Infratil Limited (IFT) Earnings Call Transcript & Summary

Tena koutou katoa. I'm Alison Gerry. I'd like to call the meeting to order and welcome you to Infratil's 26th Annual Meeting. I confirm that under Infratil's constitution, we have a quorum and declare the meeting of shareholders properly constituted. As you know, Infratil originally proposed a hybrid meeting to give shareholders the option to join the meeting either in person or join online, given the ongoing impact of COVID-19. However, due to the revised COVID-19 restrictions announced by the New Zealand government on the 11th of August, we made the decision that it was actually not prudent for shareholders to join us in person. I'm very pleased, however, to welcome shareholders who are participating online through our virtual meeting platform provided by our share registrar, Link Market Services. And the Board really appreciates shareholders' support and understanding with regards to this one-off arrangement for the meeting. Given our Chairman, Mark Tume, is dialing in from Australia, we also decided it would be easier, from a technology perspective, if I Chair the meeting today as I can physically be in the room with the operator. I'd like to remind shareholders that questions can be submitted online through the virtual meeting platform. And if you have not already done so, I'd encourage you to send through your questions as soon as you can. To ensure this is effective, our management team is going to collate the questions. And if there are multiple questions of the same topic, they're going to aggregate them. And at the appropriate time, we will seek to address them in an orderly way. Slide 3, which you can see on your screen, is a picture of the virtual meeting platform, and the arrows on the side -- slide point to the click-on when you get a voting card and also to ask a question. But if you need any help, you can also call the number displayed in the blue bar at the top of the platform. I also advise the meeting that members of the press and non-shareholders may be present. So before progressing onto the business of the meeting, I'd like to introduce you to your directors. I'm Alison Gerry. I'm an independent Director and I'm Chair for Audit and Risk Committee, and I'm a member of the Nomination and Remuneration and the Management Engagement committees. Mark Tume Is an independent Director. Mark is the Chairman of the Board and is a member of the Audit and Risk, the Nomination and Remuneration and the Management Engagement committees. Marko Bogoievski is a non-independent Director and is the Chief Executive of Infratil and its Manager, Morrison & Co. Marko is seeking reelection at today's meeting. Paul Gough is an independent Director and a member of the Nomination and Remuneration and the Management Engagement committees. Kirsty Mactaggart is an independent Director and a member of the Audit and Risk and the Management Engagement committees. Catherine Savage is an independent Director and a member of the Audit and Risk and Management Engagement committees. And finally, we have Peter Springford, who is an independent Director and a member of the Management Engagement committee, and Peter is seeking reelection at today's meeting. We also have with us Phillippa Harford, our Chief Financial Officer; and Nick Lough, our company Secretary. Gavin Silva and Ed Louden joined us from KPMG and are our auditors. In addition to your directors, we're also joined by directors and managers from our businesses. So we have Peter Coman for RetireAustralia; Steve Sanderson for Wellington Airport; Paul Newfield for Tilt Renewables; Paul Ridley-Smith for Trustpower; Jason Boyes for Galileo Green Energy and Longroad Energy; Kevin Baker for CDC Data Centres; and Marko Bogoievski as also the Chairman of Vodafone New Zealand. So now moving to the meeting proper. As the notice of meeting has been sent to all shareholders, I'm going to take that as read. Proxies have been lodged by 901 shareholders holding 322.5 million shares, and this represents 44.5% of our ordinary issued capital. I advise that the Board has confirmed that the minutes of the last annual meeting held in August, on the 22nd of August 2019, are a true and correct record of that meeting. And copies of the minutes of that meeting are available to shareholders on request. So now I'd like to invite the Chairman of the Board, Mark Tume, to address the meeting. As I said before, Mark is in Australia, and so to avoid any technology glitches, we've actually prerecorded his address. So now we will switch to Mark.

First, my apologies that we were not able to hold a physical meeting this year. As a Board, we have been committed to doing all we could to provide for a physical meeting. I was unable to attend the meeting in person this year, but we did not think that having a Chairman unable to attend to be a good enough reason to go fully virtual. Hence, our original proposal was for a hybrid meeting, with those directors and shareholders able to do so attending in person, and with others, including myself, joining online. Unfortunately, due to the COVID-19 restrictions announced by the government on 11 August, we did not think it was prudent to hold a physical meeting. And we have moved to a fully virtual meeting. The COVID-19 pandemic has created a great many challenges. But just as we can overcome the physical distance between us with technology, many of the other challenges can also be addressed if we have the right resources and approach. Can I thank you all for making the effort to join this meeting today? And thank you, Alison, for chairing the meeting. While COVID-19 casts a shadow over the last year, it has been a year of progress for the company, beating down the acquisition of Vodafone New Zealand; the establishment of our European renewable energy platform, Galileo Green Energy; the accelerated growth of CDC Data Centres; and the support we received from shareholders for our equity and debt issues. Not only is each important for Infratil's future, each represents a significant affirmation of Infratil's reputation and credibility. Our investment partners, the New Zealand Superannuation Fund, the Commonwealth Superannuation Corporation, the Future Fund and the Brookfield Infrastructure Partners are amongst the largest and most sophisticated investors in New Zealand, Australia and Canada. At last year's annual meeting, the Chair of the New Zealand Shareholders' Association asked what the Board regarded as Infratil's key risks and how they were monitored and managed. We believe the key risks relating to the operating performance of the companies in which Infratil has invested from the availability of capital and liquidity and from having high-caliber committed to people to manage our businesses. Given the shocks our social, commercial and financial environments have experienced this year, it's worth revisiting that list to reflect on how we did to identify lessons. I think we can take some comfort from how Infratil has come through the COVID-19 pandemic to date. We saw the management and staff of our businesses quickly adopt safe working practices to protect their people and customers and find ways to maintain communication with critical stakeholders and with each other. Good lines of communication were very important during the lockdown period, both to make sure information was freely available and to provide support to people who are under pressure. As you may have seen in our annual report, it wasn't all Missouri being in lockdown, and we had some fun with the photographs, which were literally taken in our homes by our family members. Our businesses provide crucial services, retirement accommodation and care, airport operations, electricity, data storage and transmission and the telecommunications. Those businesses kept those who rely on them safe, connected, housed and literally kept the lights on. Importantly, our access to funds was also unimpeded through the crisis. However, there were also serious lessons from this experience. The first relates to corporate reputation. In a difficult period, it helps immeasurably when there is high trust and mutual respect. To give a specific example, Wellington Airport was very adversely affected by the COVID-19 lockdown, going from 500,000 passengers in the month of February to less than 5,000 in April. Management had to make difficult adjustments and needed the support of the airport lenders, shareholders and staff. They also had to work with tenants, with airlines, regulatory agencies and community groups, which were going through their own extremely tough times. With mutual respect and trust, airport management were able to forge a common purpose amongst these disparate stakeholders, which minimize the cost and disruption of the changes that had to be made. A great many people worked hard for a common goal, behaved very selflessly and made meaningful sacrifices. Another lesson we should take from the pandemic is the benefit of flexibility in thinking and approach. A lot of budgeting and forecasting is based on plus or minus 1% or 2%. Suddenly, as illustrated by Wellington Airport's passenger numbers, outcomes were off 99%; at a moment like that, it is sobering to recognize that this event is different, and our goals and how those goals are to be attained will change. Wellington Airport wasn't our only business having to manage challenges brought on by the pandemic. Trustpower and Vodafone New Zealand provide critical services to thousands of New Zealanders, many of whom faced considerable financial uncertainty or stress. RetireAustralia has responsibility for 5,000 elderly, sometimes vulnerable, residents. The complex operational, personal, financial and pastoral care issues these businesses face will be ongoing. Even if COVID-19 is defeated, recovery will take time and commitment, and we will need to adapt to a new normal. As you know, in June, Infratil undertook an equity issue and raised $300 million, roughly a 10% increase in the number of shares. Unlike some other companies that recently issued new shares, we did not need to raise equity in response to adverse financial outcomes arising from the pandemic. Rather, our intention was to ensure that we are very well placed to support our businesses' growth initiatives and give us flexibility to take advantage of any new opportunities. We believe that businesses with growth opportunities will create value, and the crisis we face today has not changed that belief. If CDC, Tilt, Longroad, Galileo or another of our businesses comes to us with an opportunity to grow, we are well placed to support them. I would like to make a couple of points about how we undertook the equity raise. We raised $250 million via a tender placement to our institutional shareholders with the dual objectives of maximizing price and participation of existing shareholders. We followed that with a $50 million share issue placement plan for retail shareholders who were offered shares at a price that was to be either the institutional price or a small discount to the market price, if that was lower. All shareholders who applied for shares under that plan were allotted their pro rata entitlement. We believe this achieved an optimal balance between the two priorities of a high price and maximum pro rata participation. We will be providing more information on this in our November interim report. In addition to monitoring the performance of Infratil's businesses, capital availability and people, your Board also has a responsibility to monitor and manage the terms under which Infratil is managed by H.R.L. Morrison & Co. We make sure management have the necessary capabilities, have the interest aligned with those of shareholders, come at a fair cost and are generally performing to the high standards that the Board expects of them. This has two aspects, monitoring performance relative to the criteria noted above and comparing the existing arrangements against alternatives. Your Board has considerable ongoing experience with management arrangements and costs at entities somewhat comparable to Infratil. And we also use expert external advisers to ensure that we are fully informed about contemporary market terms. You will note there's a resolution to grant the Board the option to pay all or some portion of the second tranche of the 2020 performance fee in Infratil shares, if that tranche becomes payable and if the Board decides it is in the best interest of Infratil shareholders to do so. If the resolution is not passed and the fee is payable, payment then can only be made in cash. The company retained 2/3 of the incentive fee as protection against the possibility of value gains not being sustained. The Board believes that the ability to pay the fee and shares provides additional flexibility under certain circumstances. Your Board is very aware of the cost of Infratil's management and believes that incentives are an important driver of management performance and the alignment of management and shareholder interest. Looking back, we are pleased that we were able to deliver the 2020 dividends at a level we had indicated at the start of the year. We are very aware of the importance of the dividend to many of our shareholders, and one of our goals is to provide a reliable and increasing income to shareholders. Because of the short-term uncertainties, we have not provided dividend guidance for 2021. Marko will provide comment further on this in his presentation. Notwithstanding short-term forecasting challenges, we are confident about our ability to deliver satisfactory shareholder returns over the medium to long term. Having a long-term perspective is integral to our thinking and allows us to focus on value creation without the distractions of short-term volatility. We think this is a real advantage and particularly so given the sectors we are involved in. Our businesses have opportunities to generate good returns from investing to capitalize on growing demand, in particular for renewable energy and data storage and transmission. Our balance sheet is well positioned to be able to undertake this investment. Thank you again for your attendance. I will now hand it back to Alison.

Great. Thank you, Mark. I will hand over to Marko, Chief Executive, to now give us a report on Infratil. And following Marko's report, I will then invite questions and discussion from shareholders before we move to the formal aspects of the meeting.

Okay. Thank you, Alison, and good afternoon, everyone. Pleased to make this report today on behalf of the Manager, H.R.L. Morrison & Co. I'm Marko Bogoievski, the Chief Executive. I'm trying not to repeat a lot of what you just heard from the Chair and maybe spend a bit more time looking forward into some of our key initiatives and where we think we can make some of our investment returns over the next phase. Clearly, we're in an extraordinary market environment, having felt directly the impacts of COVID. I think every shareholder would, in one way or another, have directly felt it. We made two reports, I think, in May, when we deferred our annual result. We talked to the market again in June formally when we raised our additional capital. I think it's suffice to say that we haven't materially changed our views. We all know and understand how difficult these current conditions are, but we're particularly thankful that we have a portfolio of this quality that can deliver this so much assurance and confidence around the future. And hopefully, as we go through the presentation, you'll join me in that confidence. So just quickly, given this is a formal report back on to 31 March 2020, we did want to remind ourselves, I think, just how successful that year was. We had quite strong earnings growth, both at the operating level and net profit after, before tax that was dominated by a large significant gain from the sale of the Snowtown wind farm, which is part of the Tilt Renewables business. As Mark said, we were active in the portfolio composition with a very significant acquisition of just under 50% of Vodafone New Zealand, which we think should be part of our portfolio for a very long time. And outside of telecommunications, we managed to get via our internal platforms a significant amount of capital, just under $1 billion away in data centers and renewable energy projects in the United States, Australia and New Zealand. Still maintain a strong capital position. Notwithstanding all that activity, paid out $0.1725 per share, partially imputed. So the resilience I was referring to is partly a result of many years of hard work about reinforcing our portfolio, tightening it up around the areas where we have the highest levels of confidence. Broadly speaking, they are now focused on data centers and renewable energy. But clearly, we have very strong market positions in transportation. We have very strong market positions now in industry generation and retail. And I think that slide there just gives a brief snapshot of how much capital we managed to get a way across a number of different subsidiaries. We also stood up a brand-new entity in Galileo Green Energy, which is a renewable energy business focused on the European markets. So it's not a bad year's work. And all those are sort of industrial scale projects in anyone's language, in North America, Australia, New Zealand and in Europe. The portfolio today after all that work is in a pretty tidy position, I would say. If you look on the pie chart on the left, there's 4 significant entities that dominate the chart. So we've got air transport through Wellington Airport, we have Trustpower, Canberra Data Centres and Vodafone New Zealand. So I think it's getting increasingly more straightforward to understand the complexion of the Infratil portfolio. And if you want to look at it from a sector perspective, the chart on the right shows just how important data or telecommunications and energy markets are. Together, they dominate their portfolio and, therefore, dominate our prospects looking forward. Of course, we're having an investment thesis and having strong conviction. And good management teams is one thing, we also need the capital structure to support these businesses. Again, I think we've done a pretty tidy job even in the midst of a crisis of making sure we have adequate liquidity, adequate working capital, adequate access to long-term facilities. Clearly, we had to do quite a bit of work with a couple of subsidiaries. One is in airport we've already heard about, where we needed additional equity support from Infratil and from the Wellington City Council, which was provided on very favorable terms, and we managed to renegotiate some lending arrangements as well to give us the comfort that we need to ride out this period. We also had to provide equity support for the RetireAustralia business. That was a much smaller level of equity support, and it's possible that we may not require that support in the future. We did decide later in the crisis, as it evolved, that we were getting such confidence around our growth platforms, both in data centers and renewable energy, in particular, that having access to additional capital to accelerate the rate of developments was an important initiative. As you heard from Mark, we undertook to raise $300 million of capital. Today, that's providing over $600 million of liquidity to the firm and the entity. And we've now got very strong confidence that we can not only meet current obligations but accelerate the most accretive investment ideas that we have. Why are we doing this? That's a good question. On Slide 17, we break down our portfolio and our target returns. I think this is actually an interesting slide to spend a minute on. We're still indicating target returns, equity returns post fees, post everything. This is in total shareholder return basis, the way that our retail shareholder would look at it, of 11% to 15%. Now where that starts is getting the right portfolio mix between core risk assets, what we call core plus and growth assets, and what are pure development exposures. So you have to get the weightings right. You need to make sure you've got the right entity inside each of those risk profiles. I'd say, today, when we look at the market for those different types of assets, the most difficult sector, I think, to achieve the expected returns in the future will be the core piece. So when you see there a forecast at 8% to 10% for true underwritten core risk-type of assets, that's getting increasingly difficult. And in fact, we're seeing plenty of markets where those types of assets are trading in the sort of 6% to 7% range as well. So we should recognize that. I think the core-plus and growth area at 10% to 15% and development at 15-plus is still available if you've got the right platform with the right management team, which fortunately we believe we have. So that's something to keep an eye on in the future. Offsetting that -- the difficulty of achieving true core returns, I think, is the fact that the cost of debt today is fundamentally lower than the 6% long-run assumption we make in our 10-year outlook. And we also know that a lower cost of funding can enable us to reexamine our total leverage. So we've got a 30% target debt-to-total cap level. We know there are management costs in running this business. We estimate those to be at 1%. All combined, you generate 11% to 15% total shareholders' return, which we'll keep talking to you all about as the half year and full year results play out for 2021, 2022. So how has the market reacted? I guess we're not the only entity to have a chart that looks a bit like this. This is a, what, 10-year view of Infratil's equity valuation and share price. We all felt the pain, didn't we, in sort of the April, May time frame, where we saw a significant reduction in our valuations. We've seen a, what, 28% almost rebound since the 1st of April, and that's consistent with a lot of other entities that have a similar risk profile and return profile to Infratil. But more importantly, I guess, if you took the long-term trend there in our 5-year chart, you're seeing a fairly steady progression, which reflects the fact that we have generated 17%, 18% total shareholder returns since listing in 1994. So that's something that we intend to try and continue. I think it's probably worth spending just a couple of minutes on COVID-specific responses, and we'll get into some of the detail around each portfolio entity. I mean, clearly, health and well-being of our staff, our clients, our residents, whether it's a retired aged care business, passengers in an airport, retail customers for Trustpower or Vodafone, that's the focus. That has to be the focus, and that's the right place to look originally. We, as Morrison & Co, reallocated significant resources to what we call asset management services. Some of that was just putting out fires, whether it be, as I said, refinancing activity, talking to banks or lenders or getting additional equity support. Some of it was also talking to some of our equity partners. So as Mark mentioned in his Chairman's address, we have relationships with large sovereign wealth funds, large infrastructure funds, who, by and large, see the market and the opportunity in the same way. We do -- fortunately, we're able to get quite quick agreement about how to progress. And then actually, that level of communication, understanding and alignment with different shareholder interest actually went a long way, I think, to the effectiveness of our response amid -- in the heart of the crisis. We don't think we're out of this crisis by any stretch of imagination. If you look at sort of the analysis by entity, there's clearly different impact. So Canberra Data Centres, in some respects, is probably the least impacted. It's getting strong growth in some of the underlying services and demand for data and connectivity, if you think about it, that's not that surprising. We're doing this by video. Everybody, I think, is consuming more data on broadband. And they're the indirect beneficiary. I think though they're building new facilities, they have construction sites to manage and operate and keep safe, they have government departments and other large clients that need to secure new contracts, all that goes slower in a COVID environment. So I think not completely immune, but I think we're very happy about the way their overall position is looking in these types of market conditions. Similarly, with Tilt, Tilt is largely operating a contracted generation business. It's probably -- it's most difficult components in post COVID was the construction of Dundonnell and Waipipi in New Zealand, and that's, again, keeping people safe, keeping turbines connected and making sure you can keep the site going and keeping an operating schedule. We do have issues with some of the regulatory outcomes in Australia, which I'll talk about when we get into the Tilt slide itself. Trustpower and Vodafone are similar to one respect. They have sort of a manufacturing generation business, network and generation assets, but also have large retail and SME and corporate customer bases. Their clients are the ones that we're worried about, right? So that -- we're worried about clients' ability to pay. We're worried about business failure potentially if the COVID crisis is extended. And we are playing our role at being good corporate citizens as -- providing as much financial flexibility as we can for clients because we know we want them to be a client 5 and 10 years from now. Trustpower, though, is also seeing different demand responses. So obviously, in April, May, we saw quite a reduction in GDP and economic activity that will flow straight through to wholesale prices, whereas Vodafone, as I talked about earlier, like CDC, saw some benefit from increased demand for its services, even if it's commercial arrangements with most of its customers. It means that you can't charge for it. So different outlook in terms of demand and underlying usage. Longroad and Galileo Green Energy are both development platforms in renewables. I think, again, the Longroad team have done a fantastic job at keeping things ticking over, particularly around their construction activity. And again, this is both -- these very large solar and wind facilities in the United States. By and large, we've managed to escape, I think, the worst part of what you would think in a market where it's gone through a lot of COVID crisis. Galileo is quite a brand-new entity. It's only got a handful of employees. It's had to slow down, I guess, its rate of formation and hiring. But it has actually secured some interesting options already. So very early days in the life of Galileo. And then we get, I think, to two more difficult assets, as we have already heard. Wellington Airport went basically to, overnight, having no revenue. We saw back in late June and July when New Zealand reopened, where we're getting back to close to 65%, I think, the domestic activity relative to the same period the previous year. And I guess we know that, that airport is 85% domestic, 15% international. So perhaps at the margin, slightly less impacted at some other airport comps around -- impacts of not being able to have open borders. RetireAustralia is a really difficult asset. They're doing a fantastic job with the health care and well-being of their clients and also their immediate families and the staff that work at those facilities. And I think they have done actually a very tidy job in really difficult circumstances. So if I can, I'd like to spend just a couple of minutes on each major asset, and then we'll get on to the business of the Annual General Meeting. Two things. I think the highlight was Trustpower. I think it's worth making one comment around Tiwai Point. Obviously, the announcement that Rio Tinto intended to close Tiwai in just over a year's time is quite a significant shock to the market. You've seen immediate impact on wholesale prices. Trustpower is impacted because they are a part of that New Zealand energy mix. So you will see up to 12%, 13% of this demand have to be transferred on to other clients and customers. That puts a softening impact on wholesale prices in the medium term. Trustpower, in particular, has Waipori hydro facility and -- that runs in the deep south. It also buys energy off the Mahinerangi Wind Farm, both in the deep south. So they're more directly impacted by weak wholesale prices in the South Island. In the North Island, I guess, a bit less direct impact, and they have to manage their trading book as well as their retail exposures. And they do -- they typically do a good job of that. I think the other thing to mention there, which was probably just as important in some respects, is the announcements around what's being called Project Onslow, which is a large pumped hydro conceptual project that's been muted for -- just hanging off the Clutha River. I mean with Infratil, Trustpower, Morrison & Co, they have strong negative views about -- not the objectives of this program necessarily, but the impact of it. We know that the Interim Climate Commission made, I think, quite a sensible set of recommendations about a year ago, that saw New Zealand comfortably achieving sort of mid-90% levels of renewable energy from electricity generation. It also made a very convincing case to say that, that last 4% or 5% would be really difficult to turn into 100% renewables and there were better ways of using gas and thermal energy to meet dry period risks. And that's strongly our view today. And we think the $30 million or $40 million that will be invested to examine that will probably come up with that type of conclusion. But we think it's important as an industry to make it clear that there are some really fundamental risks with going down this path. Okay. Tilt Renewables, so renewable energy developer, has assets in Australia and New Zealand. As I said, it's busy building two large wind projects, Dundonnell and Waipipi. Waipipi is only 4 out of 31 turbines in the Taranaki that's underway, so those are progressing well. We know that Tilt is the entity that sold Snowtown 2 last year for a very large gain of around circa $500 million. Also returned AUD 260 million of capital in July this year, of which Infratil share was AUD 170 million. So really significant outcomes coming out of that business. Really strong pipeline. And we know by looking at what's happening in the market with Infigen and the takeover offer by the Spanish Iberdrola that a lot of large, very sophisticated players are starting to recognize not just the value of operating assets in the Australian market, but the value of pipeline. And we fundamentally believe Tilt is a more valuable, better constructed asset than Infigen. CDC Data Centres. I mean this is an entity that has been, in some respects, the largest individual growth aspect of our portfolio, continues to grow at that 30% or 40% level. You can see on the slide there, has built 60 megawatts of new capacity this year. We anticipate another 28, I think, in Sydney in the Eastern Creek facility. Announced 20 megawatts from 2 facilities in Auckland in the relatively near term. So it's sort of an execution machine. It's high-service, high-quality infrastructure, growing at 30% or 40% per annum. And I guess watch the space, right? So we have a lot of work to do to make sure those facilities are implemented and delivered on time. But there's no doubt about the underlying demand for these services and the role CDC can place at satisfying clients. Okay. Vodafone New Zealand, I guess, familiar to a lot of retail customers. I mean it's a huge part in New Zealand economy, the mobile infrastructure. We saw how important and fixed the broadband infrastructure was post crisis. Every Kiwi is just about -- is consuming more broadband, whether it's through a mobile device or through fiber or DSL. We're really pleased with the way, not just Vodafone, but the industry has responded to the demands on their network infrastructure. Vodafone in itself, I think we've owned it now for just over a year. I think we've done a really good job at embedding a more capable management team, giving them clear support around future investment in customer service and IT and product development. And I think this next 1.5 years will be quite -- again, quite a key -- executionally challenging year for that business but one of opportunity. Because we know that post those investments, it should actually present itself in quite a different way, not just for retail customers, but for small and medium enterprises, for corporate, for enterprise and for the public sector. You'll see and have already seen that we're out in the market with 5G investment this year. There's more to come. COVID, I think, slowed down the pace of new network development slightly across the industry. We expect that to continue now, hopefully, as we get out of these current restrictions in New Zealand. Longroad Energy is the U.S. renewable energy provider. As I mentioned, they've done a nice job at delivering just over 600 megawatts this year of completed facilities. They're in the process of building over 800 megawatts of facilities. And to put it in perspective, that 800 megawatts is about 8% of New Zealand's total installed generation capacity. So you are talking about telephone numbers when you've got sort of Longroad's development program. And their pipeline is about 4 or 5 gigawatts. So it's an amazing asset that we think could get temporarily disrupted, I guess, in calendar '21 with what's happening in the United States around COVID. And that's more to do with financing markets, tax markets and getting revenue contracts off corporate. But we have no doubt at all this is going to perform, I think, in the U.S. for the long term. And Galileo, I mentioned earlier, is a brand-new -- basically a brand-new asset. It's got strong capital support, about EUR 220 million of capital support. Has just got going. Did secure a 50% interest in an Irish set of wind assets. So that's an exciting point to start with. I think there's plenty to chew on there. Has participated in other projects and processes. And I think it's on the lookout for further development opportunities in selected markets in Europe. So watch out for that, too. We expect it to turn out similar to Longroad. Wellington Airport, as I mentioned, much more difficult asset, much closer to home. As I said earlier, we were pleased in June and July when we were starting to get back to sort of around 60%, 70% levels almost of domestic traffic. Clearly, that's impacted again now with New Zealand being in Level 3 and Level 2 restrictions. But that business -- the Board has actually responded very quickly to cut OpEx where it can, cut CapEx where it can and be a really sensible employer in terms of impact on not just contractors but employees. RetireAustralia again has, I think, dealt with most of the immediate obvious impacts about operating their retirement living business in a COVID scenario. Has done an exemplary job. I think we're really benefiting from the fact that the leadership in that organization has got very strong connections to the health care industry and very strong experience. We have got new development projects in the market. They are selling well. And I think, again, we're patient investors. We know the investment theme will play out, and we know there's a need for investment in [ this year ] offer a high-quality retirement services. So that hasn't changed. Mark mentioned in the Chairman's speech that we aren't providing group outlook or guidance at the moment. We are providing guidance, though, for some subsidiary level assets. So Trustpower, Tilt, CDC, you'll see on that slide, have provided guidance. That's over half of our total picture. We do think it's not at that point where the other assets in our portfolio can give the required levels of confidence without misleading the market, frankly. So what we're anticipating is come our half year result, which currently is scheduled for mid-November, we anticipate we should be able to provide an updated view of both earnings and dividend guidance through to March '21. Okay. Just a summary before I hand it back to Alison. So I think we're all feeling the pain of this scenario, as I assume everyone on this call, is feeling the pain of the COVID crisis. We are really thankful that we've got the quality of assets and management teams in place. That means that on a comparative basis, Infratil is actually very well positioned. We know that we have strong conviction of our investment themes. We know that we've got clear path to deploy capital in the next 12 months, 24 months, 36 months. And we know we've got the capital structure to not take unnecessary risks when we are actually pursuing that -- those development options. So the -- my final point would be that we continue to reevaluate our portfolio. I think we actually happen to be in a particularly stable position right now. But again, these are the sorts of markets that throw up opportunities. And we know that both the Board and Morrison & Co are prepared to look at anything that will create long-term value for shareholders. So thank you.

Great. Okay. So now there is an opportunity for discussion of the annual report of Infratil for the year ending 31st of March 2020. We will now have Mark Flesher read out questions, which have been submitted online. And either Marko or I will seek to provide a response. But where a question relates to one of our businesses, I might also call on one of the directors or management reps attending to provide their response. So Mark, are there any questions?

Thanks, Alison. First question comes from [ Peter Hutchinson ]. As a shareholder and bondholder, including the perpetual bonds, what is Infratil's long-term proposal for this bond? It is a real laggard. Why not convert it into a fixed-term bond?

Great. Okay. I'll attempt an answer there, and thank you for the question. At present, Infratil has about 11 outstanding bonds in our capital structure, and this is one that is trading below par. So at the time of the issue of the PIIBs, investors were seeing a very high interest rate environment, and the PIIBs was a high-yielding bond. But as we all have seen, interest rates have significantly declined, and we now see this bond trading below par primarily because it is also a perpetual instrument, and the current coupon is probably around 2.6%. So your suggestion is one that would certainly benefit bondholders. However, if we were to convert this bond to another bond or to redeem it, that would unfortunately be a transfer of value away from Infratil shareholders to bondholders. And so we wouldn't be able to undertake that transfer unless no one was off. So I hope that helps. It is also pleasing to hear that you are a shareholder. So hopefully, some of your shareholder returns can compensate you for the low returns that you're receiving on your bond. Mark, are there any other questions?

Yes. The next question comes from [ John Kennedy ]. Does Morrison & Co run the company or Infratil?

Great. Thank you. I'll attempt to answer that first, and then I might get Marko to comment on that. So like any company, Infratil directors are appointed by shareholders to represent shareholder interests, and the Board is focused on ensuring that we've got the right strategy, that we invest in wisely, that we're creating value for shareholders and that we are delivering returns to shareholders for those risks that shareholders are taking. But the primary role of Infratil Board is also to approve and monitor the strategic direction of Infratil, which is recommended by our Manager, Morrison & Co. Board approval is required for such things as -- all investments and divestments for capital management activities, for changes to the capital structure and setting risk management appetites. But the day-to-day management of Infratil is delegated to Morrison & Co. And so a crucial role for the Board is monitoring the performance of the Manager and making sure that management is delivering value. So we are constantly looking at the costs and the benefits and making a judgment as to whether the overall terms of the management agreement are providing value to shareholders. But interested in any comments from Marko.

Thank you, Alison. I think the allegations are really clear. Under the management agreement, Morrison & Co.'s job is to provide investment management services. So hopefully, you got a bit of a flavor of that during my presentation about what we mean by asset management services, whether we're in good times or difficult times, like we are at the moment. And it covers a broad range of services, whether it's originating new ideas, it could be sector coverage using experts, working with our own employees or outside experts to develop views on markets, getting geographic coverage, pulling together debt or equity capital markets activity, legal and company secretarial support, risk management, compliance services, accounting and finance, human resources. I'm sure I'm missing something, that's the danger of doing this. But it's a comprehensive mandate, and we feel accountable and sort of my job to lose sleep about that as Chief Executive of Morrison & Co. And the Board's job is to set the risk and return profile that shareholders are demanding.

Great. Thank you. Mark, any more questions?

Yes. We've had a couple of questions on CDC we've amalgamated to. Can you please describe the standards to which CDC's current and planned data centers are built to?

Great. I might actually hand this CDC question to one of the Infratil representatives on the CDC Board, Kevin Baker. So Kevin, can I ask you to respond?

Yes. Thanks, Alison. Quite a technical question, but I'll do my best to answer it. So CDC's data centers are built to what's known as Tier 3+ certification and operated under principles of the Telecoms Industry Association standards and meet Australian Security Intelligence Organization standards for the Zone 4 security. So what that means is that with that Tier 3+ certification, CDC meets the best practice requirements of hyperscale and enterprise-level data centers. So putting that into availability context, that means that Tier 3 requires or guarantees 99.982% availability, and this compares with Tier 4 availability of 99.995%. Interestingly, CDC's history of operations, it has met 99.999% availability, which I think -- obviously, this is one of those cases where the last 0.001% actually does make a difference for customers, and it's a very important KPI for CDC. So with that Tier 3+ standard, CDC is very confident that it meets the requirements of its key customer base. And also, that will be resilient to the future needs of customers as well.

Great. Thank you, Kevin. Any more questions, Mark.

Yes. A question from [ David Swartz ]. Has the actual Wellington Airport traffic to August 2020 fallen inside the dash lines showing the forecast range of the traffic on Page 44 of the annual report?

Great. Thank you. I will pass this over to Tim Brown, who is with us. But I think we have heard from Marko that up until August, we had actually seen a rebound in domestic traffic to 65% or 70%. But given I don't have Page 44 in front of me, I'm going to ask Tim to grab the report and answer that question.

Sure. Thank you, Alison. Yes, in July, we got to 305,000, which is well above the range that was forecasted in the annual report. And now for August, we're forecasting about 150,000, which is to say about 5,000 passengers a day. And that's pretty much exactly the midpoint of what the level that's shown in the annual report forecast. So either with the restrictions that have been opposed recently, we are still tracking well within the restriction range. And when the restrictions were eased earlier, we recovered a lot more quickly than we had originally expected.

Great. Thank you, Tim. Any more questions?

We have another question from [ David Swartz ]. Taken into account COVID-19 pandemic's likely effect on worldwide air travel and the known uncertainty of sea level rise due to climate change, will Infratil undertake a serious review of the future of Wellington Airport as a productive investment?

Okay. Thank you. Marko, do you want to comment on this one?

I'm happy to have a go with it. The -- I mean -- David, thank you for your question. You would have seen in my presentation, the proportion of the portfolio now is exposed to airports. I think it's in that sort of low teens level, which I think is an appropriate allocation for the type of risk and reward that asset is likely to deliver. So I think it's actually a serious -- we do take that question very seriously. We -- Morrison & Co is quite active in the airport sector in Australasia and has been doing some long -- impact analysis of COVID in the long-term rather than the short-term. And I think clearly, the propensity to travel could change as could the viability of certain air carriers. So we've certainly taken that into account. We haven't formed any conclusions today. I think the climate change question is a much broader question. Certainly would impact the airport, but I guess it has some more direct impacts, particularly in some of our energy investments. And again, Morrison & Co, Infratil have done, I think, quite a good job at recognizing early on that climate would be a factor, not just in valuations but future performance of utilities. So I guess it's a work in progress. So I'd like to think we're slightly ahead of the pack when it comes to analysis.

Thanks. Are there any more questions?

A couple of similar questions on Vodafone. Is the transformation that Vodafone is currently undertaken following most New Zealand telcos and becoming merely a carrier, a low-cost carrier versus a value-add provider? Are they being innovative? Or are they pivoting in the wrong direction?

Well we have the Chairman of Vodafone New Zealand here, so...

It's quite a leading question, really. We -- so again, I think it's a reasonable question. The -- both Vodafone and Spark, I would say, are pursuing similar strategies at the moment, which is to have extensive nationwide network coverage and meet the service and product requirements of just about every customer segment in New Zealand. So all the way from small retail customers to large enterprise customers. I don't see that changing. From that fundamental perspective, I still expect Vodafone to be relevant for all key -- all segments and all markets. I think how you deliver those services, though, you can actually be quite differentiated. And we think there's an opportunity to -- I call it replatforming. It's investing in the IT infrastructure that could create much higher service levels, much faster product development cycles, much lower cost of operation, potentially in the future. And that's actually what we're targeting. So we're actually targeting better outcomes for clients, lower and more -- and simpler operation models for Vodafone. That's the core of the strategy. I think at the margin, you've got things like media, content strategy, sports. I think we are attacking in a different direction from Spark, at least on the -- from the outside -- on that front. And that, I guess, reasonable people can differ about the merits of that strategy.

All right. Thanks. Any more questions, Mark?

Yes. We have a question from [ Steven ]. Infratil has a large interest in renewable energy. There is a lot of support from a wide range of groups. But how do you see expected long-term depression in oil and gas prices affecting the economic viability of renewable investments?

Great. Thank you. Marko, what do you think?

Again, I'll be quick. I might ask JB to contribute in a minute. So -- I mean effectively -- so oil and gas prices in the past have tended to set sort of the marginal cost of providing new incremental generation capacity in most markets. What we know today is that renewable energy on its own is actually competitive. And that sort of analysis or the need for subsidies have actually moved away. And we're seeing that in quite a few markets, which we participated in. So when we talk about being in North America, Australia or Europe, we're actually targeting those markets where either the unwind of the subsidy or the stand-alone economics of renewables are attractive enough that we don't necessarily have to worry too much about long-term oil and gas prices. But it is relevant. I mean Jason Boyes is our Head of Morrison & Co.'s energy sector group. So Jason, do you want to have a crack at that question, please?

Yes. I agree with that answer, Marko. I think the severely low gas prices is having an impact on the viability of renewable generation build right now in Europe, but we're not expecting that to last at the severe levels we're seeing right now. And all the while, technology costs and financing costs are reducing. So I think that it will be a short-term blip rather than a long-term issue.

Great. Thanks, Jason. Any more questions?

Another question for Marko on Vodafone. Will there be more restructures or job redundancies in the near future for Vodafone New Zealand?

Frankly, I think that's more of a question for Jason Paris, who's the Chief Executive of Vodafone. But I can say, broadly, Vodafone has been a really -- I think, quite a responsible employer. I think we did have to let go up to 7% of our workforce. I think it was about 130 employees, which no one likes to do. Clearly -- and I've just talked about repositioning the business and investing in new IT platforms. That won't so much lead to restructurings, but it might create a different-shaped business. And I think the first protocol was to try to use your existing employees and repurpose them and give them different focus and direction. But there's no current plans that I don't know of that would result in further redundancies today.

Right. Any further questions?

A follow-up question on Vodafone. Following on from the Slide shown on Vodafone, if Vodafone is looking at being a low-cost provider, how is that expected to increase revenue in the long term?

Good question. I think the -- what that really is getting at is -- actually, those 2 things aren't incongruous anymore. So actually, the future way you build telecommunication and digital services is it's perfectly plausible, I think, to get lower cost of operation and better customer service and product development outcomes. If you think about the way we interact with banking apps or the way we bought airplanes pre-COVID using New Zealand apps, I think that's -- it's a small example of how you can actually operate that type of service at a very low-cost and still feel satisfied as a customer. So telcos, I would say a little bit more complex than that, but it's the same principle and I think a perfectly plausible objective.

Great. Next question, I imagine there may be one.

Next question is on the U.S. Does the U.S. election have any implication on policies regarding renewable energy and, therefore, have an impact on Longroad and Infratil?

I think I will also ask Jason Boyes, who is our representative on Longroad, to have a go at that and perhaps give us a prediction for the selection at the same time.

Not sure if I can do that. The -- I think the federal environment has been difficult. But as Marko outlined, the amount that's getting built is still phenomenal. So I think despite the headwinds, renewable energy is the lowest-cost, new form of generation in that market. That said, the amount of stimulus that the [ Baden Camp ] has announced would no doubt be helpful. So it definitely wouldn't hurt.

Is that your prediction?

Yes.

Next question.

Yes. In regards to the ongoing renewables, are there any plans post-COVID to diversify the business' spread of assets beyond land-based wind in New Zealand hydro?

it would be hard to work at what we would -- I suppose we have got some ideas up our sleeves. But Marko?

Well I think just -- if I understand that question -- just to be clear, so we are quite diversified today. So in terms of wind and solar and distributor generation in Australia and New Zealand, the United States and Europe, I think that's a reasonable spread, both from sort of energy mix, the technology you're using to generate and the jurisdictional diversification, i.e. which regulators you're exposed to. But our boy, Jason, is starring today, so...

I have another. Okay. You might be referring to offshore projects.

Maybe.

Offshore wind and some of the floating solar is actually extremely expensive to develop. So we think that's really for large players rather than probably Infratil right now. There are other future technologies that we are interested in, but they're not quite at the level where utility scale, wind and solar, is onshore. So I'd expect most of our CapEx to be in that area.

Great. Thanks, Jason. Are there any more questions?

Yes. Next question is, are the data centers being built in Auckland being built for Microsoft? Or are they in competition for the announced Microsoft development? Both announcements seemed to come at the same time.

Yes. I don't think we commented on who we are building our data centers for, but I may ask Kevin Baker again, who is our CDC and to talk -- if he wants to add anything further to that.

Yes. The two data centers that CDC is building in Auckland, meeting demands of its hyperscale customers. As has been reported, Microsoft is also building a data center in Auckland. Our expectation would be that those data centers can operate quite collaboratively and work together to provide an overall network for New Zealand customers, which will benefit both government and large-scale enterprise customers. So whilst there might be a little bit of competition at the edges, that configuration of data centers is being developed to work very cooperatively.

Great. Thanks, Kevin. Next question, Mark.

It's another Vodafone question. What is Vodafone doing to improve marginal connectivity in areas that have been long underserved?

Okay. So good question. There's a couple of ways to think about that. I think part of it might be referring to coverage in sort of provincial and rural New Zealand. The way that the industry has responded there, and actually, Vodafone is playing a leading role in the space, is via the rural connectivity group, which is essentially entity that was sponsored by government, but actually managed and operated by the telco sector itself. So we share communications infrastructure in rural New Zealand. And I think that's increasingly the model for not just rural New Zealand but potentially for other parts in New Zealand to get better connectivity, better capability in market sooner using the latest technology. So I think we're a proponent of that model. You probably have heard us in the past talk actively around network sharing. That's basically one of the reasons why we think we're big fans of that. There's also, I guess, less wealthy of communities in urban New Zealand. So Vodafone, again, has been quite active in providing supports for schools and communities, whether it be devices, fixed line connections or fiber. So again, on both of those fronts, I would say Vodafone is doing more than its fair share.

Great. Thank you. So I've received a message that there are no more questions online. So we will now move to the formal part of the meeting. And there are 4 resolutions set out in your notice of meeting, which are going to be considered by shareholders today and voting on all resolutions will be conducted by a poll, as required by the Listing Rules. Each resolution is to be considered as an ordinary resolution and must be approved by a simple majority of the eligible votes cast by shareholders. My fellow directors and I intend to vote all discretionary proxies we've received and for which we are permitted to cast a vote in favor of the resolutions as set out in your notice of meeting. And I'd just remind shareholders that none of Morrison & Co, its directors, related companies, the direct or indirect shareholders or any of the staff of Morrison & Co may vote their shares in respect of Resolution 3, but they may act as a proxy or voting representative for a person who is qualified to vote on Resolution 3 in accordance with that person's expressed instructions. Shareholders voting online will be able to cast their vote using your electronic voting card received when online registration is validated. So to vote, you're going to have to click Get Voting Card within the online meeting platform. Then you'll be asked to enter your shareholder or proxy number to validate. And then please mark your voting card in the way you wish to vote and you can choose for, against or abstain on the voting card. Then once you've made all of your selections, please click Submit Vote on the bottom of the card to lodge your vote. Now if you have any problems, just please refer to the Meeting Help portal or use the help line, which is specified. Voting will remain open for 5 minutes after the conclusion of the meeting, and then we will announce the results of the polls and close the meeting through the market later today or tomorrow. So the first 2 resolutions for shareholders to consider are the election of directors. The Listing Rules requires that directors must not hold office without reelection past the third annual meeting following the Director's appointment or 3 years, whichever is longer. So accordingly, Marko Bogoievski and Peter Springford, retire and being eligible, offer themselves for reelection. So Resolution 1, for the reelection of Marko Bogoievski as Director. Marko is retiring by rotation and is putting himself forward for reelection. The Board unanimously supports his reelection and you'll find his credentials outlined in your Notice of Meeting. So Marko, would you like to say a few words?

I would. Thank you, Alison, and thank you again, shareholders. I'm pleased to offer myself for reelection. Just -- I know my background is in the Notice of Meeting, but just quickly. I joined Morrison & Co in 2008. I have a finance and more recently, a telecommunications background. I joined Morrison & Co in that year as Chief Operating Officer. Became Chief Executive Officer in 2009, at which stage, I joined the Infratil Board. So I've had a really positive part of my career involved with Infratil and that Board. I've been fortunate also to be involved in some of our more significant portfolio entities. At that time, I was a director on Auckland Airport. I became involved with Trustpower as a Director. I was Chair of Greenstone, with Shell, which became Z Energy. Chair of Longroad and -- which are now -- come off that Board and more recently now the Chair of Vodafone New Zealand. So I think I have a pretty good experience of the breadth of the portfolio. I'm really pleased and proud to be the Chief Executive of Morrison & Co as well which has grown nicely over that same period. And I'll be delighted if shareholders supported my nomination.

Great. Thank you. So I now propose that Marko Bogoievski be elected as a Director of Infratil. Are there matters for discussion or questions concerning this motion?

There are no questions.

Great. Thank you. So please mark your voting card in the way you wish to vote by clicking for, against or abstain next to Resolution 1 on the voting card. Resolution 2 for the reelection of Peter Springford as a Director. Peter is retiring by rotation and is putting himself forward for reelection. The Board unanimously supports his reelection. And again, you'll find his credentials outlined in your Notice of Meeting. We have prerecorded Peter saying a few words, again just in case we had any technology challenges. So we will now switch to Peter.

Thanks, Alison. Good afternoon, ladies and gentlemen. I've been on your Board for nearly 4 years and have enjoyed the challenges and all that we have accomplished during that time. We're fortunate to have a small, diverse, hard-working Board to support and challenge the high-performing management team from Morrison & Co. I'm happy to add to that diversity, in age, at least. Through my tenure, Infratil has made some significant changes to our portfolio. We have Marie Kondo-ed or mowed the lawn of the portfolio and subsequently divested some of the smaller companies and have made large investments in CDC, Vodafone and renewables. I believe this process has certainly added value to our company and that's reflected in our share price. My other professional commitments are as a Director of Zespri and a shareholder and Director of smaller private companies. My previous experience includes working internationally and being involved in capital-intensive businesses in the forest products industry. I know that many investors are long-term investors looking for opportunities and businesses which are sustainable in how they operate, not just in the industries they're in but also in the social and environmental commitments. Infratil was positioned to benefit from this focus and I believe this will lead to a long-term increase in return to us all as shareholders. I'd like to thank my fellow directors for supporting my reelection. And I thank you for this opportunity to seek your support for my election to the Infratil Board for a second time. Thank you very much.

Great. Thank you, Peter. So I now propose that Peter Springford be reelected as a Director of Infratil. Are there matters for discussion or questions concerning the motion?

There are no questions.

Thank you. So please again, mark your voting card in the way you wish to vote by clicking for, against or abstain next to Resolution 2 on the voting card. Resolution 3, payment of incentive fees by issuing shares. This resolution is to provide the Board with the option to pay all or part of the second installment of the FY 2020 incentive fee, which could be payable in May 2021 by issuing shares to Morrison & Co instead of paying cash. Resolution 3 is not seeking shareholder approval to pay the fee. The fee, if payable, is an existing obligation under the management agreement. But what the resolution deals with is how Infratil pays the fee. So at present, if the fee becomes payable, it can only be paid in cash. However, if resolution is passed, the Board will also have the option to pay some or all of the fee using Infratil shares, if the Board chooses to do so. And if they do choose to do that, the price of what the shares will be issued as 98% of the average market price at the time. We do not know today if the Board would exercise the option to pay the fee by having Infratil issue shares. That's a decision the Board will need to make at that time based on what the Board believes is in the best interest of Infratil and its shareholders have in regard to market conditions and Infratil circumstances at that time. Are there any questions concerning this motion?

Yes. We have a question from [ Carolyn van Kent ]. Under the dire financial circumstances New Zealand finds itself in due to COVID-19, how can the Board even be compelled to consider an incentive fee to Morrison & Co when management fees are already exorbitant in normal circumstances? Why not be -- considering a greatly reduced fee to Morrison & Co instead?

Great. Okay. I'm happy to answer that question. Look, I think we all have been impacted by the challenge in global pandemic. And we -- Infratil has been discussing that at length. However, we have the management agreement with our Manager, Morrison & Co, which has been in place since 1994. And under that agreement, we pay a fixed fee to Morrison & Co to manage our assets. And then there is a performance component, where on the New Zealand -- the non-New Zealand assets, if returns are above a 12% hurdle, then we share the gains above that 12% hurdle, shareholders retain 80% of the gains above the 12% hurdle and Morrison & Co is paid 20% of those gains. Then -- and so that is what has already agreed under our management agreement. And then once we have that fee calculated, which is $125 million for the year ending 31st of March, we break that into three portions, one which is currently being paid, $41.7 million. And then we hold the other two portions and we'll pay them, one -- the second and third next year, and then the last -- remaining third, the year after that if the value of that portfolio, which has generated that performance fee, is maintained. So this resolution is not asking shareholders to approve the performance fee. It is asking shareholders to give the Infratil Board the choice when we make that payment -- if the portfolio's value has been maintained, to make that payment either by issuing shares or to choose to pay it in cash. So that is the resolution that we're looking to ask your approval for at this time. Are there any further questions?

We have a statement that ACC would like us to read out.

Great. Okay. If you could read that statement, Mark Flesher?

ACC is a major shareholder of Infratil. Our investments is substantial. We own 5.9% of the issued shares valued at more than $200 million. ACC supports and has a constructive relationship with the Infratil Board. ACC has voted against Resolution 3 to communicate its concern regarding the structure of the incentive fee to other shareholders and the Board. The fee section of the management agreement is long and complex, absorbing 16 pages of the consolidated management agreement and is constructed in a piecemeal fashion. ACC sees two essential weaknesses: One, 3 incentive fees are payable over 3 buckets of assets. If any bucket earns a return above the 12% after-tax hurdle, the Manager has paid 20% of the gains. If some buckets create value and others lose value, the Manager shares the gains of the buckets, but the aggregate incentive fee is not affected by the weaker buckets or losses versus the hurdle. Two, there are no high watermarks in place for the performance fee, i.e., if an investment goes up and down several times, the Manager receives an incentive fee several times for the single gain the shareholders receive. The installment structure of the international [ portfolio ] annual incentive fee is a material but inadequate offset. We accept that the structure is not deliberately complex or intended to be unfair, rather the structure is an accident of history. ACC has two requests: One, ACC asks the independent directors to work with the Manager to negotiate a fair structure. We would like to see the buckets combined in a high watermark added to the structure. In our experience, this is a common practice for investment contracts. Two, ACC asks Infratil to annually disclose the performance of each of the 4 buckets, the 3 international buckets and the 1 New Zealand assets, including the dollar gained and/or loss relative to the hurdle. We understand the Board has compiled the data for the history of the contract and ask the Board to make the data available to shareholders. Thank you.

Great. Thank you. I think what I would like to do is pass to our Chairman, Mark Tume, in Australia, to respond to the statement from ACC. So if we can switch to Mark, that would be great.

Thank you, Alison, and good afternoon, everybody. Look, I might address this reverse way around and answer the second question first. The annual performance for the international assets are available, but the New Zealand assets are not valued annually as they do not form part of the performance fee in the modeling that we use as publicly available information. As for the first request, I think implying that the structure is unfair is misleading. There's no evidence that the current arrangement is unfair to shareholders when compared to our current practice. I would, however, agree that it's complex. That's by virtue of its history is recognized. But the Board have lived with it for many years and it's well understood by all directors. And certainly, the Board is not shy of tackling issues in respect of the management agreement. Recently, the Board had a detailed review of the economic terms carried out by an independent party, and that review concluded that the performance fees were largely advantageous to shareholders, particularly the hurdle of 12% and the exclusion of New Zealand assets under that regime. Indeed, back testing of a more modern agreement has confirmed that this is the case with a difference in the tens of millions of dollars. And one of the reasons the Board is seeking approval for Resolution 3 is it provides the option for further alignment between MCO and Infratil by paying the performance fee in shares. And we believe as a Board that, that would be a benefit to all shareholders. Thank you, Alison.

Great. Thank you, Mark. So for this resolution, again, I ask you to mark your voting card in the way you wish to vote by clicking for, against or abstain next to Resolution 3 on the voting card. Resolution 4, auditors remuneration. Our final resolution for shareholders is to consider the remuneration of Infratil's auditor, KPMG. KPMG are automatically reappointed as auditors pursuant to Section 207T of the Companies Act 1993. However, the meeting is required to authorize directors to set the audit fee, and I now propose that directors are authorized to fix the remuneration of the auditor. Are there any questions for the Board concerning this motion?

Yes, we have a question from [ Jenny Miller ]. How long have KPMG been the auditors for Infratil? And when is the partner up for rotation?

Great. Thank you, [ Jenny ]. I'm actually the Chair of the Audit and Risk Committee, and I should know how long they've been the auditors. I will ask my great CFO to answer that question. But while she is looking for the answer, I would like to confirm that we do rotate partners on a regular basis, and we have recently just rotated our main audit partner. Ed Louden has stepped down from the -- being the partner for Infratil, and we have replaced him with Brent Manning. But Phillippa, can you just remind us on how long KPMG have been the audit partner?

Thanks, Alison. Just confirming, they've been the auditor for about 20 years. But during that time, there have actually been reviews of that engagement. So essentially, we have gone out and undertaken a review to determine that they were still best placed to carry out that function.

Great. Thank you. Are there any further questions?

There are no further questions.

Great. So if you could please mark conversion card in the way you wish to vote by clicking for, against or abstain next to Resolution 4 on your voting card. So ladies and gentlemen, once you have made all your voting selections, please click the Submit Vote on the bottom of the card to lodge your vote. No other business may be conducted, but it is appropriate to receive recommendations from shareholders for the attention of the directors. So shareholders who do wish to do so can submit these online through the virtual meeting platform. So this now concludes the business of the meeting. Thank you so much for your patience and attendance. We'll be announcing the results of the polls and closing the meeting through the market later today or tomorrow. Good afternoon.