Chorus Limited (CNU) Earnings Call Transcript & Summary

Good morning, everybody and welcome to Chorus' 2022 Annual Shareholders Meeting. I'm Patrick Strange, Chorus Chair. As you know, our last 2 annual meetings have been held online due to restrictions caused by COVID. So it's fantastic to be back here with shareholders in person. Today's meeting is our first hybrid meeting. So we are also hosting it online via Computershare's online meetings platform. So for those shareholders online, welcome. First, a bit of housekeeping. For those in the room with us today, in the event of fire alarm or siren sound, just go out the side, you'll be escorted down the stairs by staff. If you do need assistance, wait by the elevator and a Chorus staff member will help you. If we have an earthquake, this being Wellington, remain in the room and follow the instructions of staff. Actually, just imitate Andy. He's probably going to be first to look after himself. Bathrooms are located behind the kitchen area. Now for those of you online, we're using Computershare's online meeting platform so you can watch the live webcast and access the various meeting documents. You can ask -- shareholders and proxies can ask questions online and submit them, and you will also have the ability to submit votes. To submit a question during the meeting, just pick the Q&A tab on the right side of your screen, type your question into the field and press submit. You can submit them from now on, and we'll just address them as a package at the relevant time near the end of the meeting. Also note, if you're online, your questions may be moderated or, if we receive multiple questions on one topic we may merge them. But look, if you feel your question -- those of you who are online -- wasn't answered, just give Chorus a call. We're always happy to -- one of the executives whoever is relevant to answer it. Don't feel constrained in that way. And those of you here, following the meeting, we'll have refreshments and any questions you want about Chorus or individual issues or anything, this is the perfect time to ask them over a scone. So we have a quorum, so I will declare the meeting open. Now just bear with me for a few procedural things. For those of you here in person, there will be an opportunity to ask questions on each resolution later in the meeting. If you do want to ask a question, just raise your hand and we'll give you a microphone so everybody online can hear you, and state your name and whether you're a shareholder or a proxy holder and then ask your question. Just remember, it's going to be heard much more widely than here in this room. We do ask that in fairness to everybody, you are as concise as possible in asking questions. Small speeches are fine. Meeting formalities mean that you're only supposed to speak once on a motion and that question should really relate directly to the matter being discussed and we'll be liberal in judging that, but we can't be totally open. There will be an opportunity to ask general questions right at the end of the meeting. Voting will be conducted by poll. To those of you online, to give you enough time to vote, you will very shortly be able to cast your vote on all resolutions under the vote tab. You will note the vote has been cast when the tick appears against available options, and you can change your vote up to the time I declare the voting closed. There's just a tab that says change your vote, and you can do so. If you do need assistance online, just type your query into the question field via the Q&A tab and someone from Computershare should help you or else, everything else failing, call Computershare on 0800-650-034. For those of you in the room, you'll have your proxy voting forms and that's how you'll vote. Now I and my co-directors intend to vote all undirected proxies we hold in favor of the resolutions. I'll call for voting once we've given an overview of each resolution later in the meeting. Now the agenda today is a very short address from me, followed, more importantly, by JB, our Chief Executive, and we'll then move to resolutions questions and voting. JB is joined today by key personnel, including: Andy Carroll, in the front row here, our acting Chief Financial Officer. Elaine Campbell, our Chief Corporate Officer and General Counsel, would be here, but her daughter has given her COVID. And she's at home but I believe, online. Carl Allwood, Assistant General Counsel, is here in Wellington with us. And we also have representatives from our auditors, KPMG and Chapman Tripp, our legal adviser. Now my fellow directors are all here today. So we have Sue Bailey. If you can just put your hand up or smile broadly or whatever; Mark Cross, Miriam Dean, Murray Jordan, Kate Jorgensen and Jack Matthews. Will Irving is also with us today. He's been nominated to stand for election today as an Independent Non-Executive Director. He's unanimously recommended to you by the Board and brings significant commercial, legal and governance experience working in Australian telecommunications. You'll hear more from Will shortly. Mark and Sue are standing for reelection today in accordance with the NZX listing rules, and you'll hear from them. Now let's look at fiscal year '22. Our focus was to keep bringing the benefits of fiber broadband to more Kiwis while pushing forward our goal of having 1 million fiber connections by December. Now COVID didn't make it easy with lengthy lockdowns followed by the ongoing effects of illness on our workforce and reduced customer activity as people were less willing to sort of get out there and communicate again. But we still delivered very solid numbers. And continued strong growth in demand for fiber broadband delivered underlying revenue of $959 million. Pretty tight cost management partly mitigated the inflationary and COVID pressures. So we achieved underlying operating expenses of $299 million, up only $1 million from fiscal year '21. This produced an underlying '22 EBITDA of $660 million. More modest growth, I guess, Andy. And we've got a further $6 million of revenue from our network optimization program and a legal settlement, together with the release of a $9 million holiday pay provision. So we reported a reported EBITDA of $675 million. And our net profit after tax was $64 million compared to the previous year where the restated total was $51 million. The strong fiscal year '22 result has meant that Chorus returned to actually earning more than it was spending, investing in the network for the first time in a decade. Consequently, our borrowings at the end of fiscal year '22 were lower than expected at 4.08x net debt to EBITDA and well within our business tolerance level, which is 4.75x. And after years of being up against the tolerance level and even beyond it, I must say it's a significant milestone. So that allowed a dividend of $0.35 for fiscal year '22. And as you know, we increased the dividend guidance for both '23 and '24. And we continue with the share buyback we announced in February this year. I will shortly hand over to JB who will run you through the year's performance and strategy highlights. However, I do want to say a few words. As I indicated at last year's meeting, today is my eighth and final shareholder meeting as a Director and Chair, and it's been an honor and a privilege to serve Chorus. But 8 years is long enough and the time has come to pass the baton. I certainly want to take this opportunity to thank my fellow Board members, past and present; the great Chorus team; and you, the shareholders, for all the support I've got during my tenure. I'm very pleased to hand over the reins to Mark, 6 years' experience on the Board. I know Mark shares my passion for this company and understands its importance as an essential infrastructure provider to New Zealand. I can assure you Chorus is in very good hands. Fiber has led New Zealanders to enjoy some of the fastest broadband speeds in the world while consuming more data than ever before. Over the last 7 years, we have seen some breathtaking improvements in broadband performance in New Zealand. In 2015, not that long ago, Netflix had just recently been launched. The average broadband speed was 21 megabits a second. Today, with the fiber rollout nearing completion, that 21 has become 350. At the same time, the average amount of data used in homes and small business has gone from 80 gigabytes a month to currently 550 gigabytes a month and climbing. And broadband data caps on fiber. Remember those are virtually history. And there's no sign of this appetite for data slowing. My belief is that we'll see even steeper growth over the next 7 years. We are only just starting to see virtual reality and the like, Facebook better, and I just think it will keep climbing and even faster than we've seen. I know that's not a common beliefs. People think we're sort of capping out. But I can assure you, looking overseas, they're totally wrong. The good thing is that fiber is scalable, and we'll just continue to expand the network's capacity to ensure your broadband service remains congestion-free. And our team and Nokia recently demonstrated a 25 gigabit speed across Chorus fiber. So you can see where it's going. More recently, when the world came to a stop in 2020, individuals, families and companies large and small had to lose their fear of digitalization. And through this COVID period, the fiber network really did the heavy lifting to keep this country functioning. Access to high-capacity, unconstrained fiber ensured that we could all live, learn, work and play online. Now going back a bit further, Murray will remember this, I well remember when I joined Chorus, the struggles we were having to meet unexpected fiber demand and the huge customer service problems that, that was causing. We had waits of several months for fiber installation, and we were only just hanging on. And it's a huge credit to the Chorus team from the executive right on down that we addressed that. Look, we still have issues from time to time and some of them are a bit embarrassing, but they are rare, and we get it right most of the time. Undoubtedly, the fiber rollout in New Zealand has been a huge success and demand for fiber remains high. This is a decade-long, multibillion-dollar, public-private partnership that has actually delivered and delivered on budget. And that's pretty rare for a PPP, as you look at some of New Zealand's other projects, which I won't mention north of Wellington. By the time the builds first phase ended in 2019, fiber uptake was already at 55% against the contractual target of 20%. Today, 7 in 10 of us have taken up the option of connecting to fiber where it is available and that's still growing. We'll complete the second and final phase of the ultrafast broadband build program late this year. On completion, 87% of New Zealanders will have access to fiber. It's a remarkable achievement made possible by many, a far-sighted government at the time, politicians, network builders, retailers all the way down to our people in the field. It should be job done, it sounds a lot, 87%. But actually, you've got to concentrate on the 13% of New Zealanders who don't have access to fiber. And there are actually homes and businesses on the outskirts of town are not remote rural places. So I think with the growing demand for unconstrained high-capacity broadband, there is a renewed case to further increase fiber's footprint to reach some of those 13% that are not yet covered. Now JB has just been traveling the world, talking to people. Countries like Spain, Ireland and Belgium are expanding their urban fiber deployments into rural areas and are targeting 99% coverage. In doing so, they recognize that only fiber can offer the desired socioeconomic benefits without the need for recurring government funding while supporting national carbon emission reduction targets. Now we're a pretty dispersed and somewhat hilly and tough country in places, so 99% is probably too high for us, but 87% is clearly way too low. There's a decent prize to be won, too. We commissioned some research from NZIER and early results show that giving rural households and businesses access to unconstrained, high-capacity broadband could see economic benefits of about $18.8 billion over 10 years. So it's time for government, the regulators, telecommunications industry to work together to address what's really a digital disparity and ensure we can retain New Zealand's position as one of the best connected countries in the world. Now that's almost me, but I'd just like to make one plea. We need the government's help at the moment in easing immigration controls, particularly on our technicians, so we can keep building out our fiber. Last year, Visa changes for migrant workers meant many of our technicians who have carried us through the pandemic, they've been out there working when we've all been locked at home, have taken an opportunity to reconnect with their family and friends back home. Some will return to New Zealand in time. Some will not. And as you'll see across many New Zealand businesses, we've got an extremely tight labor market. Basically, we don't have enough workers. So some of our skilled telecommunication technicians are taking the opportunity to move into new roles. And that's great for the New Zealand economy, taking the skills they learned at Chorus, but it leaves a huge gap in our industry. For Chorus alone, we are facing needing 380 technicians, recruiting 380 technicians in the short term, and most of those will have to come from overseas to meet the demands of continuing to get New Zealanders connected to fiber. Look, we'll continue to train and source locals where we can, and we do, but they simply don't exist. While the government's recent announcements on changes to the Skilled Migrant Category will help some businesses, it's not enough for us. There's a global competition to attract skilled fiber technicians as other countries look to see what New Zealand did. So there's a competition out there for these people. And frankly, we're not winning it at the moment. And it's not good news for New Zealand. We need a strong, productive economy to achieve the social goals we all aspire for New Zealand, whether it be in medicine or technology. And this will not be achieved in the current challenging time without skilled workers. So we will be talking to the government over the next couple of weeks, and I'd really encourage them to listen and to make the changes we need to get those technicians. To wrap up, Chorus people should be really proud of what they've accomplished during my time on the Board. We've made great strides in delivering broadband to New Zealand, and this country will see huge benefits from it. And personally, I've greatly enjoyed the journey. Yes, there's more to do, but I'm confident that the team at Chorus will continue to do great things in the coming years, and I wish them all the best in their efforts. Thank you. JB, over to you.

Thank you, Patrick. [Foreign Language] Annual Shareholders Meeting. Greetings, and welcome everyone, to this meeting, especially people in the room but also those of you that are online. A year ago, I talked about our plan for our big fiber boost. And in December, we enabled all the customers that were on our more most popular plan, the 100 megabits per second plan, to upgrade to 300 megabits per second at no extra household prices. And the beauty of fiber is that we're able to pass these benefits through to end users at no extra retail cost, working very closely with all the retailers in the industry. The beauty of fiber is that we could do that seamlessly. And I said, at the time that we expected that this change would really catapult the place of New Zealand in terms of global broadband ranking, and I'm happy to report that it did happen in the August Ookla Report. New Zealand was ranked ninth in terms of medium download broadband speed, which was one step better than Japan. And in a recent big survey by the global research firm Omdia that looked at broadband performance and broadband investment, New Zealand was ranked 10th. So those are amazing results. And the more people that we connect to high-performing fiber in New Zealand, the more we will consolidate the place of New Zealand in this global ranking. Now with the regulatory framework for fiber now completed, and with the fiber rollout of the initial UFB program, almost done, it will be completed in a few weeks, it was time to refresh our strategy. Our purpose is to connect Aotearoa so that we can all live, learn, work and play. And we want to keep growing fiber uptake so that the socioeconomic benefits of fiber help power New Zealand's digital future. And this is why winning in our core fiber business remains our first and most important priority. On this slide, you can see that our UFB partnership with the government has taken fiber to a range of much smaller communities throughout New Zealand over the last 9 months. And some of those were made possible by specific project, especially in the South Island, around the [indiscernible] and the Milford Sound. At the end of Q1, we had reached 980,000 connections to our fiber network. So we're very close to our target of 1 million by the end of December this year. And this number excludes about 9,000 student households that we continue to support as part of our COVID response with the Ministry of Education. The consequences of COVID continued to challenge us. Last year, our capital expenditure well less than we expected because lockdowns and COVID uncertainty did impact our ability to access customer premises. And this year, as Patrick was mentioning, the challenge is availability of field crews. We are competing for labor not just in New Zealand but on a global basis. And this is pushing our connection times out in some areas and having an impact on customer experience. But despite the challenges, we managed to continue to grow fiber take-up. We're now at 71% across the entire UFB footprint, Auckland is at 80% and Invercargill continues to lead the urban centers with 85%. So there's still room to grow. With uptake at these levels, we've now begun switching off the copper network in some areas. And this activity is the main focus of our second strategic pillar, which is to optimize our non-fiber assets. The Commission has developed a detailed withdrawal process and a code that enables us to disconnect fiber that includes giving 6-month notice to consumers. We have now issued 14,000 of these notices to end users, and half of them have already migrated off copper services. And the success of this program is really encouraging. We are achieving 90% retention of customers who are on copper broadband services migrating to fiber broadband services. And we so far have managed to get 0 escalated complaints on that process. Now I want to be clear that the withdrawal of copper only happens in area where we already have fiber. This means that we're still maintaining fiber services in all the areas that are not being notified and especially to the 13% of New Zealanders who do not have access to fiber, even if they now have access to other potential technologies and networks. Longer term, the service obligations for rural and regional areas will need a radical rethink. And this is especially true and some retailers are removing their PSTN voice services and then promoting their own alternative network solution, such as when they get a government-funded mobile tower. And the government announcement last week of the allocation of future 5G spectrum means that there is likely going to be even more mobile coverage in these areas. From our recent discussions with European operators, there is a growing trend of making sure that universal service obligations are technology agnostics. It makes sense because it ultimately reflects what customers are doing, which is picking the technology that works with them. So the growing trend around Europe is first to make sure that you push fiber as far as you can. Patrick mentioned, some of them are targeting mid-90s, high 90% overall coverage for fiber; and then to have a long-term copper disconnect strategies that allow other technologies, either fixed wireless or satellite, to ultimately serve the small footprint that were ultimately not getting fiber coverage. Now with fiber widely acknowledged as the greenest of technology, we think that 90% is an absolute minimum and getting over 90% of fiber coverage should really be the target for New Zealand. Fiber has enabled us to absorb a 23% increase in data consumption this year without a similar increase in terms of our energy consumptions. And with 1,000 gigabytes or a terabyte soon becoming the average per monthly data consumption, we plan that to happen in 2025, this is going to become even more important. Today, already 15% of our customers are of that level of monthly data consumption. Fiber is only the -- is also the only technology that allows us to increase speed without increasing carbon emissions. And as we migrate customers from copper to fiber, we plan on reducing our energy consumption by 25% by 2025. And this underpins our commitment to a Science-Based Target of reducing by 62% our Scope 1 and Scope 2 emissions by 2030 compared to 2020. Now in addition to reducing our own emissions, fiber also allows other people to reduce their own fiber emissions. We're enabling, for example, end users to reduce their travel carbon footprint when they're working from home. So sustainability practice are increasingly part of the way that we work every day. And you can find a lot more information about these, including our focus on digital inclusion and also developing a more diverse and inclusive workforce, in our second sustainability report. Our third strategic pillar is to grow new revenues. Our FY '22 financial results were significant because we delivered revenue growth, although small, but for the first time since 2017. Continued growth in the 1-gigabit uptake from 19% to 23% has a positive impact in increasing average revenue per user, or ARPU. And about 1/3 of our net new fiber connections are on that 1-gigabit product, which means that, that trend will continue. Now our focus has moved on growing our next-generation services, the hyper fiber services, that deliver 2, 4 and 8 gigabits per second. And this is delivered on the exact same fiber that we've already rolled out, just using next-generation electronics at both ends of the connections. That trend is definitely growing in terms of a global development. As operators around the world are getting ready for future data growth, we already have 1,000 customers on these services, and we intend that to continue to grow. Last year, 2/3 of our FY '22 revenues were generated by our regulated fiber services. And as we continue to grow fiber take-up, we intend that to continue to grow. But we also want to grow our nonregulated revenues, things like our edge center plan where we lease space in our exchanges to be able to host computing capacity. Now these are things that we continue to grow. They were slightly impacted by the COVID-19 in FY '22, but we still managed to double the revenues that we're doing in that space. These are typically regional and suburban offerings. So they are complementary to the big giga data centers that you would have heard about in the media. Another example of new revenues is a new service that we've launched called Power Sense. We've developed artificial intelligence on our network that allows us to pick when a cluster of our optical devices turn off, indicating that it's likely in that area, power has failed. And power utilities are keen to get that information to help them identify where they have power failures and so that they can restore those faster. So in conclusion, we continue to be successful in promoting fiber, and the fact that 90% of our customers on fiber are now on speeds of 300 megabits per second and above creates a significant performance advantage compared to other technologies. We've transitioned smoothly to our new regulated regime and we've delivered on the previously outlined capital management policy of delivering higher free cash flows, distributing the majority of these to shareholders, and reinvesting the rest into the business. There is no question that fiber is the most future-proof technology. And as Patrick mentioned, we've already demonstrated a 25-gigabit service on the exact same fiber network that we use today to provide our services. We can't just assume that people will pick fiber because it's faster, so we also need to continuously improve our customer services and also leverage the new regulatory regime that we have to benefit all of our stakeholders. Finally, we're passionate about making fiber accessible to more New Zealanders. Delivering the benefits of high-speed reliable fiber broadband even further in New Zealand is the way that we're going to truly deliver on our purpose of powering Aotearoa's digital future and also enabling a growing business. Thank you.

Thanks, JB. We now come to the resolutions outlined in the Notice of Meeting. We have Mark Cross and Sue Bailey retiring by rotation under the NZX listing rules and standing for reelection. We also have Will Irving standing for election as a Non-Executive Director under the NZX listing rules. The Board unanimously supports their reelection and election. You've got a brief bio for each director standing for reelection or election in the Notice of Meeting. And the fourth resolution relates to the fixing of the fees and expenses of our auditors, KPMG. As I said earlier, voting will be conducted by way of a poll. For those of you online and eligible to vote, you can cast your votes by clicking the vote tab as we explained in selecting your voting directions. You'll know your vote when you get a tick. You don't have to submit -- hit a submit or enter button as the votes are automatically recorded. And as I said earlier, you can change your vote up until the time when I declare voting closed. I will give you a bit of warning. And as I said earlier, I and my co-directors intend to vote all undirected proxies we hold in favor of the resolutions. Now we'll handle questions on the resolutions after we've put the resolutions. Those online just press on the Q&A icon, you'll get a new screen and you can type your question. When you have finished typing, just hit the send button. And general questions, we'll -- we'll handle at the end of the meeting. So first resolution is the reelection of Mark Cross as a director. He retires under rotation under the listing rules and offers himself for reelection. It is my pleasure to propose Resolution 1, the resolution to reelect Mark as a Director of the company. Mark?

[Foreign Language] Good morning, shareholders. Thanks for attending our Annual Shareholders' Meeting this morning, and I look forward to chatting with some of you after the meeting ends. So as Patrick has said, I'm seeking reelection today as required by the NZX listing rules, having been first elected in 2016 and reelected in 2019, and it seems amazing to think about what's happened in the last 3 years since I stood before you. It's a privilege to be part of the Chorus Board, and I'm pleased, of course, to have the opportunity today to now seek your support for my reelection. I'd like to briefly address today why I'm here, why I'm standing for reelection and what I believe I can contribute as a Director of your company. So firstly, why do I want to be a member of the Chorus Board and why am I seeking reelection? So Chorus is a key infrastructure provider for New Zealand. The importance to the country, the infrastructure that Chorus builds and maintains can't be overstated. And I think we've seen that demonstrated clearly over the last few years. As we move into a world of learning, working and relaxing online, there's one constant, and that's the need for fast, reliable connectivity provided by the infrastructure managed by your company, Chorus. I'm a keen follower of technology and future investment trends, and I see Chorus' network as being at the heart of many of those trends in the future. So secondly, what do I bring to the Chorus Board? Prior to a movement to governance, I had more than 20 years of corporate finance experience in New Zealand and internationally. This experience enables me to support and challenge management in assessing the performance of the company and helping to make the right commercial decisions. I'm currently a Board member and Investment Committee Chair of Accident Compensation Corporation, the ACC; a Director of Xero; and a Director of a privately owned communications management software company, [ Versailles ]. I was also, until recently, a Chair of Milford Asset Management and have been a Director of Z Energy and Genesis Energy previously. Those roles, my current and previous as well as my prior executive career, have given me exposure to a wide range of industries, people, situations and companies, and I bring all of those experiences to the Chorus Board table. I continue to have the drive and capacity to commit myself to being a high-performing Director of Chorus on your behalf. And ultimately, as a director and a fellow shareholder, my primary focus is aligned with yours as owners, to see Chorus achieve its vision of connecting Aotearoa and to see Chorus' share price and dividends grow over time. And with your support, I look forward to continuing working with my fellow directors and Chorus' management team to achieve those objectives. Now as Patrick has alluded to, finally, with Patrick standing down at the end of this -- his eighth meeting, the Board has asked me to take over as Chorus' Chair, subject to being reelected as a director, an appointment, of course, I'd be proud to accept. I would like to take the opportunity to say a few words about Patrick. He's been an outstanding chair of Chorus since September 2015 over what has been a defining period for the company. He's led the way through many highlights and challenges, not the least of which has been the once-in-a-company lifetime process of becoming a regulated company as well as 2 CEO changes, operational challenges and evolving our capital management strategy, always keeping us focused on what's important. And I think the hallmark of his time as Chair has been doing the right thing for the company and for New Zealand even when those decisions were hard. He's deftly managed Board succession and diversity, which was no easy task with a Board that effectively all started on the same date, way back in late 2011. Patrick is a straight shooter. And this, together with his calm and astute leadership has set the tone and culture for a Board in which all directors can and do contribute. And I'd like to thank him very much on behalf of shareholders and the current and previous Boards for his leadership. Now as for me, I understand the additional demands of a Chair role and have managed my commitments appropriately in anticipation of taking up the role. I'm very pleased to have the support of my fellow directors and look forward to working with them, JB and the whole Chorus team. Now shareholders shouldn't expect any surprises for me as Chair. We're committed to our vision that fiber powers our digital future and on connecting Aotearoa. We're clear on our strategy. We're focused on executing that strategy and on managing our capital in a way that delivers predictable and growing returns to our shareholder. And with your support, I look forward to working hard to achieve those goals. Thank you.

Thanks for those kind words, most unnecessary. We come to the reelection of Sue Bailey, Resolution 2, and I'll now invite Sue to address the meeting.

I'm not quite as tall as the others. [Foreign Language] My name is Sue Bailey. I'm pleased to have the opportunity today to seek your continued support and my reelection as an independent director of Chorus. I'm really proud to have been a Director of Chorus since 2019. I'm proud because, as you know, Chorus is the key telecommunications provider for Aotearoa New Zealand, maintaining and enhancing our network up and down and across this remarkable country. I'm a strong believer in the social and economic benefits of broadband to enable a thriving and connected community and country. This [indiscernible] underpins all that Chorus does. The importance to Aotearoa of the broadband network that Chorus builds and maintains has been clearly demonstrated again and again in the last few years. Our network, as the others have already said, has demonstrated again and again in the last few years that people could work and learn online and stay connected during one of the most challenging periods in recent memory. Throughout the proven resilience of both the Chorus network and the team of people supporting it has been outstanding. What do I bring to the Chorus Board? I have over 30 years' experience in telecommunications, starting with copper landlines, then moving into mobile services and broadband. And I've worked for Telstra, Optus, and I've been the CEO of Virgin Mobile Australia. I see my experience, and in particular, in companies at times of transformation, as directly applicable to adding strategic value to Chorus as it more fully enters into the stage of operating and maintaining our world-class fiber network. In addition, I have a strong background in marketing and customer experience, which brings a different skill set to add further depth, breadth and diversity to the current Board of Directors. As you will have noticed from my accent, I'm not from around here. But I have long admired and respected the innovation, resilience and can-do attitudes of New Zealanders. With experience gained in other markets, I bring another perspective, and I'm keen to ensure that Chorus continues to enable New Zealand to thrive and does so in a way that embraces its privileged role as [indiscernible] of the incredible fiber asset built in partnership with the government. With your support, I wish to continue to contribute my experience to your company, Chorus, as together with my Board colleagues and the Chorus team, we navigate the years ahead. [Foreign Language]. Thank you very much.

Thank you, Sue. I haven't had a chance to discuss last Friday night's cricket yet, but I'm sure I will. We come to Resolution 3, the election of Will Irving. Will?

[Foreign Language] Good morning, shareholders. It is indeed a privilege to be invited by the directors to be nominated to join this Chorus Board, and I'm very pleased today to have the opportunity to now seek your support for my election as an independent director. I'd like to briefly address how I got here, why I'm here and what I believe I can contribute as a Director of your company. So firstly, I think it's relevant for you to understand the process that has led to my nomination today. The Board having identified a specific set of skills required for this Board appointment undertook a broad search involving an external search firm. And after a number of meetings, I was nominated to stand at this meeting today. Secondly, why do I want to join the Chorus Board? The importance to New Zealand of the infrastructure that Chorus builds simply can't be overstated. As you've heard from JB and from Patrick, excuse me, we now live in a world where connectivity is fundamental, whether it's for flexible working, flexible learning, video conferencing, streaming or indeed, the way we enjoy ourselves online. World-class broadband is absolutely crucial to every New Zealander. Lastly, what do I believe I can contribute to the Chorus Board? I have significant commercial, legal and governance experience, working across the telecommunications, infrastructure and regulatory sectors in Australia. I'm currently the Chief Strategy and Transformation Officer at NBN Co in Australia. The company established to design, build and operate Australia's wholesale broadband networks. Prior to this role, I held a variety of roles at Telstra, including as Head of Telstra Wholesale and in the retail customer space serving small and medium business. Before that, I was Telstra's Group General Counsel. I see my experience in wholesale and retail networks and telecommunications, including across infrastructure, customer experience and adding -- and strategic issues as adding significant value to Chorus, particularly as we navigate the new regulatory regime. And I look forward to contributing to the development of Chorus' strategy in relation to its superb strategic fiber assets. Finally, I believe my diverse skills and experience and a fresh perspective will complement and strengthen Chorus' Board and bring the ability to drive better outcomes for all New Zealanders. These are complex times. And I'm keen to ensure that Chorus continues to connect Aotearoa New Zealand so that we can all live, learn, work and play using the best infrastructure in the world. So with your support, I look forward to the opportunity to work with Chorus' Board and its strong management team in the years ahead. Thank you.

Someone's taller than me. Thanks, Will. I will now move some ordinary resolution, the appointment -- the election, just checking the notes here, of all 3 actually. Just go back and make sure we pick them up. In case I haven't, I'll just move the resolution that Mark be reelected, Resolution 2 that Sue be reelected and Resolution 3 that Will be elected. Now do we have any questions to any of those resolutions? Any online?

No online questions, thanks, Patrick, on resolutions 1 to 3.

Thank you. Now Resolution 4 is the final resolution, which is the auditor's fees and expenses. So in accordance with the Companies Act, Chorus's current auditors, KPMG, have been automatically reappointed as our auditor. And under that act, auditor fees and expenses must be fixed in the manner determined at the annual meeting. Have we got any questions on Resolution 4?

No questions on Resolution 4 online.

So I'll now move as an ordinary resolution that the Board be authorized to fix the fees and expenses of KPMG as auditor. So if you haven't already done so, can you all vote on those resolutions in the way that you have been instructed? Anybody here needs any help marking their forms, just put your hand up and someone will help. [Voting]

And just while you're doing that, let's move to general questions. Reminder, those online, you've been instructed how to do it. Hopefully, you posted them in. Are there any questions from the floor?

One here. We have a microphone. It's just at the back of the room. It's on its way.

My name is [ David Tennison ], I'm a shareholder. Can you hear me? Is that better? Okay. My name is [ David Tennison ]. I'm a shareholder. And I have to admit to be one of these dreadful shareholders who actually reads the annual report. But -- so my question is actually -- it's the same question, but there's an easy bit and a harder bit to answer.

I'll take the easy bit, and I'll give JB the hard bit.

I got to Page 50 and -- which is on the taxation section, I noticed you had a negative imputation credit balance at one point. And that struck me as -- or tax credit balance, I think it's expressed as. And it struck me as quite an odd thing because I know if you don't pay any tax, then you don't get any imputation credits, but I was curious as to how you could actually get a negative one.

That's -- I'm not sure if that's the easy or the hard one. What's the other part?

Okay. Well, the other part is a sort of a corollary of that, and that is I have been very impressed at the generally increasing dividend stream that's been coming from Chorus. And so I'm quite happy with the way the company is being run. But I did notice that the last dividend had no imputation credits, whereas previously, all the other dividends have.

Okay.