with how the company is continuing to perform, which gives us great confidence in the reiteration of our outlook statement provided in mid-August, which was, on a pro forma basis, we expect to deliver good growth in revenue and EBITDA. And on an actual basis, given the inclusion of Trader Interactive and webmotors for the full year, we expect to deliver strong growth across revenue and EBITDA and strong growth in net profit after tax. And in terms of margins, we expect to see margins improve again in FY '24 on a pro forma basis. So looking -- diving down into some of our financial metrics now. And the company has delivered excellent financial outcomes in FY '23, generating strong revenue and earnings growth. The results we've achieved show continued growth momentum, demonstrating our resilience against a more complex macroeconomic backdrop, and we're confident in our ability to continue delivering good results, given the size of the opportunities that we have in front of us and all the multiple levers for growth that we have. Just looking at a summary of our profit and loss. And as you can see here, a strong increase in revenue and EBITDA and the growth in depreciation and amortization here reflects the impact of consolidating Trader Interactive and webmotors for the first time through our FY '23 P&L. The increase in finance costs comes from additional debt taken to fund the TI acquisition, along with an increase in base interest rates that we've all observed over the last 12 months. The group's tax rate in FY '23 was lower than it was last year, and that reflects the minimal tax that's payable on the Trader Interactive earnings, and that's largely due to TI utilizing tax deductions for the amortization of purchase price intangible assets. Group delivered adjusted net profit of $278 million, which was 43% higher than the previous year, and adjusted EPS or earnings per share growth is a better representation of the underlying performance of the business as that includes the increase in shares on issue from the recent cap raises. And on that basis, it was pleasing to see growth of 17% on pcp as well. Just looking at segments now on a pro forma basis, which consolidates Trader Interactive and webmotors in both current and comparable periods. You can see here, this view here really is the best representation of the underlying performance of the company, and it's fantastic to see double-digit revenue growth across all the regions of the organization and reflects the strength of our operational performance in the last 12 months. Just looking at cash flow and balance sheet, and we've generated strong operating cash flows in FY '23, with EBITDA to cash flow conversion ratio of 99%, which reflects our strong working capital profile and discipline in cash flow management. From a funding perspective, we delivered pro forma leverage of under 2x, which is where we feel most comfortable. And finally, the business continues to invest in key products and technologies, which drive the current and future revenue growth, and you can see on the far right-hand side of the slide there, the growth in CapEx has been reasonably consistent on a revenue to CapEx rate, around about 9%, which is good. Just looking at market metrics. So just before we jump into more detail on the financials, just a bit of context around some of the operating environment, things that we see. So on a traffic and lead perspective, we've seen these metrics come off the COVID pandemic highs, but they still remain nicely above pre-pandemic levels as of 30 June. And from an inventory perspective, we've seen inventory levels across all our major markets. Trader Interactive and webmotors are still below 2019 levels. Australia is now it's above but on par to where it was in pre-COVID levels at 30 June, whilst Korea is also cycling higher against pre-COVID levels themselves as well. So just diving into the geographies now. And for Australia, FY '23 actually delivered the best financial result for our Australian business since around 2013 with double-digit growth in both revenue and EBITDA. We continue to invest in building an increasingly online buying and selling experience. And we've extended our market leadership from both an audience and inventory perspective, and that's reflected in the double-digit revenue growth in each of our key dealer, private and media revenue segments that you can see on the slide there. Jumping over to North America and a Trader Interactive, we've seen outstanding performance there over the last 12 months with revenue and earnings up 14% and 17% on pcp, respectively, on a on constant currency basis, with growth rates increasing in the second half of the year. EBITDA margins expanded through the benefits of continued operating leverage with margins growing from 57% to 59%. We also observed growth in all verticals with RV, which is recreational vehicles and power sports being the standout through growth in yield and customer penetration in particular. Truck segment has been improving nicely, particularly of late, reflected in the improving inventory levels and consistent levels of customer acquisition each month that we're seeing there as well. And in fact, across each of our businesses, we've added net 300 paying customers in the last 12 months, which has also been very pleasing. So on to Latin American study with webmotors and another outstanding 12 months there with revenue growth of 29% and EBITDA growth of 31% on pcp on a pro forma constant currency basis. We've increased our market share in large areas outside of Sao Paulo and Rio de Janeiro through acquiring new dealers, growing our audience and adding private sellers, where webmotors is uniquely positioned to capture market share with exceptional buyer and seller engagement metrics, and a sophisticated suite of digital products that they have. Results shown in the table here also include the contribution of webmotors adjacent market businesses which are Car10 and Libby, and both those businesses have demonstrated excellent growth in both revenue and earnings over the last 12 months, too. So Encar in South Korea delivered another excellent performance in the last 12 months as well with double-digit growth in revenue and EBITDA up 11% and 12%, respectively, on a constant currency basis. And this was driven by continued expansion of the Guarantee inspection product that they have and the addition of four new sites and growing customer penetration within those existing branches that they have. Encar also continues to make strong progress on its mission to facilitate online automotive transactions, which is reflected in the strong growth of its Encar home and digital retailing services that it has. And just covering the rest of Lat Am and some of our carsales investments and starting with the left-hand side, which is LatAm excluding Brazil. And we've seen a much improved 12 months for our Chilean operations as inventory levels have increased materially from pandemic lows. And as a result, Chile's delivered outstanding revenue growth in Dealer and Private segments. The other thing to note here is that after 8 years or so, we've also decided to exit our unprofitable Mexican business, soloautos. And with COVID behind us and having acquired a controlling stake in webmotors, we felt our efforts will be better served elsewhere in other parts of the Americas. On the right-hand side there, just looking at carsales investments, and these include businesses we consider to be stand-alone from our core marketplace, businesses, which include adjacent services. Biggest contributor here to this segment is our tire business, which saw underlying revenue grow 8% on pcp, which was a solid outcome. Profitability was a bit more challenging due to continued elevation in freight and labor costs. Also in here is our RedBook Inspect business, which demonstrated good growth in underlying inspection volumes, particularly in our prepurchase and rideshare segments. Look, as a business, we're really passionate about delivering the most frictionless buying and selling experience for our customers around the world. We remain very alive to the competitive dynamics in each of our markets, and we're very focused on execution as we move into FY '24. And this focus is particularly targeted into 5 main areas that you can see on the slide. And over the next 12 months, we expect to make excellent progress in these areas, and I'll provide more detail on each of those five now. So just in terms of market leadership, our goal here is to solidify and extend our market leadership position in all our markets. And as you can see, we're doing a good job in this area, demonstrated by our audience versus our nearest competitors in each of our key jurisdictions. And we're well placed with the network effects that we've got to continue to deliver the strongest possible value proposition for our consumers and our dealers. Look, given the huge audience that we have and the digital capabilities that we've got across the group, we're very well placed to facilitate the increasingly digital buying and selling experience that people are really looking for. And whilst most consumers aren't currently willing to complete the entire buying process online, we're focused on providing consumers with the option to pick and choose what parts of the process they want to complete digitally. And as you can see here, we're making excellent progress in reducing those friction points across each step of the buying process of the digital journey in each of our key markets. A few highlights to call out on this slide just in terms of progress over the last 6 months in Australia, we launched a digital finance application process. In the U.S., we're now facilitating safe and secure payments. In Brazil, we're improving the finance integration with Santander and integrated Car10, the subsidiary I mentioned before, which has a repair and service marketplace business into webmotors as well. Overall, look, there is still a long way to go with this, but the benefits of this strategy are already being reflected in our growth, and we're seeing confidence. We have confidence to continue to invest in these areas over the longer term. Just looking at dynamic pricing. And over the last 7 years, we've been able to evolve our pricing strategy for private sellers in Australia from a simple fixed price model to value and then location-based pricing. And this has delivered strong yield growth. And more recently, we've included metro and rural based pricing to optimize volumes and yield in FY '24. It's really pleasing to see dynamic pricing at that strategy that we have been replicated and replicated quickly in Brazil. and the U.S. with the strong early results that we're seeing there from that upside still to be delivered over time. On to media. And you might recall, a couple of years ago, we talked about modifying our media strategy in Australia, and that was to diversify more heavily into nonautomotive customer segments and introduce more innovative audience and programmatic and native product solutions for our customers. The evolution of our carsales match and ID products is an extension of this more sophisticated product offering, which enables our advertising partners to better target a specific audience as well as purchase our media products in a much more convenient way. Both the initiatives that we have here have contributed considerably to the excellent growth that we've seen in media, in Australia, in that segment, and there's significant future potential growth there as well. Also, we're seeing some potential to deploy some of this technology into our global markets. In FY '23, we deployed carsales programmatic advertising technology into Trader Interactive, which has a significant -- seen a significant increase in viewability of advertising on their retail websites and monetization, and we expect that will provide us with some decent financial upside for Trader Interactive into FY '24. And this programmatic advertising solutions also got the potential to extend into Brazil and Korea with minimal additional work. So look, the vehicle industries that we operate in are undergoing a lot of change, including the growth in electric vehicle adoption, new OEM operating models and the increasing digitization of the buying and selling process. At carsales, we are uniquely positioned to respond and benefit from many of these trends, which is the key thesis of our horizons, our future horizon strategy. We're consistently exploring new ideas and opportunities to grow. As shown on this slide, we think about future horizons across four key pillars. So the first is ensuring that we continually fuel our internal innovation through in-house product development. The second pillar includes us extending our audience and competitive advantage into new markets A good recent example of that is the release of caravan and camping accessories as an e-commerce store here in Australia. The third is continuing to explore mergers and acquisition opportunities where we can deploy our intellectual property and technology into attractive new markets. And the final pillar is making small investments in very select early-stage businesses to ensure that we're leveraging insights and trends from the most innovative early-stage businesses operating in our industries. And so key focus areas in that part of the business include electrification, autonomous vehicles and fintech. So look, AI, as you can see on this slide, it's nothing new for us. As you can see from this slide, we've been investing in AI for a long time. The three pillars in our AI strategy are around enhancing the consumer experience on site, enhancing elements of trust and safety and optimizing our business process. And as you can see, a number of use cases we currently have today on that slide. AI has become a more topical subject recently given the prevalence and increased adoption of large language models. There's undoubtedly a significant opportunity for carsales to better utilize our data through AI. And we see ongoing opportunity around assisted experiences for customers like personalized, conversational search or AI-assisted content generation for new advertising. Other areas of use might be in terms of software engineering processes to help developers write code faster and more accurately or to automate other manual processes that we have around the business. But in short, the point is that AI will help us to build better solutions and improve our productivity as an organization over time. Just on sustainability. And yes, as an organization, we're committed to being responsible corporate citizens and taking action on environmental, social and governance issues, which is important in ensuring our ongoing success. Our teams are dedicating more focus to ESG issues given that the growth in the group's global footprint. As you can see here from this slide, we've made some excellent progress in this space over the last 12 months, and this includes publishing our first TCFD report and implementing a subsidiary Board risk management framework, which will give us critical help in ensuring that we're managing local currency risk and other business performance. Now this is the last slide in the deck. So I just want to summarize, we've had an excellent 12 months on all fronts, and we're looking forward to FY '24 and the opportunity that, that presents to us as well. Some of those opportunities include, but aren't limited to our desire to continue to build on our market leadership positions, building competitive advantage and delivering long-term sustainable growth for shareholders. We're focused on removing friction points in buying and selling. And you can see how that continues to play out for us as an organization in the context of some of the earlier slides I showed you around digital retailing. We know we've got great opportunity in our international markets with new product, but we're also focused on growing customer acquisition take rates there over time. In the last 12 months, you've probably seen -- more noticeably seen at least intellectual property and technology transfers within the group, which isn't anything terribly new for us, but you'll see more of that to come over the coming 12 months. And finally, as a business, we're a good generator of cash. And as our EBITDA margins continue to expand over time, you'll see this continue to be a feature of the business whilst investing for future growth and paying attractive dividends for all shareholders. So with all that, I'll hand back to the chair. Over to you, Pat.

Are there any questions?

One from the Webcast. This question comes from Mr. Peter Calero. After the results announcement, carsales received a speeding ticket from the ASX. The share price increased by 13% over the next 4 days. Another one of my holdings, Cochlear, shares price increased by 12% over the next 4 days after their results announcement yet did not receive a speeding to get. What did Carsales do to offset the ASX compliance office?

Look, I don't think we upset the compliance office too much. I think the issue was what was being published in the press and some of the headlines in some of the press I think -- we're around about the performance of the overall automotive market. And for clarity, the ASX, I just wanted to clear that up with us. in terms of it was about market performance, more new cars being sold, more used cars being sold as opposed to outperformance versus consensus. So that's why we cleared it up very, very quickly.

Henry Stephens, speaking from the Australian Shareholders' Association. I've got about 260,000 proxies. A great year for the Board and the company. It was really terrific. My question is just about your slides. I'm interested in is the technology and your ideas or flowed from Australia to Trader Interactive or have you got some ideas and technologies that have flowed back to Australia? I get the impression that Trader Interactive is a company that you're adding all the value, they don't have a lot, but you're bringing all this fantastic technology to them. I'm just wondering what's the truth there.

Yes. Great question. Generally, what happens in these digital marketplace verticals, so cars, trucks, powersports, RVs is the markets tend to be more sophisticated in cars because the dealer network is more sophisticated, more technology sophisticated and those other verticals tend to be behind. So up to 5 to 10 years behind depending on the vertical. So in our case, with Trader Interactive, they are non cars. So they're all behind. So it's relatively easy for us to take our IP in tech because we're more advanced and apply that into those less advanced verticals. Now that doesn't mean to say that over time, that transfer won't go to waste. So at the moment, it's us exporting our IP and our tech into those vertical markets. The U.S. was the example you used, but there are amazing teams over there. They're great people. They're very innovative people as well. So my expectation is longer term, I'm looking for IP transferring both ways to make our Australian business stronger as well by taking IP from other markets that evolve differently.

Thank you, Cameron, for that excellent presentation and business update. So I will now proceed to discussion and Q&A around the formal business of the meeting, where we have 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 proxy votes received for each resolution will be visible on screen. I will also give you a warning before I close the voting. So we'll now move to the first item of business, which is the item 1 financial report. I now table the June 2023 annual report containing the financial report, which includes the directors' declaration, the related directors' report and auditor's report. Copies of the 2023 annual report are made available on the company's website or have 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 Corporations 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 from our auditors, PricewaterhouseCoopers, so the matter is now open for discussion by shareholders. Are there any questions on the floor? Michael, any questions? Thank you. I will now move to the resolutions to be put to shareholders. So Item 2 is the remuneration report. I now table the remuneration report of the company, as contained in the 2023 annual report. As I've already noted, copies of the annual report were 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 a remuneration reported put to the vote. The Corporations Act also provides that no votes may be cast on this resolution by key management personnel whose remuneration remands are included in the report nor their closely related parties. I will only be voting proxies for unrelated priorities. Before we move to questions on the remuneration report, I would like to make a few remarks. As I reflect on the past year and the results before you today, I want to make a few important observations. Carsales is a very proud Australian-found entrepreneurial company that now has more than 50% of its revenues outside Australia. We have delivered on any measure excellent returns to shareholders over a long period of time. We have a strong culture of being paranoid, always looking to stay ahead of threats to our business models across the globe, and we don't tolerate [hubris] anywhere in our organization. Since we've been listed on the stock exchange in 2019, as Cameron showed in his slide, our total shareholder returns are more than 6x that of the ASX 200. That's more than 6x over a 14-year period. In the FY '23 financial year, our total shareholder returns were more than 30%, and our 5-year total shareholder returns were 74%. And over that same 5-year period, we have paid our executives under 70% of their STI potential and just over 60% of their LTI potential. And as we did again in the FY '23 here in both the STI and LTI, we as a Board exercised negative discretion. And we've done that in previous years, where we think that gives a more balanced outcome. Over the last 3 weeks, I and other members of our Board have spoken to a large number of our institutional shareholders and proxy advisers about the results, the outlook and today's notice of meeting. And today, I'll speak to you, our retail shareholders, as well as other shareholders who are in attendance. Carsales' success is built on its IP. That IP is all about knowing how and when to do specific things in a classifieds business and to create a successful marketplace. And today, touch wood, we've demonstrated that this IP works in markets as diverse as Korea, Chile, the U.S., Australia and Brazil. That IP sits with our people. The majority of Australian technology companies who have grown globally, remembering we have grown our enterprise value from just under $1 billion in 2009 when we listed on the stock exchange to over $10 billion today. Most of those other Australian technology companies have changed out the majority of their executives to grow. We're incredibly proud of the fact that the vast majority of our global leadership team has been with the company for many, many years, starting with Cameron, our CEO. And this hasn't happened by accident. It's come from a concentrated effort led by the Board and a CEO to attract and retain talent over long periods of time by investing in their development and by ensuring carsales globally is a great place to work. Remuneration is an important tool to reward our people, but it also plays a key part in retaining those people. Our remuneration structure has been heavy to variable pay in the form of the STI and an LTI. Nearly 70% of Cameron's FY '24 on target remuneration is in variable pay. So very closely aligned with shareholders. We acknowledge. We continue -- can continue to improve our remuneration structures. And as you've seen in our notice of meeting, we have made 3 significant changes in our FY '24 executive remuneration structures as we evolve them as the mix of assets we own change. And we will take on board for future plans the feedback we've received over the last few weeks in our shareholder discussions, which are all valuable in us rebalancing, competing stakeholder agendas. But I would be doing our executives are huge to service by not thanking them publicly today, for their hard work, commitment and innovation and reinforce that we, as a Board, as stewards for all shareholders believe paying you 135 of your STI entitlement and 89% of your LTI entitlement is only fair when you have been the architects of evolving this business into one that is now very global in its operations and in a year when as I said, our 1-year TSR, which is the period of which the STR gets paid, grew 32% and our 3-year total shareholder return grew 32% in the period for the LTI. The matter is now open for discussion by shareholders. Do any shareholders in the room have any questions on the remuneration report?

[indiscernible] from the ASA again. We supported the remuneration report. We thought it was very reasonable and in alignment with shareholders' interest. So I'm very surprised by the vote. 15% have voted against. And I'm just wondering if you can cast some light on that? What are the proxy houses? Which proxy house has voted against it? And why?

Yes. Thanks, Henry, and thank you for your support. I don't want to get into the, which proxy advisers did something I didn't do something at the end of the day, they've all got their own decisions to make and recommendations to make. The reason for the vote against as we can read it is a hypothetical that the threshold, which is the point at which an executive can earn any incentive in the STI was pitched too low. The fact that we had already addressed that matter by increasing that in our FY '24 notice of meetings seemed to fall on [indiscernible]. We'll take it on notice. But at the end of the day, in the fairness category, I don't think anybody could judge it as being unfair or trading the executive favorably. Any other questions on the floor, Nicole?

Similar question, but a little different from Stephen Mayne. There was a 16% vote against the remuneration report on the proxies, which of the proxy advisers recommended against this? Was this ISS and its offshore index fund Donkey BlackRock, Vanguard and State Street in action or were there other drivers? Also, roughly how many shares were excluded from voting on this item as opposed to the other items of business?

So Stephen, that question obviously was submitted before my speech. So hopefully, I've addressed most of the questions. The actual answer to your question about the excluded is on the screen. It was lodge with the stock exchange this morning, so that's 5.4 million. In terms of which proxy firms well against, that's not my job to tell you that, but it wasn't ISS.

[indiscernible]

Well, the [indiscernible] is generous human than I am. Any other questions, Nikki? Excellent. So there being no further questions, I now ask Nikki to inform the meeting of the ballot proxies that have been lodged for this motion.

Thank you Okay. Proxies lodged for is 233, 500,000; against 43 million; abstained is 31,000; and excluded is 5.4 million. There are 399 open.

Thank you, Nikki. I now put the motion that the remuneration report for the financial year-end of 30 June 2023 be adopted. If you haven't already done so, please vote on the resolution to adopt the remuneration report now. [Voting]

The next items of business being Items 3(a), 3(b) and 3(c) relate to the reelection of directors. As Item 3(a) relates to my reelection as a director, I will now hand to the Chair of our remuneration Nomination Committee, Kim Anderson, who will take us through these motions.

Thanks, Pat. As Pat just said, is Item 3 relates to the reelection of Pat O'Sullivan, as a director. I will chair this part of the meeting. Pat joined the Board in 2007 and became Chair of the Board in 2019. Since that time, Pat has been an exceptional chair, leading the Board and the company through unprecedented growth, unprecedented times and transformational changes, his outstanding financial and commercial expertise and experience in global companies of great value to the Board and the company. The Board and management greatly values his leadership and expertise. Pat'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. I invite Pat to say a few words regarding his reelection.

I'm going to do that for me here with the microphone on Yes. Excellent. Thank you, Kim. Let me start by saying I am very proud to be part of the carsales Board. We do have a very unique culture in that each director on this table makes them available to meet and chat with executives across the company and the executives who are in this room have an expectation that they will get real insights and value from those conversations. As I mentioned earlier, when I addressed the remuneration report, this company is all about its IP, being its people, and that starts with the Board. The Board as a team. Over the 24 years that carsales has existed, we've had only four chairs, the longest ever been well, who's at the end of the table, we'll talk to you shortly. And I'm very privileged to be the current chair. For those that don't know me, having to talk about myself is not something I do very comfortably. My style is about working as a team with that classic, there is no I in team. I was an executive for 25 years, and over the last 12 years, I've been a Nonexecutive Director and Chair of many ASX-listed and private companies. As reluctant as I am today to talk about myself, I need to provide you all with some important reassurances given the recommendations by 1 proxy to vote against my reelection. You have a wonderfully diverse innovative, engaged and committed Board that works very hard as a great team. We respect, engage, challenge and support each other and the executive. We have had to evolve quickly as a Board since I took on the Chair role as we moved from a mainly domestic business to one that now has more than 50% of its revenues coming from offshore. And that evolution is continuing as it is really important that we are structured and focused on the matters across the globe that really matter to our stakeholders. Today, your Board has a great diversity in skill sets, be that gender, we have 3 female non-executive directors and 1 appointed who will join us in 2024. Skill sets are really important and tenure, we think, is really critical. We all challenge Cameron. And as a management team, we're all very supportive of Cameron and his management team. Your Board is brave. We went to the equity markets 3x in a very short time frame during COVID to raise equity to make international investments in the U.S. and Brazil that Cameron has talked about because we believe in Cameron and his executive team's ability to drive and deliver growth through our cumulative IP. Your share price is up more than 40% since the last of those capital rises only 6 months ago. We have built -- we have spent on building succession on the Board and refreshing the Board. As of recent times, we've lost the cumulative IP of long-term directors, including the founder, Greg Robuck, Rick Collins and Jeffrey Brown. Your 3 longest-serving directors are Wal, the co-founder of the business, who will speak shortly, myself, and then Kim, who, as we mentioned last year, agreed to do 1 extra term to what she had planned to help us integrate the recent acquisitions. She will step off the Board in the next 2 years. Then there's a gap in tenure to Edwina, Kee and David, who are on our Board between 4 and 7 years, and then we have our 2 newest directors in Susan. And as I mentioned, the [indiscernible] that we've announced will join the Board in early 2024. So it did accept that IP is critical to our future success than having a Board with some directors who have long memories must be valuable. Our Board and management team are certainly see huge value at us. As to the issue of may having the capacity to fulfill my role, the ability to commit the requisite time to do a great job as your Chair, which is the issue raised by proxy advisers, ISS, all I can do is reassure you evidenced by the fact that over the course of the last 3 years while I chaired carsales, I've been involved as Chair of another large ASX company who had a very significant cyber attack. I was front and central in Australia is the largest M&A transaction when I was on the board of Afterpay. I was Chair Elect when [indiscernible] did its recent IPO, and I was Deputy Chair of another large private business that did an on-market ASX takeover. I've never missed a carsales Board meeting. I've never missed carsales committee meeting, all of which I attend even though I'm not a member of any of those. And we've had a number of due diligence committee meetings, which are wonderful lawyers love housing when we're making acquisitions, and I can safely say I've never missed any of those. So my commitment to you is the fact, if for on e moment, I felt that I didn't have more than enough time to be a very active part of this great team, I would step aside as Chair. Finally, I reassure you that as your Chair, I, along with the team, I'm always very focused on ensuring we have a great talent available for succession plans for all key roles, including the Chair of the Board. Thank you, Kim.

Thanks, Pat. The matter is now open for discussion by shareholders. Do any shareholders wish to comment or ask questions on Item 3(a)? Nikki -- sorry Henry.

Henry Stephens from the ASA again. I'm just concerned about the vote against your reelection Pat. Is this because of the length of time you've been on the board or for a perception of a lack of independence. Given the situation, we believe a good way forward prior to succession would be to nominate an independent non-executive director to represent retail shareholders. Yes. So I think that's a bit of a solution for the problem of independence.

Thanks, Henry. Thanks for that question, and thank you for your thoughtful advice. We'll take that on Board. I think the most important thing to say here is that, in the Board's view, Pat is considered completely independent. He is very mindful to ensure that he gets consensus from his fellow directors on decision-making and his entire focus is always on the success of the company, and the best way to demonstrate that is from the results be put before you today. So I would reassure you again on Pat's comments on capacity, he is an exceptional chair, he never comes to Board meetings unprepared. He has exceptional report and respect with Cameron and the rest of the global and executive leadership teams. And we certainly reject any view that he would be not independent in his decision-making. Are there any further questions, Nikki?

There is a question from Stephen Mayne, which I'll read but has largely been addressed. Thank you for disclosing the proxy position to the ASX in a separate announcement earlier today. This is best practice as it allows shareholders to discuss any material protest votes. Could the Chair and next most senior director, please comment on what caused the 27% proxy protest against Pat's reelection, and whether we will be making any changes as a result?

I think we've answered that question. Thank you. Okay. I'll now put the motion to the meeting that Mr. Patrick O'Sullivan, being a Director of the company, who retires by rotation in accordance with Rule 17.1 of the company's constitution and being eligible, offers himself for reelection to be reelected as a director of the company. If you haven't already done so, please vote on this resolution now. [Voting]

Thank you. Item 3(b) relates to the reelection of Wal Pisciotta. I don't think Wal needs much introduction in this room on this call, but he is the founder of sales and has been a director since its inception. He has over 35 years' experience in supplying computer services to the automotive industry. And his extense knowledge of the IT needs of the automotive industry and his contribution to this business is -- has been a driving force from the start. We are deeply valued by having him on the Board and involvement in the company. Wal's reelection is unanimously and wholeheartedly supported by the entire board. I now invite Wal to address the meeting.

Thank you, Kim. And Pat, as usual, you completely understate and underrate your value as Chair. I had the great pleasure of chairing this business from the moment. Great. First brought the idea into my office. I immediately and enthusiastically supported it and continue to do so for the next 18 years as Chair. We took the business from an idea to an ASX 100, multibillion dollar business. While I am proud of that result, when I realized I no longer had the energy necessary to lead this business, we have since elected 3 new chairmen, So there have been 4 chairman in total. And I have had the pleasure of working and being one of them -- in working with all of them. And Pat, you are, by far, unequivocally the best. You and Cameron are the true dynamic duo. Long may you both continue in your present roles. The leadership and management team that you've created and lead so brilliantly has produced exceptional results for the company and for all of us shareholders. It's even more exciting to think that we have so many opportunities still in front of us to further grow and improve this business. Thank you both for what you have done. Long may you continue in your present roles. As far as my position goes, I've really appreciated the support of shareholders for a long time now. And I hope I can count on it, continuing today, and I can be reelected as another non-executive director. I do appreciate the support you've provided to date, and I look forward to the future. Thank you.

Thanks, Wal. The matter is now open for discussion by shareholders. Do any shareholders wish to comment or ask questions on Item 3(b)? Nikki, are there any questions or comments from the webcast on this item for discussion?

There is by Stephen Mayne. And again, Wal is a legend who joined the carsales Board in 1996, has retained a big shareholding all the way through and was Chairman until 2015. He deserves a lot bit of credit for our success despite never working a day in the business as an executive. Could the candidate clarify his age and intentions? Is this likely to be his last 3-year term? And when he does depart, is he hoping to nominate someone else to represent his shareholding? Also, what does Wal think of the name change and why in he push the switch earlier?

I might ask you to repeat some of those questions about trying to answer this, and Stephen, I'm sorry, you're not in the audience today. I'd rather do this live and online. But Yes, good questions. I'm even 72 years old. I'm still enjoying it. Thank you for your compliment, Steve. That's nice, Stephen, do I plan to stand again? Well, I don't know what I'll be doing in 3 years. But if I feel like I do today, the answer is yes.

The rename. I think the name is appropriate and do. We are a group of companies now. We're not just a company. We're not just an Australian company. We're earning more than half, more than half of our revenue overseas. That's quite a result. As I said before, it's a result of these 2 guys handle the table. And we've all got a lot to be proud of. Is that it?

Yes.

Thanks, Wal. And I thank everybody in the audience here would agree today you are indeed a legend. So Nicole, I now ask you to inform the meeting of the valid proxies that have been lodged for this motion?

Certainly. Thank you. We have 271 million shares for, 10.9 million against, 399,000 open, and 55,000 abstained.

Thank you. I now put the motion to the meeting that Mr. Wal Pisciotta OAM, being a director of the company, who retires by rotation in accordance with Rule 17.1 of the company's constitution and being eligible, offers himself for reelection to be reelected as a director of the company. If you haven't already done so, please vote on this resolution now. [Voting]

Moving on to Item 3(c), which relates to the election of our newest director, Susan Massasso. Susan's appointment follows an extensive search for a new non-executive director for the company. Susan brings over 25 years of commercial strategy and operations experience for the branded business -- for brand-led businesses across diverse international markets. Susan has extensive knowledge in the areas of customer experience, brand development, business growth strategy and crisis and risk management. Her election is unanimously and wholeheartedly supported by the entire Board. I now invite Susan to address the meeting.

Good afternoon, shareholders. I'm delighted to offer myself for election to your Board of Directors. Since commencing on the Board in June this year, I've joined the People and Culture and Sustainability Committees. And I'm rapidly learning about the carsales business, its strategy and its culture. I'm a hands-on director. So outside the formal Board and committee meetings, I've been spending time immersing myself in the business with key executives and stakeholders locally and internationally, and it's helped me increase my knowledge and understanding of the business, and I'm learning what a special business it is. I was attracted to carsales based on the continued ability for the company to reimagine its growth potential beyond its strong local position. It is expanding its IP and know-how into new attractive regions pace, and we've seen a lot of that today. And it's all being done while having close attention, preserving its strong and people orientated in entrepreneurial culture. I hope to bring my own unique experiences to the company. I've worked across a number of iconic consumer Australian brands with strong founder-led cultures that have also transformed themselves and expanded internationally. Prior to my board career, I was the Chief Growth and Brand Officer at the a2 Milk Company with responsibilities across consumer marketing, innovation, international growth strategy, IP, regulatory and corporate affairs and learnt a lot from my time there, which was finished up early in 2021. In my close to 8 years at the business, the inevitable bumps and bruises that comes with transformation and growth was inevitable, but I've been able to reapply those learnings to the high-growth organizations I work with today as a nonexecutive director or adviser. I have a passion for creating consumer and customer solutions by innovation and commercial creativity in responsible and profitable ways, that, in turn, help build competitive insulation, brand equity, company culture and ultimately, shareholder value. I'm currently [seated] on 2 other boards. One is private equity, another is not for profit and have a small advisory practice, predominantly servicing start-ups and high-growth companies. I believe I have the time and capacity to focus on all those commitments and actually the combination of them help me in total across my roles. I look forward to your support today, and I'm really looking forward to working with the carsales Board into the future.

Thanks, Susan. The matter is now open for discussion by shareholders. Do any shareholders wish to comment or ask any questions on Item 3(c)? Henry.

Henry from the ASA, again. Susan, you obviously have got some very good consumer brand experience, and I'm sure you'll be a great addition to the Board. You've had some very responsible roles at the a2 Milk Company, which has been a great disappointment to shareholders over the last 3 years as exhibited by the decline in the stock price from $20 to now $4. I'm wondering if there's any important lessons that you've learned from working for this company that you can pass on to the Board and us today?