Eagers Automotive Limited (APE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Tim Crommelin and I'm Chair of your company, Eagers Automotive Limited. Since listing on the ASX in 1957, today is Eagers' 65th Annual General Meeting, and welcome to you all. As many of you would be aware, we are unable to have this year's AGM at the head office of Eagers as it was badly affected by flood in February and the head office there will be lot renovation work going on and they won't be back in there until late this year at the earliest. But this time next year, let's hope we can have the AGM in person back at the Eagers head office. It is 11:00 a.m. here in Brisbane and the company's Secretary, Denis Stark, has advised that a quorum is present. I, therefore, declare this meeting open. This meeting, as you'd be aware, is being held as a hybrid meeting with shareholders able to attend either in person or online via the Computershare meeting platform. Shareholders online can listen to our live webcast and watch our presentation. They can also ask questions and submit votes online. I'd like now to introduce my fellow directors and senior management. You will see that up on your screen. Directors that are in attendance today are Nic Politis, Dan Ryan, Sophie Moore, Sophie is also our Finance Director at Eagers. We've got David Cowper, Marcus Birrell, Greg Duncan and David Blackhall. Regretfully Michelle Prater from Western Australia is a Director also, but Michelle has an apology as she is quite unwell with COVID. So she was going to attend online, but she's pretty crooked and less. So unfortunately, she can't be with us today. We also have a number of executives here in person and online, Keith Thornton, our Chief Executive Officer; Denis Stark, our Company's Secretary; Paul Warburton is here, he's Executive General Manager of Financial Services; James Couper, he's Senior Executive of Operations; Hazel Cromie, he's Executive General Manager, People and Safety, and they join us. I'm also very pleased to acknowledge and welcome Edward Geschke to his first AGM following his recent appointment as Chief Operating Officer, Automotive. Edward joins us from Perth. So welcome to you, Edward. Martin Ward, our previous Chief Executive and Managing Director of Eagers that many of you in the room would know. He was lapped up until the time of Keith taking out in February last year. So he's with us. So welcome, Martin. I'd also like to introduce David Rogers, and I think Troy Peterson, they represent our auditor, Deloitte. David and Troy will be available later in the meeting to answer any questions in relation to audit matters. The secretary has advised that there are no apologies other than Michelle. So with that, I'd like to get on with the meeting. But just before we do, I'd like to take a moment to acknowledge David Cowper, one of our directors. David was initially appointed to the Board in July 2012 and was last reelected 3 years ago at our AGM in 2019. Although he was scheduled to retire by rotation and nominate for reelection, David has decided not to seek reelection after almost 10 years of outstanding service to your company. David will be retiring from the Board at the conclusion of this meeting today. David has been an extremely dedicated and industrious and loyal servant of the company since his initial appointment including his vital role as Chairman of our Audit and Risk Committee. On behalf of the Board and shareholders, I acknowledge and thank David for his tireless efforts and immense contribution as a director over the past decade. Thanks, David, and all the very best in your future endeavors. Little bit of process for the meeting. If I can just run through that, firstly, the question-and-answer process. Given this is a hybrid meeting with shareholders able to attend either online or in person, there are a few matters I need to run through. It's a bit tedious. So please bear with me. Only shareholders, representatives and attorneys of shareholders and proxy holders who are attending in person today and holding a blue admission card and those attending online are entitled to ask questions or vote at this meeting. For attendees to ask a question, you will need to raise your hand when I invite questions. Online attendees can submit questions at any time by selecting the Q&A icon on your device. Select the topic your question relates to from the drop-down box, then type in your question and press the send button. Online attendees can also ask verbal questions by following the instructions written below the broadcast window. It should be up on your screen for those online attendees. Though online shareholders can submit questions at any time, I will address those questions only at the relevant time during the meeting. If we receive multiple similar questions on any topic, we will try to group them together. I will ask our Senior Executive Operations, James Couper, to read out those questions. The voting process. Voting today will be conducted by a poll on all items of business, and I will open voting shortly. For attendees present in person, your blue admission card is your voting paper and instructions. You need to follow the instructions, mark a box beside the motion on the voting paper to indicate how you wish to cast your vote and then lodge it in the ballot box before voting closes. Proxy holders who are here in person have attached to their blue admission cards, a summary of their proxy votes, which detail their voting instructions. By completing the voting paper, you will be deemed to have voted in accordance with those instructions. Proxy holders who are entitled to cast any open votes will need to mark a box beside the motion to indicate how you wish to cast your open votes. For attendees online, a polling icon will appear on your device when voting opens. Clicking on the icon will bring up a list of the motions and present you with voting options. You simply select one of the options for the relevant motion to cast your vote. There is no need to hit a submit or enter button as the vote is automatically recorded. You may change your vote at any time up until I declare voting has closed. All attendees, whether online or in person, may submit votes at any time from when voting opens until I declare that voting has closed. Finally, I appoint Lewis Brimelow of Computershare Investor Services, who is here with us today. He is the returning officer, and he will conduct the poll for this meeting. I now declare voting open on all items of business. Before we proceed with the formal business of this meeting, I'll present my report on 2021, after which Keith will provide his operational report and comment on the current year. Shareholders again, my Chairman's address. Welcome to Eagers Automotive Annual General Meeting for 2021 financial year. Following my address, as I mentioned, the Chief Executive, Keith Thornton, will provide an overview of the operating and financial performance for 2021, and he will also comment on the current trading and the year ahead. What a year 2021. It was one of the most challenging but rewarding years in your company's long and proud history. Reflecting on the past 12 months, the pandemic continued to pose significant challenges for the automotive retail industry globally and locally, including the economic impact of government-mandated lockdowns in some states of Australia and New Zealand as well as border closures and supply chain issues. Despite these challenges, we've again demonstrated our ability to quickly respond to public health requirements, continuing to operate safely and provide excellent customer service, executing the company's strategy while delivering a record financial performance for the year. We are proud of what we've been able to achieve in what's been a very challenging market. Our key financial metrics for the year-end 2021 reflect a record year. We achieved a statutory profit before tax from continuing operations of $456.8 million, up from $280.1 million in the previous year, while underlying operating profit before tax was $401.8 million, up from $209.4 million, on group revenue of $8.7 billion. Dividends. We're delighted to have continued our long history of rewarding shareholders with our dividends for 2021. They totaled $0.709 per share. That included a final dividend of $0.425, an interim dividend of $0.20 per share and a special dividend of $0.084 per share, which related to the sale of our Daimler Trucks business. Sustainability and ESG. Whilst our sustainability journey has been underway for many years, this year marks the first year or publication of our first sustainability report in our annual report. The pandemic, together with our heightened focus on climate change, has accelerated the global consciousness of Environmental, Social and Governance matters. ESG risks and opportunities remain a priority for us as we continue efforts to reduce our impact on the environment and enhance our business as a place to work and support our communities. I'll comment briefly on the year ahead. As we look to 2022, while some uncertainty remains in the external environment, we have continued to experience strong demand in all our regions during early 2022 and are well positioned for the year ahead. In addition, we have a strong balance sheet, providing capacity and flexibility to support disciplined reinvestment to help drive future shareholder returns. As announced this morning, we expect to achieve an underlying operating profit before tax from continuing operations for the first half of 2022, that's through to June 30, and that will be in the range of $183 million to $189 million. That is a drop of 12% to 15% as compared to the outstanding record result from last year on a like-for-like basis. The small drop is largely attributable to a reduction in the number of new vehicles that have been delivered during the half year. However, the underlying performance of our business remains exceptionally strong and Keith will talk more about that in his address, and demand continues to significantly outstrip supply, and our record order book having grown by more than 25% year-to-date. Despite the continuing strength of our underlying business and our order book, global disruptions to the new car supply chain and lack of transparency on timing of new vehicle arrivals provide a challenging environment in which to forecast the timing of vehicle deliveries to customers. Nevertheless, our strong fundamentals have us well placed to capitalize on our growing order book for when supply constraints ease. Even with these evolving market dynamics, Eagers continues to pursue opportunities to provide accretive growth for our shareholders. In his address, Keith will comment on exciting developments in our business portfolio, specifically in relation to new market entrants like BYD, Cupra, who are attracted to as they should be, to Eagers' extensive retail experience and Eagers' unique geographic reach. Keith will also provide an update on our entry into the ACT through the acquisition of the dealership business from Nick Politis' WFM group. The ACT is currently the only metro region in Australia in which we do not operate, and expanding our geographic reach will offer clear strategic benefits. We anticipate that shareholders will be invited to vote on this acquisition in July 2022. Now to our team. I'd like to take this opportunity to acknowledge the leadership and dedication of Keith Thornton in his first year as Chief Executive, to deliver a record financial year in his first year amidst a global pandemic is a testament to his and the broader management team's commitment and focus on execution in a dynamic external environment. On behalf of the Board, I'd also like to extend a sincere thank you to our entire workforce. Our workforce is extremely hard work and dedication have been pivotal in our delivery of the outstanding results Eagers achieved in 2021. I'd also like to thank my fellow directors for their continued dedication and contributions. And I again, acknowledge and thank David Cowper who is retiring from the Board following today's AGM. Finally, to you, all of our shareholders. Thank you for your ongoing support. We're excited about the year ahead and look forward to continuing to deliver for shareholders in the long term. I'd now like to hand over to our Chief Executive, Keith Thornton. And following Keith's address, we'll deal with the formal business of the meeting.

Thank you, Chairman. Now before I start my speech, I just wanted to also welcome Robin Piper. Robin, I saw you wondering at the end there. Now as everyone knows, we're no longer known as AP Eagers, we're now Eagers Automotive. But obviously, the Alan Piper being the AP, in our previous name, Robin is a very important part of our history. So welcome, Robin, thanks for coming on this morning. Good morning shareholders and thank you for your interest in Eagers Automotive's Annual General Meeting. Today's AGM marks my first full year in the role as Chief Executive Officer and it is a privilege to report the results to our shareholders. Today I will address the company's performance during the last financial year, which ended 31 December 2021. I would then like to update you on the company's progress on delivering on-going operational excellence and execution against our key strategic priorities, including our Next100 strategy. Finally, I will comment on our outlook. The external environment as it relates to automotive retail remains extremely dynamic. Multiple and material influences, largely related to the global impacts of COVID-19, continue to limit new car supply, which in turn impacts virtually every part of our business. In a broader economic sense, historic low interest rates, record low unemployment and the housing price dynamics of the last 12 to 18 months have all had an influence on our industry. The net effect is that automotive retail continues to experience both headwinds and tailwinds to the operating environment in broadly equal measure. We are pleased to report that Eagers Automotive has continued to deliver for our stakeholders in this challenging environment with a record ever 2021. For the 12 months ended 31 December, we recorded a statutory profit before tax of $456.8 million, our underlying profit before tax was $401.8 million, earnings per share were $1.252 on a statutory basis and the margin performance was 4.6% return on sales. All of these metrics represent new benchmarks for your company. Our consolidated revenue from continuing operations for the full year was $8.7 billion, marginally down on the prior period due to the divestment of Daimler Trucks business in April 2021. Supporting these profit results is an extremely strong balance sheet position with net corporate debt of only $128.4 million as at 31 December and $451 million of owned property at the end of the year including property held for sale, which is the highest holding by valuation in the history of the company. This result highlights once again that Eagers Automotive is focused on on-going operational excellence combined with strategic execution, irrespective of external factors. The 2021 result and the continued performance of the business into the start of 2022 highlights the robust and adaptable nature of automotive retail, with the ability to pull different income levers at different times and in different market environments. The resilience of the automotive retail business model has been further enhanced by the company structurally resetting our cost base, particularly across key categories of people and property. And a relentless focus on productivity improvements will drive future positive business transformation. Eagers Automotive's unique geographic scale and breadth of brand representations, which currently includes 40 car and truck brands in the Australian marketplace, allowed the company to leverage strong demand in the new vehicle market across this brand portfolio while also insulating the business and helping to mitigate the impacts of localized COVID-19 restrictions. It's important to note that in 2021, we saw a number of government-mandated lockdowns related to the COVID pandemic. In New South Wales, across both our Sydney and Newcastle regions, as well as in Victoria and across in New Zealand in our Auckland business, 114 trading days were impacted and restricted more than 35% of the company at any one time. Now while this was indeed challenging, the experience we gained from business interruptions during the initial on-set of COVID in 2020 allowed us to quickly adjust. This included providing safe and convenient solutions for our customers through online-enabled click and collect sales combined with contactless delivery and service options and online payment capabilities. Our 2021 record result was achieved whilst absorbing an estimated $20 million to $25 million profit impact due to these localized lockdowns during the third and fourth quarters of 2021, which was largely related to lost trading in parts and service as well as delayed used car purchases. Despite lockdowns impacting customer activity and creating workforce and supply chain interruptions, new car orders continued to materially outstrip new car deliveries in every month of the year, creating a record order book for the company. Now this dynamic continued into 2022 and I will talk to this in further detail in our outlook. During 2021 we took the decision to simplify our business model to be focused on 2 divisions: Franchised Automotive and Independent Used Cars, both underpinned by strategic property holdings. Now this has allowed the business to accelerate our execution against our Next100 strategy on which I am now pleased to update you. On the screen you see Eagers Automotive Next100 Strategy, which I am hopeful many shareholders are becoming very familiar with. At Eagers, we believe a clearly articulated and a consistent strategy is something that underpins effective execution and long-term value creation. We are not a company that will change strategy at every meeting that you attend. Eagers Automotive Next100 Strategy aims to position the company as a leading automotive retailer, who is well positioned to capitalize on the ongoing changes in the automotive retail industry. By providing innovative, customer centric, and that's very important, customer-centric solutions to our business partners, on a lower and more sustainable cost base, the company will be best positioned to lead industry transformation and ultimately, further consolidation. As we continue to progress execution of the key components of our strategy, we expect to: a, become a preferred partner for our OEMs; and b, grow shareholder returns. In 2021 we continued to actively manage our dealership portfolio with a number of strategic acquisitions. On the screen you will see we bought Toowoomba Ford, which also had some property attached to it, and also a multi-franchise dealerships in Cardiff and Maitland to add to our Newcastle region business. There were in addition to the Daimler Trucks divestment. We continued to rebalance our property portfolio, acquiring 10 strategic sites valued and a number of them were attached to these dealership acquisitions, valued at $169 million in 2021. And this was in addition to the $111 million of property acquired in 2020, as I said that takes our total property portfolio to more than $450 million, including 1 property held for sale at the end of the year and I'll reiterate, that's the highest by valuation in the company's history. In addition to strategic property ownership, we exited a total of 52 external leases as part of our rationalization and consolidation strategy. Of these 23 leases related to on-going business, providing a $12.4 million reduction in annualized property costs in these businesses alone. We continued to invest in new automotive retail formats, such as the AutoMall West, which opened last month at the Indooroopilly Shopping Centre in west Brisbane. This new retail format provides a more tailored, flexible and convenient experience for our customers, while leveraging economies of scale to enable a more economically sustainable retail footprint over the long term. And this is a truly globally unique initiative for our industry. Other dealers have put brands and shopping centers before. No one that we can find has done it in this way. It's another example of how Eagers Automotive is committed to leading innovation in retail solutions for both our customers and our OEM partners. Now I will take a very short break at the moment to allow shareholders to watch a 30-second drone fly-through which will give you a sense of this incredible facility. [Presentation]

It's truly exciting. It's truly unique. If you live in Brisbane and you find yourself out in West Brisbane, please drop in and have a look I'm going to go from totally off script here. We've been overwhelmed in the response from all our stakeholders. Our business partners being the OEMs, customers, employees. A couple of key stats we are seeing since this opened 4 weeks ago, 1,650 -- sorry, 1,650 unique visitors to the AutoMall West per day compare that to a dealership and how many people walk into a dealership per day. The average dwell time for each one of those people when they're in there, so dwell time being the time they spend walking around the AutoMall West is 16 minutes. And in terms of the economies of scale that we generate, we have 8 brands, it's actually 9 if you include Volkswagen is passenger and commercial but work on 8 brands. We have 24 staff running 8 brands, 3 per staff, 8 of those are casuals and are only on to match demand with customers. So we have 2 head count per brand full time. It's an incredible business model going forward. And those 1,650 people that walk in every day are getting to understand exactly what the future of retail in automotive in Brisbane at least looks like. So we're very excited. Please have a look if you get the opportunity. Moving to used cars. Our easyauto123 business continued to grow profitably as it benefits from being fully integrated into our wider group. During the year, we opened new easyauto123 sites in Sydney, Townsville and across multiple locations in Auckland. We've continued to redesign our workforce and workspace in response to changing customer habits as we extended our measured investment in proprietary technology to optimize our workforce productivity and again importantly improve the customer experience. We also remain committed to delivering optimized financial solutions for our customers. Despite the impact of COVID-19 on automotive retail finance, we continued to outperform the industry materially and originated more than $2 billion of loans during the year. Turning now to our outlook. Eagers Automotive is in a very strong financial position despite ongoing supply chain constraints and the temporary disruption to logistics and resourcing in early '22 as a result of the Omicron outbreak. As I mentioned before, exceptionally strong underlying demand for new vehicles has continued across our business. We're talking about 2022 at the moment. The key driver of our order book is the difference between orders and deliveries and this is the metric that best defines the strength of the market relative to supply. The order write year to date, April 2022, has exceeded deliveries by 33.8% and the overall order book which was a record at the end of 2021 has grown by more than 25% since that year-end position. Now supporting the size is the strength of the underlying demand and this record order book is that the total per unit gross achieved as is gross profit per unit on vehicle delivered year-to-date has been maintained at the very strong 2021 levels. In addition, our finance penetration results remain consistent with 2021, which is materially above the industry performance, while our ancillary car care sales are also at record levels. Now to be clear, revenue and profits are only recognized once vehicles are delivered to the end user. So these order bank combined with the continued strong gross levels provides a very strong base for our confidence going forward as supply constraints ease. Underpinning the demand and the margin performance, which are both very positive, the company continues to be disciplined in our management of the underlying cost base while leveraging our on-going structural benefits of property, people and technology. Finally, this year we have continued to focus on scaling our easyauto123 business with year to date revenue growth of 51.7% year-on-year and volume growth of 32.6%. Despite the continued strength of our underlying business and positive operational metrics, we are not immune from the disruption to the new car supply chain, which is foreshadowed to continue in the coming months. We remain very confident that the full year will see a total market broadly in line with 2021. However, the current short-term COVID issues particularly in China, coupled with significant disruption to shipping and logistics, creates uncertainty that may mean deliveries are more likely to index higher in the second half that normal. As foreshadowed by our Chairman, on an underlying like-for-like basis we expect a result for the first half of 2022 in the range of 12% to 15% below that of '21 adjusting for Daimler Trucks. Now this reduction is almost exclusively attributable to the lack of supply. It is something that we find very hard to control, but we are very positive that, that supply will ease, those constraints release, and that will benefit all shareholders going forward. On a statutory basis, we expect the first half result of between $225 million and $240 million, reflecting both the underlying performance and the expected successful completion of the Bill Buckle Auto Group divestment in June 2022. We remain very confident in the underlying strength of our business, supported by our robust balance sheet and the volume and gross that is contained in our record order book that will be delivered as supply constraints ease. The continued lack of transparency of new vehicle supply however and the disruption to labor, parts supply, logistics and transport, mean we remain cautious regarding the timing of when these deliveries will occur. So in summary, our outlook for the second half of 2022 remains very strong with the addition of incremental contributions from the businesses we acquired in quarter 4 2021 and the expected completion of the ACT acquisition in July 2022. Now please note our half year results are subject to external audit review and that will be conducted following the completion of the half year. I'd just like to update shareholders on some key strategic developments post the year-end. As always, your company, Eagers Automotive, remains both busy and proactive in our relentless pursuit of profitable, sustainable and strategically aligned growth. Tim mentioned this, but in an exciting development following year-end, we have completed binding documentation with EVDirect.com to become the exclusive retail partner for BYD vehicles in the Australian market. BYD is one of the world's largest and fastest growing automotive manufacturers, specializing in electric and hybrid vehicles. BYD are currently the third largest automotive retailer globally by market capitalization, only behind Tesla and Toyota. And they're now looking to expand their global market strategies beyond China. We are progressing our retail network plans with both BYD Australia, the importer, and EV Direct, the Australian market distributor, with the first deliveries expected in the second half of 2022. In addition, we have recently been appointed as the Cupra retail partner for Queensland and Western Australia. For those that don't know Cupra is a new brand. It used to be part of the SEAT Group, Spanish brand. Cupra is a sporty version of their new sporty brand that was born out of SEAT. Cupra is a part of the Volkswagen Group, with ambitions to move to be a fully EV model line-up by 2030. The appointment as the launch retail partner in the metropolitan markets of Brisbane and Perth, our 2 biggest markets, is an exciting greenfield opportunity that effectively covers approximately 30% of the national Cupra market opportunity on the launch. Our OEM partners and specifically new market entrants, like BYD and Cupra, are attracted to our extensive retail experience combined with an unmatched and unique geographic reach. Currently, ACT represents the only metro region in which Eagers Automotive does not operate. However, in March, we entered into a non-binding agreement with WFM Motors Proprietary Ltd to acquire a high-quality portfolio of dealerships and associated properties in Canberra. This acquisition offers immediate scale, representing almost 30% of all new car sold in the ACT, along with scope for future growth. The portfolio is high performing, representing leading manufacturers. Those manufacturers cover 43% market share of the sales in ACT and is situated in prime operating locations around Canberra. Due diligence is progressing to schedule, and the transaction remains subject to shareholder approval, among other customary approvals due to the relationship between Nick Politis and the various selling entities. Now as everyone knows, Mr. Politis is a member of the Eagers Automotive Board of Directors, and he also controls the selling entities. As mentioned by our Chairman, we anticipate that Eagers Automotive shareholders will be asked to approve the transaction at an extraordinary general meeting in July 2022. Further information on the transaction, including an independent experts report and property details is expected to be released to shareholders in mid-June '22. Finally, and as already mentioned, a nonbinding agreement was signed in March 2022 with the Australian Motor Group for a strategic divestment of the Bill Buckle Auto Group in North Sydney. This will enhance our capacity to invest in organic growth as well as focus on acquisitions like the ACT portfolio, which will accelerate our Next100 Strategy. So in closing, I would like to extend my thanks to each and every customer we served in 2021, many of whom are loyal shareholders. Your support is greatly appreciated, and we never take your custom for granted. I'd also like to sincerely thank 7,580 members of our Eagers team. Your dedication and commitment have been instrumental to the delivery of our record results in 2021, while the level of resilience, agility and empathy you have shown during challenging times was truly extraordinary. Thank you to the Board and my predecessor Martin Ward for your advice and support throughout my first 12 months as CEO. I would like to specifically thank David Cowper, our retiring director, for his commitment, expertise and guidance over the last 10 years. David's legacy with Eagers Automotive will include a significant personal contribution to the improvement and the professionalism of the company in the areas of audit and risk. Thank you, David. You'll be missed. To our each OEM partner, we are proud to represent your brand. Our position as your retail partner is a privilege and responsibility we take very seriously. We will continue to focus on delivering on our internal mandate to being a preferred partner for your business. To our banks and finance partners, our landlords large and small, and all our other business suppliers, we thank you for your overwhelming support during what has continued to be a challenging time for business in general. Finally, last but certainly not least, a big thank you to our shareholders for your ongoing confidence in and support of our and your company. We look forward to continuing to engage with you and all of our stakeholders during the year ahead. The team at Eagers remain very excited about what the future holds for Eagers Automotive. Thank you.

Thank you, Keith, and certainly some very good things there going forward for all shareholders, which is terrific. We now move to the formal business for today. And up on your screens, we should see the proxies received. So on your screen details of the proxies and direct votes received prior to this meeting are there for your viewing. A 2021 Annual Report and Notice of Annual General Meeting were made available to all shareholders on the 14th of April and are taken as read. I remind you that shareholders' questions on any item of business will be addressed during the discussion on that particular item and before voting closes. General questions will be addressed later in the meeting. The first item of business is to receive and consider our financial reports for 2021, which are included in the annual report, and that is if you have your annual report that's starting on Page 34. The Corporations Act requires the financial reports to be put to the meeting each year. If there are any questions from shareholders on the financial reports, I will attempt to address them now.

The first complement on the change in CEO you plan to use internal appointment to smoothly transition and say a complement to you for all success over last financial year. But another, just to appreciate the way hitting your value, you disclosed the last 5 years' financial figures, very few companies do that. It's a credit to you if you keep doing that. Also complement you in [Technical Difficulty] What my question relates to is that there's been publicity after the closing of the financial year, an incident where one of your colleagues is involved in reciprocation of money. My question to you is how have you, yourself, your Board, your auditors and your [Technical Difficulty] on steps to ensure that type of incident doesn't happen in the future?

I'm not sure whether shareholders got all that, but maybe they could hear that.

In simple, I was just asked, you, yourself, your auditors must all wonder, why did that happen? What steps are being taken to ensure that doesn't happen in the future.

Lots of things, I guess. But what I might try to do certainly, we've got the auditors here. We've also got one of our Directors, Sophie Moore, who's our Finance Director, and she might talk to that. Keith may be able to address that and if it isn't covered in total, I can maybe add a few comments, but I doubt that I will be able to do.

I wasn't asking about the incident itself.

No, no, no steps.

How they are making sure on...

Who'd like to go first? Keith?

Thank you for your comments, firstly, and also thank you for your question.

He is your predecessor to you. It's just back a long time.

And I appreciate that, and I've been with Eagers since 2002. So I'll take total responsibility for the incident. The issue I was very aware of at the time I was previously the Chief Operating Officer, the incident. I won't go into depth about the incident, but it occurred in 2018. So the reconciliation and the conviction of the individual has only just come to path literally a week or 2 ago. So it has been a long drawn out process to bring the individual to account. So I'll just make that comment in terms of the timing of the incident. If any shareholders was curious about the disclosure of when this occurred and which numbers or which figures this related to. It occurred in 2018, and it was covered by our insurance at the time. The more important question you asked, Peter, is how are we going to have comfort this sort of thing won't happen in the future or if that's unreasonable to expect our business to size out, but it will never happen how do we mitigate the risk. I will highlight the involvement of David Cowper. I made a mention already now in my speech, David Cowper is our retiring Director, he's the Head of our Internal Audit and Risk Committee. David is the ex-auditor of the company way back in his previous days, I think with Horwath Board and then eventually with Deloitte. David has overseen with Sophie Moore, our CFO, and Maree Patane, our Head of Internal Audit, a significant move forward on our internal risk framework. So our risk framework is now something that gets reviewed every 6 months by the internal management then it's elevated to the Audit Committee and up to the main Board. On that, we highlight any potential risks that are evolving, identified and they come from a bottom-up approach. It's not management saying we see these risks, it comes from outside of the business. In terms of how that has benefited the business, that risk matrix that we now follow evolves around different types of risks as the automotive retail business evolves. So that particular instance occurred in an auction business. We made a decision to exit that particular auction business because we did see some risk in it, and we didn't see it as a long-term sustainable business inside Eagers going forward. Sophie, do you want to add anything to that?

No, absolutely. Thanks, Keith. And look, key departments within Eagers Audit have a number of control activities. So there's a number of segregation of duties that we instill across the business. We also have oversight at of both a regional business level and at a corporate level together and we do a number of separate assessments through our internal audit department, but also through our control framework that is instigated by our senior finance leadership across the organization, which is led by regional financial controls, together with the corporate functions that sits here in Brisbane. So that is also, as I said, supported by an internal audit function, which is a team that not only has a program of risk and review investigations, but it also works closely with the business as they identify risks in their day-to-day operations.

Well I have one thing, Tim, before we finish off. Going forward because we have other questions around this. We are implementing a process of robotics, process automation. So when people talk about robots, working inside the business, we have a virtual workforce of 10 bots, which are robotics process automation. We're doing that for a number of reasons. Robots obviously can work on closing out invoices, internal invoices, selling out to external vendors, et cetera. We're doing it to manage our data because when humans are involved, they're quite often enter dirty data, they change it with every single entity and it creates a very dirty database. We're doing it to improve productivity because these robots are virtual robots, they work 24/7, and they don't make mistake. And the third thing we are doing is to reduce our risk of fraud because every key stroke that these bots do is totally auditable. And of course, they don't have a motivation to commit fraud. And it covers the exact area that we were exposed in this particular instance. So we are going through quite a process of moving this, which will have multiple benefits for the business going forward.

And could I just add, I mean the rigor around risk and audit in the later 5 years has been obsoletely immense. CEO of the company, we would hope that rigor and as described by Sophie and Keith situations like that would not happen again. But as I said, it is the appropriate time for our auditor to answer any questions in relation to our financial reports. And if you've got any questions regarding the order -- the audit or the auditor's report, the accounting policies or the auditor's independence. Now it's the time. Are there any other questions that may relate to our financial reports? You had a question?

There's been a question online. This question is directed towards our auditors from Deloitte. Mr. Rogers please comment on what process Deloitte went through to ensure that Eagers was entitled to claim JobKeeper? Do they know what the split was between how much was passed on to employees and what was retained by the company? And what complexity did JobKeeper add in terms of presenting comparative figures and calculating executive bonuses?

Okay. So I just wanted to direct shareholders to our opinion on Page 136 of the annual report. As auditors, our objective is to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, not individual line items per se. That said, in 2021 when JobKeeper was acclaimed, we did assess eligibility criteria, disclosure and repayment likelihood as it was an unusual transaction. In 2021, we also considered the likelihood of repayment obligation again and required no adjustment to the numbers, including comparisons. The other part of the question are probably best answered by management.

Keith?

I'm happy to take that up for you.

Yes, go ahead.

So there is -- we actually have another question, I believe, in general questions regarding JobKeeper. So we can talk more broadly around JobKeeper later. To answer to the technicality of the question regarding our financial reports and also executive bonuses, I think that was part of the question. It is worth noting that all results that we referred to today and at the time are underlying results. I think one thing that shareholders should take a lot of comfort in is Eagers constantly talk about underlying performance. And importantly, our statutory profit is usually high. A lot of companies talk about underlying and their statutory profits a little bit lower because they hide their problems down below the line. So we focus on underlying. The reconciliation of our results in 2022 and our underlying performance had no reference to JobKeeper whatsoever. In terms of our executives and pay and the way JobKeeper was treated internally, no executives were paid with any JobKeeper calculations at all. It's interesting to note that Director and key management remuneration in 2020, which is the year that we're talking about. And to be clear, JobKeeper refers to 2020. This is an AGM referring to 2021 results, and we're talking about 2022 outlook. So this is referring to effectively 2 periods ago. It's got nothing to do with the financials we're reporting on today.

Can I just add, JobKeeper finished in September 2020, Eagers received, nothing in that time on.

And in terms of executives and directors, et cetera, directors and key management personnel in 2020, their remuneration was down 23%. And directors forego or went that's all their director fees for 6 months, which was the period of JobKeeper. Our previous CEO, Martin Ward, had a 46% reduction in his package. He went all short-term and long-term incentives and reduced his base salary. There were no equity plans put in place to senior executives and any payments were totally unrelated to JobKeeper. It is important to note those things because Eagers did share the burden of the COVID pandemic across all stakeholders. And that is important to note for shareholders going forward.

I think, Sophie, you may be able to comment also that any JobKeeper payments and point out again, they finished in September. Again, we have to provide to the tax office, I believe, and the government full audit of what we received and why we received it.

And all the payments were paid to employees in the period.

Any other questions in relation to -- that's it? Thank you, James. If there are no further questions from shareholders, anything from shareholders in person, no. I think we covered that. Nothing online or audio.

If not, I would like to move then to the next item of business. That is a slide there, the reelection of Dan Ryan. It's Item 2 in today's agenda, and it's reelection of Dan Ryan as the Director. In accordance with our constitution, Dan retires by rotation of this meeting and being eligible offers himself for reelection. Having initially being appointed as the Nonexecutive Director of the company in 2010. Dan was last reelected at our AGM in 2019. Dan is the Director and the Chief Executive Officer of our largest shareholder, WFM Motors Proprietary Limited and brings a wealth of industry knowledge to our Board. Dan also has significant management experience in automotive transport, manufacturing and retail businesses. Further information on Dan can be found in the notice of meeting and on your screens now. I'd like to point out that the Board derives great benefits from Dan's expertise and experience, and all of our directors recommend Dan's reelection today. I'd now invite any questions on this item from shareholders attending in person. Is there anyone in the room that's got a question?

Australian Shareholders' Association have directed me to [indiscernible] very, very carefully [indiscernible]. And I'd just like to explain that the ASA has rulings and advices [indiscernible]. And they consider Eagers at present time is an total failure. It recognizes that major shareholders are entitled to have representation. They consider Mr. Ryan should be layout to continue on the Board. But the Board itself does not comply with the ASA guidelines as to gender balance. It doesn't comply information to independence. You did not have the outside independent directors in the Board itself, you might thinking yourself, you're independent that the guidelines to the ASA say that after you have been a Board member for 10 years, you no longer are independent. If [indiscernible] look at your [indiscernible] on the basis of being there 10 years. When you look at the gender balance, the ladies which have neither of them are independent [indiscernible] some of you leadership side of western Australia [indiscernible] decision of the acquisition of Mr. Politis' business in Canberra. And it's hard to see how [indiscernible] independent [indiscernible]. Again, nobody to criticize [indiscernible].

I wouldn't want anyone to interfere. It's a very exciting opportunity for the shareholders.

[indiscernible] I was pleased to see that today the stock exchange release that you will report at 10 AM which gives the opportunity of the market to assess what you're going to say, the market is to [indiscernible]. So I just wanted to give the explanation of why I haven't voted against it and put you on a sort of a warning of the ASA likes to see a better dedication to gender balance on [indiscernible]. You have the opportunity where there's one Director has retire. Over the next 12 months, hopefully, you will understand what the shareholders' [indiscernible].

Thank you for your comments. Covered a lot of territory there and probably not possible to cover all of them. Can I just make a couple of general comments. Board composition is always a hugely challenging discussion. David Cowper retires, but we will then have 8 directors, 4 are independent and 4 are deemed not independent. Can I just say I'm one of the independent directors, but the 4 who are deemed not independent, have massive knowledge in the industry and how good is that. The Board is fortunate to have, I belief, I'm an outsider, is fortunate to have people on the Board with huge knowledge in the industry. And I think we heard from Keith, just how complex this industry and is, not to mention global things, but just what's going on in the industry. So I consider it as a shareholder. And I think a lot of other shareholders do that the Board is extremely lucky to have people on the Board to really know what's going on in the industry and are able to act in the best interest of all shareholders. Yes, it has been raised. And I think there might be another question about we have 25% representation of women on the Board only. Yes, okay. And there is an objective that, that increases. And I think we set a target for 2025 to see whether we can have more women on the Board.

[indiscernible]

Yes, certainly. You're glad to have a go now.

I've been in business all over time, many years, senior positions. I'm in favor of ladies having the job as long as they are the most capable. I'm not in favor of token appointments, and want the best person for the job.

And just one other comment, it is 25%. We can't extend. We can't escape that. And both ladies are deemed nonindependent by whoever deems that or makes the rules or whatever. And I'll just make 2 comments about the lady. One, Sophie Moore, and she's here. She's our Finance Director. And let me tell you, for a multibillion dollar company, your finance directors are seriously important person. We're extremely lucky to have her. And to be honest, it doesn't worry me whether she's deemed independent or not independent. It's all about how good she is or not good and she's fantastic. Michelle Prater, who unfortunately, can't be with us. Michelle and her family, yes, are very significant shareholders in Western Australia and Michelle resides in Western Australia. Western Australia is a massively important part of Eagers business. We are absolutely, how can I say, blessed and delighted to have someone of her experience being able to be on the Board and for some reason, deemed not independent. That's okay. But we've got what we've got, and I think we're extraordinarily lucky. So -- but yes, we do have an objective by 2025 to see where it falls. Keith may have a couple of comments.

The only thing that I would add, I appreciate your feedback there on the comment. We personally when we talk about this, I'm not on the Board as the CEO. However, obviously, I'm part of the conversation around it. I think there's 3 criteria that are equally important: Independence; expertise; and alignment to shareholders' interest. I think if you look across those 3 categories, we have a really, really good Board as we stand. However, your comments are noted, obviously, ticking 1 of the 3 boxes rather than trying to get a balanced approach across a Board is a dangerous thing and can actually lead to lower performance for shareholders. So we try and balance all those 3 criteria.

Thank you. Back to -- I should also mention, too, we -- like most public companies, these days get put through the rigors of the proxy advisers, and they are certainly my comments, but have all voted in favor of resolutions today and have also pointed out very strongly that they think it's entirely appropriate that WFM has 2 representatives on their Board. So any other questions from shareholders or that are in attendance here or are there any other questions in relation to the reelection of Dan, which you can see is very heavily supported by the voting?

Mr. Chairman, we did have an online question of a very similar nature, which I understand we've dealt with around female representation and independent directors. There was an additional question directed towards Mr. Ryan, requesting him to outline how much of his time is spent on WFM matters and how much of his time is spent on Eagers matters? I understand Dan is joining us online, and he should be had to respond to that question.

Okay. I'll just come off you. Can you hear me, Tim?

Yes, Dan, I can.

Okay. I understand the question, and thank you for asking the question. I'll answer the question in a different form in a way, I spend an enormous amount of time on the WFM business. I've been the CEO of WFM for 16 years, out of 22 years in the automotive industry. And my argument would be that APE is actually benefits from the time I spent WFM. Because a large portion of my time in WFM is reviewing the larger [indiscernible] in the market, talking to what we are, finding out what's happening with product in the industry, determining what [indiscernible] we've got, trying to apply my knowledge in terms of high sales property valuations in the market. I do spend an enormous amount of time with WFM. I'm not in a position to give you a percentage that, that is because ultimately, I think the time I spend on WFM areas that allow me to come to a Board meeting reasonably well equipped in terms of my understanding of the automotive industry and my understanding of what dealerships are selling and buying for at the moment. And my understanding, generally of issues like COVID is a good example, how it's affecting the industry, what Keith is experiencing through COVID and the closures that we had to manage during that period. So look, I've answered your question, I think, in a different way than probably what you may have asked. But I think the time I spend may be a much more valuable Board member than if I didn't do it.

Thank you, Dan. Can I just also add to that, Dan is a Non-Executive Director of Eagers. We should note that, so we get all the benefit, as Dan just outlined, being a nonexecutive director. I think you also raised a question about acquisition of business in the ACT. And I'll just briefly comment on that. Yes, that business is owned by WFM. Neither Dan or Nick Politis, are involved in any Board discussions at all in relation to that acquisition. They have not been provided with any information that the Board has. There's an independent experts report done completely by Pricewaterhouse in relation to that. They have no input into what board considers whether that's while or not, and they will have no vote in terms of whether we go ahead or not.

Thank you for your comment [indiscernible]

No. It was just the balance. I guess.

[indiscernible]. You are hoping to have the [indiscernible] before the 8th of June, next year, [indiscernible].

That's simply because we need to go through the due process of independent experts reports, et cetera. So absolutely.

[indiscernible]

These accountants as a 70-page independent experts report that we just got. So we've got...

I saw the transactions day after day [indiscernible] Mr. Politis has confidence in Eagers Automotive.

He certainly does, and we appreciate that. Thank you for your comments. Are there any other questions into Dan's reelection? Again, I just refer you to the process. Any? If not, nothing on line James. We're done there. Thank you. We note the number of proxies. And as I mentioned earlier, our voting today is being conducted by via the poll. So all shareholders can cast their vote in relation to Dan's reelection now. If I could then move to the next item on the agenda. It is our remuneration report. That's item 3 today, and it seeks shareholder approval of our 2021 remuneration report, which is set out in our annual report. This part is advisory only, and the Board is looking for shareholder support for our policy on remuneration matters. But you will have noted, as we outlined in the REM report, we've engaged with shareholders and other stakeholders in relation to our remuneration plans and certainly listen to any feedback that has come from that. I believe, this led to an improved transparency and overall disclosure of all our remuneration matters and reports, particularly over the last 2 years and one of our directors, independent Director, Greg Duncan, heads up our Remuneration Committee. So I'd ask shareholders attending in person if they have any questions in relation to the REM report, anyone here any questions? If not, could I ask James, are there any questions online or audio?

Yes Mr. Chairman, we have 2 questions in relation to the REM Report. The first question, we had a first strike on the REM report in 2019, but it has been more than 95% in favor over the past 2 AGMs, including today. So well done on winning back support on remuneration matters. What changes did we make to achieve this? And what proportion of our staff do we currently estimate own shares in Eagers?

A lot of changes. And it should be remembered the time that we got a strike on REM matters was around the time of the acquisition of Automotive Holdings Group, which has been a very significant acquisition. And in doing that, there was a significant write-off of goodwill, which impacted on our statutory profit or whatever. So there were some shareholders, obviously, some of the fund managers or the proxy houses or whatever, who had comments around the REM report, but it was a very narrow miss we made, but there's been very significant changes in our approach, particularly engaging with shareholders to which I referred. Maybe, Greg, you're on the line. Are you happy if I put you in the hot seat to make any comments about the rigor that we go through now in terms of dealing with REM?

Thank you, Chair. Yes. Look, I support what you've already said. And in relation to the specific question about what have we done in response to the first strike that was received at the AGM in 2020. And I think this has been previously reported, but we undertook a comprehensive review with shareholders, proxy advisers and other stakeholders to understand their concerns. The Board and the committee retained independent external advice on remuneration. And as a result, many changes have been made to the remuneration framework that was adopted prior to the strike. And I think it's clear now that the Eagers remuneration plans align with the ASX 200 market practice, and they do so whilst maintaining a strong pay for pay-for-performance culture. And I think it would be also appropriate to say for the past 2 years, and that's been the first time for Eagers, I believe, that the remuneration committee has engaged with a number of the major proxy advisers. We did so this year. We did so in the previous year. The remuneration committee had unfortunately had all Zoom meetings rather than in person, but we had extensive discussions with the proxy advisers, we understood their concerns. We've reacted accordingly. And I think as you've already reported, the proxy advisers are in support of the current remuneration report, which is well laid out in some detail in the annual report from Pages 43 through to 55.

Thank you, Greg. Any questions for Greg?

One further question Mr. Chairman. The question is, why is the CFO on the board and does this extra responsibility for the CFO to influence how much the CFO has paid? And should we consider adding the CEO to the Board?

Sorry, I missed the first part of the question.

First question is, why is the CFO on the Board.

Why is the CFO on the board.

And does this extra responsibility of being a Board member influenced the remuneration of the CFO?

I'll answer the last, but had no influence on the -- and why is she on the Board. What you think she is outstanding in terms of the contribution and certainly worthy being on the Board.

Any consideration to whether or not the CEO should be on the board?

Always a consideration and Keith said so much on since he took over in February a year ago that probably we haven't sat down and talked about it as a Board with Keith as much as we could.

Unfortunately, Jamie doesn't help the diversity of the independence metric.

You can be assured that, that will be on the agenda, but quite a few things to get through, first aren't they. Don't want to add further complication here at this point Keith. Any other questions.

There are no further questions Mr. Chairman.

Again, votes today, I should point out that those votes do not include any votes by directors. Directors can't vote on the REM and they are not -- so in any way they are not allowed to vote on that. So, is there anything anyone else would like to rise in relation to that. I think that is done. Thank you. Very soon, I'll close the voting on both items 2 and 3. But before I do, I'll just pause the meeting to give shareholders a final opportunity to cast votes. For those attending online, please submit your votes through the online platform. [Voting]

Thank you, ladies a minute. Thank you, ladies and gentlemen. All voting is now closed. The results on both agenda items will be tallied immediately following this meeting and released to the stock exchange later today. That is the conclusion of our formal business. And so that's now concluded. But before I close the meeting, I'm very happy if there are shareholders that have got any general questions for those of you who wish to stay for that or those that have to go. You're welcome. Are there any questions from shareholders? Firstly, I'll deal with any questions from shareholders who are attending in person today. Nothing more in the room, if there's no questions from shareholders. James, are there any general questions either online or via the audio call?

Number of questions to get through, Mr. Chairman. First question was submitted by Dr. Porter, who's been a long-time shareholder and supporter of Eagers Automotive. Dr. Porter [indiscernible] everyone for the outstanding results in the last year and also the dividend. Mr. Porter's question relates to risk management. And considering Eagers is probably the largest franchise operator in Australia. What audit and risk management practices do we have in place to measure actual sales to end users versus cyber or phantom sales a common practice in the motor industry.

Keith take that one. Thank you for your question Dr. Porter and thank you for your long term support. It's greatly appreciated.

I think we have touched on some of our risk management structures in general, which I did want to touch on around this, but specifically answering the concern around cyber cars. So Dr. Porter rightly points out that OEMs have in the past, and it's been more prevalent in the past, reported cyber sales, where a car is reported as sold, but it hasn't actually been sold to an end user. Now first of shareholders comfort there is no way that Eagers can ever misreport sales, re-report sales based on a [indiscernible] transaction at about internal deal of management system. It is impossible for us to overstate those sales. They have transaction of every single vehicle and obviously, money transferred. The Cyber car issue that Dr. Porter asked about has been an issue in the past. It was -- I think there was also a newly reporting brand. I'm going to talk about specifically that overstated their sales in the last 12 months. It is generally done by the OEMs for their benefit because OEMs have generally, up till now, been focused fundamentally on market share as their key success factor, particularly the local national sales level here in Australia. It was much more prevalent prior to COVID when there was significantly more supply than demand. Those dynamics have fundamentally swapped. So the desire for OEMs to precall is another way it's described a precall sale, or sale, try to sell a car is no longer there. Having said that, and it is really important to note, and it's a great example. Cyber sales were actually identified through our internal risk matrix and reviews and are elevated to the extent that they were actually being reported on by our specific report at our Board meeting, which continues to this day. So every single month, every single director sees exactly how many cars we have registered as a demonstrator service loan car or possibly prerecorded for an OEM. Now as I said, that is basically disappeared in the current environment. So the risk of cyber sales for Eagers is very, very low, particularly at the moment. And we're very -- we have total transparency on where the vehicle is sold to an end user and how it's reported through the very -- the many different OEM systems that report sales. So we're quite comfortable with where we sit at the moment, Dr. Porter on that particular issue. The broader issue of risk management is something we've touched on, and we see that as something that's going to be an ongoing focus for the business. I will link it to one other question around remuneration and what we've done to change remuneration. The leadership team of the business have balanced incentives across sustainability and about strategic outputs. And what that means is sustainability is around making sure that we manage risks that we protect shareholders' investment, that we're compliant legally by accounting in every way, health and safety of our employees and our customers. That is around sustainability. Strategic is about delivering on operational excellence and delivering on our next 100 strategy, and that is about growing shareholder investment. So we are very much -- we focused our team on a balance between the two. So hopefully, that does give some shareholders some comfort about the focus around the focus of the leadership team Eagers business.

I don't know if every shareholder knows this, but a car is not reported in the accounts of Eagers until it is delivered to a customer and we get paid. So all the cars that are sitting in this order bank that were sold throughout last year that have not been delivered yet or the increase that's occurred since the beginning of this year. Those will not be accounted in the profits until the car arrives in the country and is delivered to the customer. So regardless of the question regarding Cyber cars, there is no accounting treatment of anything inside Eagers until it leaves Eagers and goes to a customer. And that may not be fully understood. I thought it might add value to the answer.

Thank you, Martin. And I think, Keith, you referred to that too in June the importance of the delivery of the car for us to book profit.

Next question, Mr. Chairman, relates to the structure of our AGM meetings. Whether or not we're considering hybrid meetings in the future to allow shareholders who cannot be here in person to attend and whether Eagers would consider publishing a transcript or an archive of the webcast from today's meeting?

Well, as I said earlier, we're off site from our original planned location for the AGM. I'm hopeful that next year, we will be able to be back at head office for the AGM. Yes, I think it was raised by you, sir, as earlier as a shareholders association of our hybrid. And I guess, the rules seem to keep changing around that, don't they. It's been several year as to what I think is a good idea. But short answer is, I guess, we'll be considering and I'm absolutely sure that if we have a hybrid meeting, it's not that hard to video these days is it to be able to then have a podcast or YouTube or whatever.

The next question is in relation to political donations and government policy. So what is Eagers Automotive's policy position on making political donations? And will we be making any related to the current federal election? The second part of the question is, what regulatory risks does Eagers face if there is a change in government policy, particularly in relation to the sale of petrol vehicles in Australia and how that might impact their business?

A lot in there. Maybe the political donations, I'll check it over to Keith, but we probably should point out that the 7,500 employees. Unique is a very big company. And Eagers is obviously very supportive of any manner of workforce opportunities. So Keith, do you want to crack at that first and then maybe move to the second part of our electric vehicles or nonpetro.

Yes. Thank you, Chairman. Generally speaking, Eagers is in a political organization. We don't believe it's appropriate to take a political view on behalf of our shareholders, that's our general position. We do think it's important as a large player in our industry to work with the government of the day and perhaps the opposition of the day to make sure that the issues we face on behalf of shareholders are well communicated. We need to be a responsible player in the industry. We have the largest by a long way. The voice of Eagers counts, so therefore, we do need to be a participant, but we do that via our industry body, which is the AADA. Now we're very fortunate in the AADA. The Chairman of the AADA is David Blackhall, who's one of our independent directors. Martin Ward down the back, our previous long-term CEO and Director is on the Board of the AADA, and that's really important that he remains on the board and on his alternate. What that means is that by the AADA, we are able to participate through their guidance and expertise with either the government or the opposition on issues that are relevant to our industry. So generally speaking, Eagers has never had a policy around political donations because they have been totally immaterial. And I think that will continue going forward. In terms of change to policy in the future, we welcome anything that will stimulate activity. One of the things that will occur in the future is there will be a transition. We don't know how fast or slow it will be from ICE, combustion cars to electric to hybrid to hydrogen. There will be a change. One of the great things around Eagers is we represent 40 car and truck brands. Every time someone decides to change to try to drive train their car, it triggers a transaction. That's what we do. We transact cars. So any catalyst for a transaction, which may be an incentive on an EV, it may be some other change in legislation, it might be reduced stamp duty I do note that there's 4 states in Australia now that are giving a $3,000 incentive on EVs. Any catalyst to a changeover in a vehicle is a good thing for Eagers. So generally speaking, the makeup of the car park in Australia, there's approximately 20 million cars on the road, no change. But we will always play a part. We will sell cars, we will service cars. We'll sell used cars. We'll finance those cars. We provide insurance and we'll sell parts. So as long as there -- as long as you look at the window and we see lots of cars running around it doesn't really matter what's propelling them, Eagers is best positioned to play a part in the future of mobility.

Thank you, Keith. Anything, anyone online audio would like to add or anyone in the room? James, further questions?

Next question, Mr. Chairman. Excellent is to hear of the substantial order book. Are there any statistics to guide us what percentage of those potential buyers complete their purchases given the longer-than-normal way, they have currently in genomic?

I'll throw that to you, Keith.

Happy to answer that. We haven't got an exact measure on, but it is totally immaterial. People are not suddenly deciding that they don't want or need a new vehicle. What we are seeing is there is a little bit of attrition in the order bank. But what that means is that maybe a car that we've sold someone and we have on order, they may well find another vehicle with another brand. Sometimes, it's a brand that we have and the dealership that we own, and they are dropping out of that order and moving over here, which just brings someone else higher in the order bank. So there's a little bit of attrition around it as people go and chase supply rather than falling over and saying, I no longer want a car, I no longer need a car. That's not occurring. So the order book, and we've now had this order book dynamic in place since the middle of 2020 has seen virtually no reduction through fall over. It's been quite incredible how strong it is. And there is an element, one of the greatest things in retail, any retail, not just automotive retail is urgency. And this order bank and the shortness of supply is creating incredible urgency. People are going in and saying, I don't have my name down to buy Brand x, I'm going to get, and it is certainly supporting this dynamic of incredibly strong demand in the industry. We are estimating the demand at the moment is running at around 1.3 million cars underlying demand in Australia. The highest -- the industry has never delivered 1.2 million cars into Australia. And we're likely to deliver circa 1 million to 1.50 million. Demand at 1.3 million supplied 1 million to 1.50 million. It is an incredibly strong environment at the moment.

Any other questions? How are going, James?

We've got a few more to go on. Next question relates to our property portfolio. How often do we get the individual properties independently valued? And have we considered given the current property bubble doing any sale or leaseback transactions that could free up capital for shareholders or buyback?

That's one that I might get Sophie and Keith to talk about. But yes, firstly deal with how often we live in the valuation process.

We review -- I've got a formal valuation on all of our properties on a 3-year rolling cycle. We also then do a review at both June reporting period and December's reporting period across the portfolio to assess whether there has been any decrements or increments across the property portfolio. Those independent valuations are reviewed by the auditors, together with the overall value of the property portfolio.

Is that in relation to property sale and leaseback, I might just add before you jump on to it, what have we got 200-something outlets around Australia. Yes, Eagers does lease a lot of property. Eagers owns a lot of property. We prefer to own the property, not lease it, but clearly with 200 outlets. We're not going to be able to own everything that's on a continent. So Keith, specifically sale and leasebacks.

I think it's important that, first off, the question is around freeing up capital for further growth. At the moment, there's no necessity for that. So when there's no necessity, there's no motivation for us to go out and try and pick the top of the market to do a sale and lease back because that's not what we do. We buy these properties for strategic reasons. We buy them because they are -- they secure our representation, they facilitate consolidation and rationalization in new automotive retail formats, which is bringing more business onto a small footprint, which is part of the future, and the long-term benefit for shareholders and ultimately if we buy these properties well in strategic locations, when we eventually do cycle our product portfolio, there is massive capital windfalls, which we've seen many times through [indiscernible]. So at this stage, there's no need to go and chase capital. We are not looking to do sale and leasebacks to free up capital or to benefit on sale prices. And the final comment I would make is it is while from time to time, measured sale on leasebacks makes sense. We have seen examples in the past where sale and leasebacks are used adversely for the future of shareholders. By that, I mean, if you sign up to a very high lease with high CPI increases, you'll get a very, very good price today, which will be mortgaging the future for shareholders. Eagers does not mortgage the future for shareholders. We are a long-term player. The management of Eagers, the Board of Eagers are in it for the long term. They're not looking to support a result in an individual reporting period.

Thanks, Keith. James?

Next question, Mr. Chairman, relates into the Repo transaction in the ACT. This question is, would any of the directors like to comment on why WFM decided to sell the Canberra division to Eagers? Whose idea was it to pursue the transaction? And are there any future potential further transactions between Eagers and WFM?

I might be able to answer the last part. There have been no discussions on waver of any future transactions. In relation to this transaction, what was the...

Whether the directives or Mr. Politis would like to comment on why decided to sell the Canberra division to Eagers.

The opportunity presented for Eagers and the independent members of the Board. We're very keen to jump at it.

Before a director makes a comment, Tim, or might -- Chairman, sorry. I might, jump in. From a business point of view, the ACT acquisition is compelling. Eagers have identified for numerous years that the one metropolitan area in Australia that we didn't have any representation was ACT. We were very keen to fill out our geographic portfolio so that we covered, not just covered, but we're a large or dominant player in every single metropolitan market. The opportunity to be able to go into ACT with a [indiscernible] acquisition that represents 30% to 35% of all sales, 43% of market share on the brands represented, pick up a high-quality property portfolio was incredibly compelling. When you add to it our next 100 strategy, which is around scaling our easyauto business. It gave us the opportunity to both supply stock and provide property to roll out our easyauto business into ACT. When you look at it through the lens that we've been recently asked to be the Australian retailer for BYD. And the ACT will be a marketplace that will probably over-index with electric vehicle sales. It gave us the opportunity to roll out BYD. And we have other OEMs that are looking for expansion there. So in terms of the reasons why ACT would work for Eagers, it is absolutely compelling. In terms of the financial consideration, that will be subject to shareholders' vote and has an independent expert report behind it, but we are very comfortable where that deal sits at the moment.

Anything anyone would like to add to that? You're done, James?

We have 3 more questions to go Mr. Chairman. The next question is in relation to JobKeeper -- could the Chair and the CEO, please comment on whether the Board had any discussions about repaying any of this figure, given there are concerns around whether or not companies are appropriately qualified for the system? And there are a number of other companies within the retail sector who paid back some or all of the JobKeeper?

Yes. I think those will be both comment I'll make some brief comments. JobKeeper was from May 2020, was it, Sophie, correct me to September. To qualify, we had to have a 50% reduction in our revenue. It was brutal. The profit of Vegas in January, February, March was completely wiped out by January, February, completely wiped out by what was happening with COVID and revenue was collapsed by more than 50%. We qualified comfortably and applied for it, and we did not receive any other payment after September. In addition to what went on after September, there were many days of lockdowns, and Keith may be able to give you the number. What it did do, though, when we applied for JobKeeper, it actually underwrote and sustained some 2,000-plus employees in the company. Given the appalling collapse in the market, in terms of revenue around that March, April, May. 2000 plus employees would have left Eagers within a month. They're not people that would have necessarily got jobs in the motor industry because if we were doing it tough. You can bet your life everyone else was doing it very tough. And we had a plan to deal with a massive reduction in costs across the company, and that would have involved 2,000 of our 8,000 workers. We applied for JobKeeper. We got it every cent of what we received, went to employees and we were able to maintain our workforce, not only maintain our workforce at that point in time right through to when JobKeeper was over for Eagers, which was September. We then were able to maintain our workforce all the way on from September 2020, and there's been hundreds of days where we haven't been able to trade in terms of lockdowns in COVID. So Keith, you might want to add something around that?

Chairman, I think you've covered most of it. Just for context, and I don't know whether everyone appreciates exactly the size of your company as we went into COVID. It was just after the merger with AHG, we had more than 11,000 employees at that time. and we had an annual wage bill of around $1 billion. So the design of JobKeeper to protect employees in industries affected by the COVID lockdown Australia applied absolutely to Eagers Automotive. Before JobKeeper was put in place to support us, the toughest day in my career with Eagers was a decision to let 1,200 people go. And we had to do that because it was a balanced approach, and we were worried about the survival of the company. It was as simple as that based on what we were facing with the COVID in the early days. JobKeeper and our Chair, just mentioned, saved a further 2,000 jobs, which would have occurred should there be -- have not been government support. So being a large Australian employer at protected jobs that was its design and its intent. It allowed us to survive COVID and more importantly, it has given us the confidence to retain the employees, invest in our business and grow as the economy recovers. But as our Chairman pointed out, since the last hour of COVID was received by your company in 2020 -- sorry, JobKeeper, we've had 250 days affected by COVID in our business, since then. On those days, whether it was a full lockdown or a partial lockdown, et cetera, we have had to continue to pay our employees, which we happily do because of this support we got through JobKeeper. Even this year, our COVID-related absenteeism is up by more than 50% compared to this time last year. We are a business that is at the whims of global supply chain. China is critical to us. They provide downstream part supply to virtually every OEM we sell cars core. At the moment, there's 165 million people affected by lockdown in China. So COVID continues to materially influence our business as we see it today. And from our perspective, we believe that the JobKeeper program delivered against its design and its intent.

Any further questions for Keith?

Two more questions, Mr. Chairman. And the next question is, what is the effect of Honda and Mercedes Benz converting to an agency model had on your business?

That one is for Keith.

Firstly, we don't, as a rule, and we won't start today, comment on individual OEM business models. It's not appropriate. We're a partner to all our OEMs, and our relationship with them and the way we interact with them is something that we do mine closed doors. It is actually hard to make a definitive comment on how agency has impacted us because it's early days and it's a slightly distorted environment we're in. Vehicle sales being a key measure at the moment are not relatable to be taxed, which is the industry reporting measure because what they tax is actually indicating is vehicles delivered to end customers, not cars sold under a new model. In the Mercedes-Benz case, just as an example, we are still delivering cars under the old model, the non-agency model as well as delivering cars under an agency model. So it's a very distorted environment at the moment. Moving past the specific OEMs, our view around agency is that we have concerns about whether it will survive a more normalized supply and demand environment. The issue with agency is you do 2 things, which we don't believe reduce or remove the control of us as an operator to tailor and respond to individual customers' needs. And you also take away the ability for a customer to manage what is a complex transaction. Buying a vehicle is not simple in most cases, as walking in and buying a car. There is usually an old car being the trading. So it's an old asset being replaced with a new asset and quite often there's appliance contract on the old asset and a finance contract on the new assets. It's a linked transaction with multiple levers inside it. What car dealers have done for decades, [indiscernible], is that we will tailor a deal to a customer circumstance, whether it responds to the payout on their old car, whether it's a lower interest rate, whether it's a discount on the new car to reflect the fact that this is the fifth brand ex they've bought from us. We also marked the asset, the new car to the market in the moment. What that means is we can say, if you want to pay that right now and we're happy to do the deal, we have just marked that car to the market in the moment. You lose all urgency under an agency model. There is no discount on the price. There is one price. There is no flexibility for the dealer, so we cannot change the valuation on the trading. So our ability to actually be responsive to our customers is severely limited. And we are concerned that as you move into an environment where there is more free supply, it becomes very hard to be responsive. And perhaps the OEMs under an agency will possibly be at a disadvantage to a normal operating model. I'll also add as a final comment, Chairman, that as we sit here today, there are 2 brands, which have been called out on the question that are in an agency model. There is no moves underway from our other OEM partners to move to it. And again, without naming specific OEMs, 2 of the absolute top tier leading OEMs have made it very clear that they will not be bringing an agency right through to 2030 and beyond.

Final question, Mr. Chairman. This question is directed at our commercial relationships with both car sales in Tesla and whether we see them as threats or allies? So in the case of Tesla, do we see them as a threat given they like to control every part of their supply chain? And for car sales, are there any major brands which don't work for car sales and instead to prefer to work exclusively with retail partners such as Eagers.

Very easy to answer that. Tesla, we'll start with Tesla. Tesla very simply is another brand of car that we don't represent. They sell through factory-owned stores. It's as simple as that. That's how Tesla go to market. They own their retail operations. So at the moment, I think their total market share, I think they sold around 12,000 cars in a market of [ 150,000 ] last year. So they are not a material player here in Australia at the moment, and they are simply best viewed as a brand that we don't represent. That is the best way to look at Tesla. I wouldn't say they're a competitor, a threat, or anything else. That is the best way to look at Tesla. In terms of car sales, car sales are a third-party advertising platform. We are not -- we're in automotive retail. So car sales, advertise, automotive cars, they also advertise motorcycles and rim products and they're expanding overseas in the same third-party aggregation of sales. They are trying to bring different software and tech costs to make the transaction something that can occur on their website and then charge a dealer for it, but they own no stock and they cannot sell you a car. The car sales is not a competitor per se. They're an advertising platform. In terms of working with them, they are a part of the industry. They're a supplier to us. I would describe our relationships is very cordial and friendly. They're an important part of our business, and they supply a great service to us in that, but they are similar to other third-party advertising platforms in what they do.

Any further questions anyone would like to raise? That's it James?

Pleased to confirm no further questions.

Thank you very much. As there are no further questions, that does bring the meeting to a close. Can I just thank shareholders for their participation today, it's very pleasing to see that the extent of shareholder engagement in a year where we've been able to deliver a record profit and certainly, I would think it's also another record in terms of the length of Eagers' AGM [indiscernible]. But that really is a testament to the engagement by shareholders, which I think is a wonderful thing. And I think also for shareholders, I think very pleasing to see that they got shareholders get extensive exposure to 2 of our very key executives in the company, Sophie Moore and Keith Thornton. So thank you very much, shareholders, again, for your participation. I think we might have, even though it is lunch time, I think we've only got tea and biscuits out there, but you'd be very welcome to join executives of the company, members of the Board outside this meeting room. Thank you very much, and I now declare the meeting closed.