Gentrack Group Limited (GTK) Earnings Call Transcript & Summary

It's 4:00. A quorum is present, so I declare the meeting open. Welcome to Gentrack's 2020 Annual Meeting. Let me first introduce your Board. I'm John Clifford. I've been a shareholder and Chairman of Gentrack since 2007. Nick Luckcock was appointed as a Nonexecutive Director in February 2018. Nick is a Partner and a member of the Investment Committee at HgCapital with extensive private equity experience focused on the technology industry. He has deep experience across a number of significant organizations in business services, financial processing and technology sectors. Fiona Oliver joined the Board as a Nonexecutive Director in February 2019. Fiona is an experienced Director and Audit Committee Chair, with executive-level experience in asset management, funds management and private equity. Fiona is a specialist in investments, the capital markets and mergers and acquisitions. She holds a degree in arts and law from the University of Auckland as a qualified Solicitor in New Zealand, New South Wales and England. Andy Coupe joined the Board in April 2014, has a background in investment banking and law. In addition to Briscoe Group, Andy is Chair of Television New Zealand and also serves on the Board of 3 NZX-listed investment companies. Andy is the Chairman of the New Zealand Takeover Panel (sic) [ New Zealand Takeovers Panel ]. I'll talk about the respective backgrounds of Leigh Warren and Darc Rasmussen during the formal business of the meeting. Let me also introduce the executive team, many of which are here today: Jon Kershaw, the company's Secretary and General Manager of Commercial and Legal Matters; Jan Behrens, our Chief Technology Officer; Phil Eustace, our interim CFO; James Williamson, who is not here, he's based in London, CEO of the Veovo airports business; Tony McGlennon, who is VP of our New Zealand and Asia Pacific business; Paul Muscat, who's not here, is based in London. He's the Regional Vice President and General Manager of our utilities business in the U.K. and Europe; and Mark Humphreys, who's not here, our Country Manager in Australia. I should also point out for shareholders, Jason Doherty from our Auditors, KPMG; and Toby Sharpe, from our Solicitors, Bell Gully. The agenda for today's meeting will cover an update on CEO and CFO changes, FY '19 summary, Gentrack strategies, some commentary on our FY '20 guidance and the formal business of the meeting, followed by a chance for shareholders to ask questions and any general business. At the close of the meeting, which I expect to be around 5:00, there will be refreshments and an opportunity to talk to the Board informally. We announced this week that Ian Black has resigned as Chief Executive Officer. Ian and the Board agreed that it was time to bring in a new Chief Executive to take Gentrack on to its next stage. And we thank -- and I personally thank Ian for his hard work over the last 4 years. I have taken over the role of Executive Chairman in the interregnum before we appoint a new Chief Executive, and we have commenced a global search for a suitably qualified new Chief Executive for the business. We have an interim CFO in place, Phil Eustace, who's here with us. And I am shortly hoping to announce the appointment of a new permanent CFO for the business. First of all, a quick summary on financial year '19. This is the material that -- in the presentation that we gave to shareholders and released to the spot market at the end of last year. Revenue was $111.7 million. EBITDA was $24.8 million, which was disappointingly down on the prior year, which had been about $31 million EBITDA. Adjusted net profit after tax was $9.6 million, and we paid out, I think, 75% or so of NPAT as a dividend at $0.08 per share. Giving you a quick picture of the 2 sides of the business. The utilities business, as you see from that graphic, is predominantly in the U.K., $55.4 million of the revenue and in Australia, $22.7 million. New Zealand is a relatively small part of the business, $7.6 million, and elsewhere, $2.4 million. The utilities business in FY '19 had revenue of $88 million and EBITDA of $20 million. We signed up 7 new utility customers during the year, and we upsold 3 of our customers on the Evolve assurance product, which we acquired early in FY '19. The Veovo airports business, as you see from the graphic there, a much bigger geographic spread of revenue around the world, $23.5 million revenue, $4.8 million EBITDA. That number is somewhat depressed by the write-downs related to the unsuccessful investment we made in CA Plus. We signed up 3 new airports. And I note here, just to give you some context, that Veovo is in 20 of the world's 100 busiest airports. I think we have over 100 airports in total using our software. As we have emphasized to shareholders in the market, we are on a journey towards shifting the business to a SaaS, Software as a Service, recurring revenue model. And you see in the graphic there, the growth of our contractually recurring revenue in the dark blue. And the -- what we call the business-as-usual, normally recurring, but noncontracted revenue, which are the services we provide to our customers. Almost all of the new business we are signing now is on a recurring revenue SaaS commercial model basis. That is easier and quicker to install. And hence, we are seeing a reduction in the nonrecurring revenue, the projects where we implement software, because it's quicker and easier to do so. In the long term, as we grow the recurring revenue part of the business, that leads us to a more predictable and stable business. And we are transitioning, where the opportunity arises, our existing customers to SaaS services, in particular, for new functionality. So many of our customers are on the old revenue model, where we sold them a license upfront. But where opportunities arise to provide new functionality on a SaaS basis, that is what we now do. We announced, a short while ago, that we were reducing the cost base of the business by $8 million run rate, about $4 million of which will benefit the second half of this financial year. That's principally related to headcount reduction. We have not reduced our key product investment, which we believe we need to maintain to preserve our competitive position. We have restructured fundamentally our customer delivery and support functions in the U.K. to achieve higher productivity, improve product quality and quicker responses to our customers' needs. No one is more disappointed than me, as Chairman and 9.7% shareholder, by the share price and profitability slide over the last year. In fact, I should remind you that the pain actually started about 7 months ago in July 2019 with our first downgrade from the $31 million EBITDA we made in financial year '18. I want to explain what happened. But first, a quick history lesson, which I think is instructive as to our current challenges and what may happen in the future. The U.K., Australia and New Zealand were amongst the first countries worldwide to privatize their electricity sectors in the late 1990s, only 20-or-so years ago. In the last -- in the 10 years that followed privatization to 2010, when generation, transmission and retail was separated by the privatization process, there was a wave of reconsolidation where retail and generation recombined to form today's gentailers so that the generators had a largely fixed-price market to which to sell their power. From a consumer perspective, not much changed. In the U.K., 10 years after privatization in 2010, the Big 6 regional X monopolies still had 99.5% market share. Only industrial customers had shopped around. It's a similar picture in Australia and New Zealand, with the big players all totally dominating in 2010, 10 years into privatization. All of them have diversified into gas to offer both energy sources to their largely captive customer base. Around 2007 to 2012, smart metering started to roll out in New Zealand, Australia and the U.K. and a few other markets globally on the back of regulatory mandates. This was despite the best efforts of the incumbent energy majors, who wanted to frustrate this competition enabler because smart metering records when you use power and transmits this daily and enables cherrypicking of the most profitable customers and brings energy retail into the digital age, probably about 20 years behind the rest of the world. From 2010, with the arrival of smart metering -- the 2 things are not totally causally linked, but they are significantly linked, competition started in earnest. Retail switching, where customers change electricity retailer, has reached between 20% and 30% per annum, i.e., 20% to 30% of people change energy retailer every year, with customers looking for cheaper power and better service, often through price comparison websites. From 2010 to 2020, about 50 new energy retailers entered the U.K. market, 13 entered the Australian market, 10 entered the New Zealand market. In the U.K. and Australia, those new entrants have succeeded in taking about 30% market share from the old monopolies by offering cheaper power and better service. In New Zealand, that drops to about 15% market share held outside the Big 5. Gentrack became the leader in supplying billing systems to these new players in the U.K., winning about 40 out of the 50 new entrants, 6 in Australia. In our home market in New Zealand, we had Genesis, Meridian, TrustPower, Energy Online, and Pulse and 9 lines companies, most significantly, Vector. Our software enabled the new entrants to have a much lower operating cost than the big players, sometimes, literally, 1/10 of the cost to serve, as it's called in the industry, which is the cost to run an energy retailer per end customer, i.e., excluding only the price of buying the power, which you then on sell, and the cost of marketing. In Australia and the U.K., the rising -- and New Zealand, the rising price of energy bills has become a major political issue, even an election-losing issue. Despite the level of new entrants and retail switching, about 50% of consumers still don't shop around for cheaper power. This has been a source of great frustration to governments in the U.K., Australia and New Zealand, who are blamed for high power prices. Energy retailers, particularly the big guys, have been accused of ripping off their customers. They raised prices on their loyal, i.e., their disengaged customers, and competed for new customers with very confusing tariffs. On the 1st of January 2019, the U.K. government cracked down on the industry, imposing a cap on the standard variable tariffs that consumers default onto. This was the biggest single intervention in the U.K. energy market since privatization. It locked GBP 1 billion, about $2 billion, from the revenue and profits of the U.K. electricity retail industry. The Australian government followed suit, imposing price caps and new regulations on tariff transparency. So unpopular are the gentailers in Australia that the government's policy is proudly known as the big stick policy, which threatens the large gentailers with forced disposal of their generators. Even in New Zealand, where much of the generation is renewable hydro, as you know, the government has brought in a pricing review to review these same issues in 2019. This has caused bloodshed in the U.K. energy retail market. For the first time in the industry, 12 energy retailers have gone bust. Five of them were our customers. This resulted in bad debts for Gentrack in the utility business for the first time and a loss of recurring income. It has triggered a wave of mergers and acquisitions as loss-making retailers seek to consolidate and survive. E.ON, one of our big customers, is acquiring npower's customer base in the U.K. and, just before Christmas, announced 4,500 redundancies as it tries to stand monthly losses, which I believe were running at GBP 1 million per week. We are expecting more energy retailers to fail and further consolidation in the year ahead, which creates uncertainty for Gentrack. IT and billing projects have been put on ice in the U.K. and Australia as the big retailers consider the consequences of government intervention. As this all unfolded from mid-last year, we, at Gentrack, were slow to recognize the growing impact on our revenue and the risk of customer failures. We had some projects under negotiation, which we hoped to sign in the second half of the year. These would have kept our growth going, but unfortunately, they were lost or put on ice. So the outlook in the U.K. remains difficult to predict. Most of the new energy retailers and several of the larger gentailers are loss-making. I'll say that again, most of the new energy retailers and several of the larger gentailers are loss-making. If a retailer wants to grow market share in the U.K. to win on the price comparison websites, they currently have to sell energy at 0 margin. It is, to some extent, an irrational market where the players are waiting to see who is left standing to recover to profitability. Many of the larger players, and some of the niche retailers, are experimenting with radical new business models, including electric vehicle tariffs, virtual power plants and in-home demand-side response. Gentrack remains positioned as the clear market leader in innovative retail billing in the U.K., Australia and New Zealand. We've got 40 customers in the U.K., including 4 of the Big 6, who use our software in their new low-cost digital retail models or for their commercial and industrial customers. In Australia, we have 8 energy customers, including 2 of the Big 4, Origin and Snowy Hydro, with their 1 million -- over 1 million consumers under the Red and Lumo brands. In New Zealand, we have 3 of the Big 5 gentailers and 3 of the 5 top networks. But it is now completely clear that there are major changes well underway in the energy sector. I don't think it's an exaggeration to say a revolution is underway, which is profound implications for our customers. The first is the shift to renewable energy. This has been growing in significance since 2010, with a lot of government subsidies, but it is now accelerating even without subsidies. Solar and wind energy are now cheaper than coal and gas generation in many markets, and we're beginning to see the widespread deployment of batteries at renewable generation sites, making them more short-term reliable. In Australia, renewables will be 40% of the generation mix by 2030. The U.K. is already at 40% renewables, with renewables overtaking fossil fuels in the last quarter for the first time since the Industrial Revolution. And this year, the U.K. will almost generate no energy with coal. The U.K. plans to increase the amount of wind power by 3 to 5x over the next 10 years, when it will completely dominate the power generation mix in the U.K. New Zealand is already 84% renewable power, with a government target of 90% by 2025. Why is this significant to Gentrack? Because wind and solar energy have close to 0 marginal cost when the wind is blowing and the sun is shining. This has turned the wholesale market for power on its head, and to a large extent, broken the traditional fossil fuel generation business model. The implication for energy retail is there is now an enormous incentive to build so-called demand-side response into retail models, i.e., to use technology to enable consumers to consume cheap power when it's freely available for nonsensitive demand, for example, for hot water, for home-heating, for battery and electric vehicle charging, a market set to grow exponentially. The second revolutionary force, which is related to the shift to renewables, is the change from central power stations to what are known in the industry as distributed energy resources. It used to cost billions, literally, to get into the LNG generation business. But now for as little as $1 million, small investors are participating in the energy wholesale market. The U.K. market operator -- or a U.K. market operator recently told me that in 2010, there were only 14 players in the U.K. generation market and about 30 power stations. That's 10 years ago: 14 companies, 30 power stations. This year, in 2020, there are now 10,000 generators participating in the U.K. wholesale energy market. It is the same story in Australia, where 20% of homes have solar panels, which deliver power, unsubsidized, for about 50% less cost than you can buy it from a retailer through the grid. The major players are well aware of this existential threat to their central power station business model. The third major factor influencing energy retail and our business is regulatory change. The pace of regulatory change for energy retail has been rapidly gathering force since the arrival of smart metering, and this is set to continue. The U.K. is introducing a regime next year whereby consumers can switch energy retailers to the cheapest deal daily. Currently, it takes about a month. All U.K. retailers and Gentrack are having to upgrade our systems substantially for this change, which I expect will be copied in Australia. From 2025, this is amazing, the U.K. will ban gas for new home-heating and hot water. You will only be able to heat your home and your hot water with electric heat pumps. The U.K. has set a target that from 2035, only 15 years from now, all vehicles must be electric, not even hybrid, pure electric. It is estimated that this shift of home-heating and hot water and transport to electricity will increase the U.K.'s energy demand fourfold for electricity, all of which will be met by renewables. This weekend passed, the Labor Party in Australia has adopted the same carbon net 0 emission target by 2050 that drives the U.K.'s energy policy, in no small part, I'm sure, due to the impact of the fires at Christmas on politics in Australia. This will require further regulatory change and investments in renewables and very significantly for Gentrack, an acceleration in new energy retail business models, which include demand response and load control. What does all this mean for Gentrack? Well, we're well positioned as a market leader in the U.K., Australia or New Zealand for innovative energy retail. But we have new and emerging competition in Australia and the U.K. who have seen the opportunity. We need to continue investing in our product to stay ahead of the market and new compliance requirements. We need to enable our customers to emerge as the winners in this new volatile market. In particular, with the drying up of the start-up energy retail market, we need to focus on the major players, both the new emerging major players, who have won to the new entrants the race to scale, but also the existing large gentailers who are not going to disappear, but have to adopt their business to the new model. In summary, we've got strong fundamentals despite difficult market conditions. We are the market leader in energy and water utility billing and customer management in the U.K., Australia or New Zealand. We have a large and sticky customer base. We have extensive IP and significant barriers to entry to competition. Although we are seeing competition emerging in Australia or in the U.K., Gentrack remains a profitable cash-generative business, with no debt. Our pathway back to growth is to continue investment in our SaaS products to maintain our competitive advantage. We have, in the utilities business, just over 100 people in product development and about another 26 in product development on the airports side. We need to focus on migrating our existing customers to our new SaaS capabilities. We're going to focus on our existing market -- markets, the U.K., Australia or New Zealand, where there are long-term growth opportunities despite the current regulatory uncertainty and turbulence. We need to develop the Southeast Asian market from our starting point in Singapore. And we have the balance sheet to consider small synergistic acquisitions, which give us cross-selling opportunities and new technologies to sell through our existing customer base. The outlook for FY '20 is, as we stated in January, between $8 million to $12 million EBITDA. In the first half of FY '20, ending the end of March, we expect to report EBITDA between $2 million to $3 million, which of course, is very disappointingly down on $12.8 million last year. The cost benefit -- the cost reductions I talked about earlier will benefit the second half, but not the first half. In the U.K. and Australia, the energy market conditions remain highly unpredictable, but we do expect to achieve about 5% growth in the contractually recurring revenue from our existing customers, net of some losses of customers who have failed. We'll continue to invest in our products to meet market requirements. As always, Gentrack, at our current size and with our current mix, remains -- our results remain dependent on the timing of projects and contracts. And of course, at the half year results in April, we may be in a position to update the outlook for the full year. So I now come to the formal part of the meeting. The company secretary has confirmed to me that the Notice of Meeting has been sent to all shareholders and other people entitled to receive it. The company's constitution prescribes a quorum requirement of 3 shareholders. Clearly, that has been met. Proxies have been appointed for the purpose of this meeting in respect of approximately 37 million shares, representing 40% of all shares and about 200 shareholders. I'd like to thank shareholders for their level of participation in today's meeting. My fellow directors and I intend to vote all discretionary proxies we've received in favors of the resolution as set out in the Notice of the Meeting. The financial statements for the 12-month period, so 30 September '19, together with the auditors' report, are set out in the company's annual report, which was made available on our website in December. Hard copies are available in the registration area. Ladies and gentlemen, we now come to the matters requiring resolution, which are outlined in the Notice of the Meeting. There will be an opportunity for shareholders to ask questions on each matter being put to shareholders. When I call for questions, can I ask you to hold up your ballot paper when acknowledged? Wait for a microphone. Clearly state your name prior to asking your question. I ask that in the interest of fairness to all shareholders attending the meeting that anybody wishing to speak should be as concise as possible and considerate of other shareholders wishing to ask questions. For the sake of good order, shareholders should speak only once on the motion being put, and the question should relate directly to the matter being considered. We will have a -- an opportunity for general questions after the resolutions. Now moving to the resolutions. I propose to call for a poll on each of the resolutions. If you're a Gentrack shareholder here today and you do not have a voting card, please raise your hand, and somebody will assist you. Resolution 1, 2 and 3 are ordinary resolutions that require approval of no more than 50% of the votes cast. Resolution 4 is a special resolution, which requires 75% approval. Your voting cards will be collected after all the resolutions have been tabled just prior to the close of the meeting. Firstly, we turn to the matters relating to the company's auditor, KPMG. The motion concerns the reappointment of KPMG as auditors and their remuneration. I propose that the Board is authorized to reappoint KPMG as auditors and to fix their remuneration. Are there any questions for the Board concerning this motion?

Mr. Chairman, [ Jenny Mullin ], New Zealand Shareholders Association proxy. We note here, Fiona, that you were latest to join the Board, and you're the Chair of the Audit Committee. And we've had 4 profit downgrades since you've been involved. And we also note that the 2018 accounts were $325,000. And suddenly they've climbed to $537,000. It's a $212,000 difference. And I'm wondering, was it because of all the discussion over the impairments? Or was it because we just didn't have it right for the audit fee?

The audit has become more complex with the increasing scale of the business. And there was discussion around the impairments. So yes, the increased complexity of the business and the issues being considered by the auditors drove that increase in fees.

And will it remain at this level, do you think, next year?

We have to see. I hope not. Any other questions on the motion concerning the auditors and their remuneration? Okay. Please mark your voting cards in the way you wish to vote, ticking for, against or abstain. [Voting]

And I now show the proxies received in advance of the meeting. As I said, we'll be collecting the cards at the end of the meeting on all the motions. As stated in the Notice of Meeting, Darc Rasmussen was appointed to the Board as a Nonexecutive Director in December 2019. James replaced -- sorry, Darc replaced James Docking, who resigned as a Director of Gentrack in December. As Darc was appointed by the Board, it's a requirement that his appointment be considered by shareholders at this meeting. Darc is a seasoned enterprise software professional with over 25 years experience, successfully building and growing Software as a Service and cloud-based businesses in global markets. He has spent his career working and living in Europe, the U.S.A. and Asia Pacific, growing public and private companies, including Infor, SAP, IntraPower, which was known as Trusted Cloud, and Integrated Research. Significantly, he led the SAP Global CRM line of business, and he was CEO at Integrated Research. Darc is currently also a Nonexecutive Director at Objective Corporation. The Board recommends Darc to you as a Gentrack Director and unanimously supports his election. Darc's credentials are outlined in more detail in the Notice of the Meeting, and I now invite him to address the meeting on his proposed election.

Thank you, John. I'd like to thank you and the Board for your confidence in appointing me. Does that -- Yes, super. I think I'm on. Yes, I have prepared a few...

[indiscernible]

I beg your pardon? I beg your pardon?

We can't see you down here.

Would you like me to stand up?

Yes, certainly.

My pleasure. And I'll come to the podium.

Approach the podium.

Okay. Thank you. Good suggestion. So as I said, and I hope you can all hear and see me now, I'd like to thank John and the Board for appointing me and giving you the opportunity to serve the company. I hope you, as shareholders, will approve that appointment. To give you a little bit more background on myself other than what John has already shared with you, I can share that I have tracked Gentrack over the past 5 years. I've had ongoing conversations of cursory interest with John about the company. And I see, in many respects, similarities to other companies that I have worked with and led in the past, organizations based in Australia and New Zealand, with global reach and global growth opportunities. I'm fortunate to have worked with a number of companies in the past who have engaged in the utilities industry, such as SAP, and also led organizations through the transition that Gentrack is going through now from an upfront to a recurring revenue and SaaS delivery model. It is a critical, but it is also an exciting transformation that has substantial upside once it is complete. I would offer to bring my lived experience to the table at Gentrack and -- from managing many like-sized and larger software organizations across the globe that have gone through this and similar transformations. My expertise would be summarized as software technology, transformational change management, including SaaS, and managing global software companies. What I see at Gentrack is an organization with a large, global addressable market opportunity as a result of privatization, regulation changes, renewable energies and the technology that is going to be necessary to allow those changes and transformations to be affected throughout the industry. So with change comes uncertainty and setbacks, and we are seeing some of that impacting on Gentrack today. But with change also comes opportunity. And companies, like Gentrack, with strong fundamentals and the capacity to weather these changes can be positioned to take advantage of the market dynamics and emerge as leaders. So I'd welcome the opportunity to bring my experience to the table, and I'll put my best endeavors for the benefit of the company and you, its shareholders, to maximize the growth opportunity that stands before us. And I trust that you will give me the opportunity and approve the appointment. Thank you very much.

Thank you, Darc. Thank you. I've got a mic. So I now propose that Darc be elected as a Director of the company. Are there matters for discussion or questions concerning the motion in relation to Darc's election?

Yes, [ Lynn Webber], shareholder. Just a quick question. You mentioned that you've been following Gentrack for about 5 years and been having close discussions. The trend has been down. So when you've been observing and having close discussions, what benefit do you think you added?

So can I just make an observation? The trend was up until July 2019. Darc's conversations with me over the years have been anecdotal because he wasn't officially involved in the business. He's been involved in related software businesses, so I was interested in his perspectives.

Yes. My apologies if you misheard me, the word was cursory discussions, not close discussions.

Any other questions related to Darc's appointment? So I now propose that Darc be elected as a Director. Please mark your voting cards. And here are the results of the proxy votes. [Voting]

Moves us on to the reappointment of Leigh Warren as a Nonexecutive Director of Gentrack Group. Leigh was first appointed in 2012. But actually, he's been involved as a Director in Gentrack since 2008. He retires by rotation this year, and he offers himself for reelection again. I should say that I asked Darc to stay -- sorry, I asked Leigh to stay on as a Director this year given the changes in the company, given his extensive experience and background in the industry. But it is his intention to retire from the Board after this year. Leigh, would you like to -- I should give -- by way of further introduction, Leigh has 25 years' experience in international business and has held a number of directorships and executive positions in large multinational software companies, including being the Managing Director for Oracle in South Africa and Australia and New Zealand; Chief Operating Officer for SAP in North Asia; President of ABB Software in Europe, Middle East and Africa; and Vice President, Asia Pacific for Symantec, the cybersecurity business. Leigh is also a director of Hong Kong-based Solution Access, an early-stage technology investment group, and an adviser to boutique investment group, Caldera Pacific, also based in Hong Kong. Leigh's credentials are outlined in the -- further details are outlined in the notice of the meeting. I now invite Leigh to address the meeting.

I'm not sure I need this. Hopefully, you can hear me at the back anyway. And thank you, John.

I'll get that.

I'll get it. This is the third time that I've been here either for election or reelection. So I congratulate Darc on his appointment. I'm not going to spend too much time on my background. Essentially, it's a mixture of governance in software companies and then operational management and leadership in software companies. And I still think that's relevant as my position on the Board here where I can contribute. As John alluded to, the main driver for my nomination again this time is to provide continuity and stability to the company. As Gentrack moves through this next evolution of its period and its journey, there are some important things that the company needs to achieve in the short term -- that the Board needs to achieve, including recruitment of new leadership. And I think I can support that in the best interest of the company and of shareholders. And so I'm committed to do that, also speaking as a shareholder myself. So with your support, that is what I would like to commit to. Thank you.

Thanks, Leigh. Thank you.

Happy to answer questions.

So are there any questions for Leigh before we put the matter to a vote? Okay. Thank you. So I now propose Leigh is reelected as a Director of the company. Please mark your cards. And here are the proxy votes received in advance. [Voting]

That moves us on to the final resolution, which is, I think, known as a special resolution, which requires 75% approval. The former NZX listing rules have been replaced and updated by new listing rules, which took effect from 1 January 2019. In accordance with the transitional arrangement for these new rules, Gentrack transitioned to the new rules with effect from 1 April '19. And as a consequence of that transition, Gentrack's constitution needs to be updated to ensure it meets the requirements of, and is consistent with the new rules. Gentrack has also taken the opportunity to propose additional improvements to its constitution to reflect recent amendments to the Companies Act 1993 and for consistency with market practice. A summary of the significant changes to the constitution was included in the Notice of Meeting. A marked up and clean copy of the proposed changes to the constitution have been available under the Reports and Presentations section of our Investors center at the Gentrack website. I now propose that the existing company's constitution is revoked. And the new constitution, in the form available on the website, is adopted as the constitution of the group with effect from the close of this meeting. Are there any matters for discussion or questions concerning this motion relating to the constitution? No. Fairly dry and somewhat technical subject, but it's us keeping up-to-date with the requirements of the market. So please mark your voting cards with your votes: for, against or abstain. And here are the results of the proxy votes. [Voting]

Ladies and gentlemen, that concludes the formal part of the meeting. And I now open the meeting to the opportunity for shareholders to raise further questions. Before I do that, I'd like to take the opportunity to remind everybody that only shareholders have the right to ask a question. And I'd ask shareholders to hold up their voting card to demonstrate their shareholder position. Please wait for a microphone before you speak. And of course, the Board will be available after the formal part of this meeting to talk informally to shareholders over refreshments. So I'll open the meeting to questions from the floor. Sir?

I'd like to have some explanation about the departure of your Chief Executive and any terms and payments that were received by him. And why did he sort of just decided to leave?

The Board and Ian agreed that it was time for a new leader to take over the company. And we thanked him for his 4 years of service, and we decided to implement that change and announce it before this meeting to be able to tell shareholders of the change.

Two days before the meeting.

Indeed.

And the remunerate that he received, was it...

So his remuneration, I believe, is in line...

What did he receive financially?

The question is what did he receive financially. He has received remuneration in line with his employment contract, which basically was lower than market benchmarks for departing chief executives. There was no special...

That doesn't give me pretty much confidence, does it?

No.

So for other people that have left, they seemed to get extremely good adjustment, but...

That was not the case in this situation. The details of it will be revealed in our annual report for FY '20. The arrangements were there and are confidential until they're published in that report. But I can assure you that they were appropriate in the circumstances. Question at the back?

[ Gianna Radanovich ], shareholder. Apologies if you covered this, I was late because of transport. But I'm interested in the airport part of the business because I think Gentrack may be hit by a double whammy with the downturn in tourism. Could you say something about how that part of the business is progressing?

Yes, very perceptive question. Our customers on the airport side are actually the airport operators, not the airlines. And our revenue from our airport customers, including Auckland Airport, for example, and Melbourne and Sydney airports, are not related to the volume of flights or passengers. So we don't currently expect any impact directly from the coronavirus pandemic as it may become. That said, I think if it has the impact that it may, over the next year, on global travel, it will undoubtedly hit the budgets and planning of airports, and that would affect us in the long term. But as I say, our revenue isn't related to flights or passenger numbers. It's related -- it's license revenue paid irrespective of those things by the airports.