Kelsian Group Limited (KLS) Earnings Call Transcript & Summary

[Presentation] Good afternoon. My name is Jeff Ellison, acting Chair of the SeaLink Travel Group and Chair of today's meeting. On behalf of the Board of Directors, I welcome those of you who have joined us online today for the SeaLink 2020 Annual General Meeting. I also hope you enjoyed our earlier video which illustrates the diversification of the SeaLink Group, including our -- some of our international businesses. Now due to COVID-19, health concerns and after considering advice from the relevant authorities, we have -- we are conducting today's AGM as a fully virtual meeting. With me here in person today, in Adelaide, are directors who normally reside here or are able to travel from Queensland with the lifting of the travel restrictions recently. I have Terry Dodd, Fiona Hele, Chris Smerdon, Andrea Staines and Lance Hockridge. Also, Neil Smith is joining us online from the United Kingdom where he resides. During today's meeting, I and our group CEO, Clint Feuerherdt, will present to you on the company's performance during the last financial year, and we will then move on to put the resolutions outlined in the Notice of Meeting to vote and allow all shareholders an opportunity to ask questions or make comments relevant to the business before the meeting. Firstly, I'd like to introduce the Board of the company. You will see their photos appear on the next slide. First of all, Jeff Ellison, myself. I'm acting Chairman of the company, and this is the first meeting as Chairman of SeaLink having been appointed as acting Chair of the company on the 1st of July this year. I was appointed a Director of SeaLink in 2008 and served as Managing Director until January this year, becoming a nonexecutive director on the 17th of February 2020. Terry Dodd. Terry Dodd was appointed a Director of the company in March 2011 and is a member of the company's People, Culture and Remuneration Committee. Fiona Hele. Fiona was appointed a Director in September 2016 and is the Chair the company's Audit and Risk Committee. Chris Smerdon. Chris was appointed Director in May 2004 and is a member of the Audit and Risk Committee. Andrea Staines, OAM. Andrea was appointed Director in February 2016 and is a chair of the company's People, Culture and Remuneration Committee and was a member of the company's Audit and Risk Committee during the previous financial year. Neil Smith. Neil was appointed Director on the 16th of January 2020, and I would like to welcome Neil to the AGM, his first SeaLink AGM as Director, at which he is, therefore, standing for election. Lance Hockridge. Lance was appointed Director on the 1st of July 2020 and is a member of the Audit and Risk Committee and the People, Culture and Remuneration Committee. I would also like to welcome Lance to the Annual General Meeting, his first SeaLink AGM as well, and he is, therefore, also standing for erection. Moving to the next slide. I would also like to introduce Clint Feuerherdt. Clint is our Group Chief Executive Officer, having been appointed to that role with effect on the 16th of January of 2020, and I welcome him to his first SeaLink AGM. You'll hear more from Clint shortly. I have Joanne McDonald, who is the Company Secretary and was appointed to that position in August 2018. Andrew Muir is our Chief Financial Officer, a position he has held since January 2017. He was also appointed as one of the company's secretaries on the 1st of June 2018. From our auditors, our external auditor is David Sanders from Ernst & Young. David will be available for questions later in the meeting. I'd also like to acknowledge that today, for those of us in Adelaide, we meet on the traditional country of the Gaurna people of the Adelaide Plains and pay respect to elders past, present and emerging. We recognize and respect their cultural heritage, their lease and relationship with the land. We acknowledge that they are of continuing importance to the Gaurna people living today, and we also extend that respect to other aboriginal language groups and other first nations. Now voting procedures. The company secretary has confirmed a quorum for the meeting is present, and I formally now declare the meeting opening. Our Notice of Meeting was distributed to all members on the 25th of September 2020, and also lodged with the ASX website on that date. I would take the Notice of the Meeting as read. I will briefly now provide an overview of the voting procedures for today's meeting. We will determine all resolutions by a poll. To ensure shareholders have more time to vote throughout the meeting, I now declare polls on all items open. The polls will be closed at the end of the meeting. A summary of the proxies and voting outcomes will be lodged with the ASX once finalized. As Chair of the meeting, I will vote all directed proxies in accordance with directions given by shareholders. I will also holding -- I am also holding open proxies as Chair of the meeting. These will be voted in favor of all resolutions. Any directed proxies not voted at the AGM automatically fall to the meeting chair, and I will vote these as directed. In accordance with the company's constitution, each shareholders entitled to vote -- to attend and vote at the meeting is entitled to a direct vote on a resolution. Shareholders can cast a direct vote using the electronic platform as explained in the Notice of the Meeting. Please ensure you have registered as a shareholder or proxyholder on the Lumi online platform to enable you to vote online and ask questions. If you have any queries about this, please refer to the virtual meeting guide accompanying the Notice of Meeting and available via the Boardroom share registry page or SeaLink website. Regarding questions, I advise that shareholders that attorneys, proxies and authorized company representatives may ask questions or comment on each item and on general matters relevant to the AGM. There will be an opportunity for questions in respect of the resolutions as they are introduced. We will outline proxies received for each resolution as they are put to the meeting. Shareholders and proxyholders will also have an opportunity to ask questions relevant to the AGM at the end of the specific agenda item. [Operator Instructions] All questions were received by our Company Secretary, Joanne McDonald, who will identify each member who will ask the question and then read the question out for everyone to hear. I will then answer or ask an appropriate person of the team to respond to the question. We will endeavor to answer as many questions as possible in the time allocated, but reserve the right to rule out questions not related to the meeting or out of order. It now gives me pleasure to provide the Chairman's address. Before we move to the formal business, I have pleasure in presenting the Chairman's report for the year ended the 30th of June 2020 for the SeaLink Travel Group. It has been a very challenging year for many Australians, from bushfires out of the summer holiday period, right the way through the COVID-19 pandemic, which we're still experiencing. I do want to acknowledge the difficulties many of our customers have suffered, particularly those on Kangaroo Island and in Victoria, our broader operating teams and of course, the wider community. From our perspective, we've been very focused on doing what we can, which is to continue running our businesses as well as possible, responding and supporting our customers and making sure that we are consistently executing our strategy. Overall, our previously communicated strategy of growth by acquisition of infrastructure-light asset has been well-founded and impeccably timed. The transformation -- acquisition of the Transit System Group on the 16th of January 2020 has made the combined operations of business with a very high proportion of contracted revenue, high-quality, reoccurring earnings and entrenched competitive advantage. The associated capital raising and debt refinancing was a monumental achievement for SeaLink and placed us in a position of financial strength. We have continued our vision and are building on the strong businesses and opening opportunities for both companies to continue to lead a diverse land and sea transport industry. The success of our multi-modal approach can be seen by the recent winnings of new bus contracts in Western Australia and South Australia, the Brisbane ferry contract, ferry contract to Hayman Island and most recently, the Singapore bus contracts. Our bus business have remained strong during this period with government-backed revenues supporting approximately 87% of revenue for our transport businesses. Although, the pandemic has had a devastating effect on many of our tourism businesses, our outstanding management team and the JobKeeper program have allowed us to keep our teams together and engage with the company, ready for when conditions recover. As state borders reopen and consumer confidence grows, we see good opportunity in the Australian tourism market to return to strong, sustainable earnings in our tourism businesses. I take this opportunity to again thank our staff who have done an amazing job adapting and changing our businesses to limit the effect of the pandemic and seeking new opportunities to reduce costs and build new revenue opportunities. Regarding earnings, SeaLink Travel Group has produced a statutory net loss after tax of $13.5 million for the full year. This is after one-off pretax costs of $29.9 million related to the acquisition of the Transit Systems Group and the impairment of certain assets and goodwill to reflect their lower utilization levels during the corona pandemic. Our underlying net profit after tax and before amortization was $37.2 million, noting this only included 5.5 months contribution to the Transit Systems business. Shareholders have recently received a $0.045 per share fully franked dividend combined with the interim dividend of $0.065 per share, bringing the full year dividend to $0.11 per share fully franked. This compares with 2019 of $0.15. The Board, of course, considered a range of different scenarios regarding the final dividend. The final decision is in line with our previously declared guidance of between 50% and 70% of underlying net profit after tax and amortization, the industry outlook and future business opportunities. The economic outlook still remains highly uncertain. However, we at SeaLink feel we are very well positioned for a range of different economic scenarios. We have a strong balance sheet and good cash flow. The majority of our earnings are contracted with government, and we have an excellent management team in place. I'm very pleased to acknowledge the appointment of Clint Feuerherdt as our group -- our new Group CEO on the 17th of January 2020. Clint was the former Head of the Transit Systems and brings with him enormous experience in public transport, government tendering, business growth and acquisition. I would also like to thank my fellow Board colleagues for their continued commitment and adding value through offering their diversity of skills and experience and active participation in the governance of the group. A special welcome to our 2 new Board members, Neil Smith and Lance Hockridge, both of whom bring enormous experience to the Board. Also, thank you to our recently retired Chairman, Andrew McEvoy, who provided great support and insight during a period of strong growth. Regarding the position of the Chair of the Board, I take the opportunity to thank the Board for showing confidence in me to act as Chair of SeaLink during these unprecedented times. The Board's decision was based on our desire to have stability during the uncertain times brought on by the COVID pandemic and the acquisition and integration of the Transit Systems. It has been the Board's intention to appoint a long-term Chair once stability has been achieved. At this stage, this is planned for the first half of 2021, and more information will be provided during this time. Finally, I'd like to express my thanks to the broader SeaLink team of more than 8,600 employees all around Australia and overseas for their hard work and contribution during the year, and I look forward to our continued success together. Thank you, and it now gives me great pleasure to hand over to our CEO for his address. Thanks.

Thank you, Jeff. Hello, everyone. I'm really pleased to be presenting to you at my first AGM as group CEO. I'd like to thank the Board of Directors for their confidence in me and collective guidance over what has been a pretty interesting start to a new chapter for the company. It goes without saying that the last 6 months of FY '20 were some of the most challenging trading and economic conditions that any of us have ever experienced. Exacerbating the effects of COVID was the emergence from an extremely severe bushfire season that had a direct effect on the company's assets on Kangaroo Island and obvious disruption to tourism trade. Fortunately, the company had already repositioned itself through its pursuit of the essential services strategy and for nearly all of the second half of FY '20, had the benefit of the recurring government contract come from the Transit Systems Group businesses, along with a number of marine businesses that are also underpinned by long-term government or corporate contracts. Although it seems like a distant memory, we shouldn't forget that prior to all of this, our first half performance for just the marine and tourism division was very strong, and the summer period before bushfires and COVID was delivering outperformance in most marine and tourism operations, including a very strong result in Sydney's Captain Cook Cruises for the December half. The FY '20 full year was without doubt the most transformative year in the company's history. The key highlight was clearly the acquisition of the Transit Systems Group on the 16th of January 2020. This acquisition takes SeaLink from a domestic-based and focused marine tourism business to Australia's largest land and marine tourism and transport service provider with established international operations in both London and Singapore. When we had announced the TSG transaction back in October 2019, there were a number of contracts approaching expiry and new contracts being bid for. I'm pleased to highlight that we have had a 100% success rate in our contract renewal and since January have picked up some very significant new contracts. In total, we have secured over $3.8 billion in contracted revenue during the second half of FY '20, $3.4 billion coming from the Australian bus division. Since the end of the financial year, this success has continued with a recent award in Singapore for 2 contracts worth more than SGD 1 billion in additional revenue over the first 5-year term. In parallel, with this immense success, we have been, of course, managing the effects of COVID on our people, our customers and our operations. For most of our business, this meant focusing on operational risk management to protect our people and our customers, increased cleaning and sanitization and continuing to deliver high-quality and reliable essential services to the community, even in the height of the city-wide lockdowns. While our central bus and marine services were largely unaffected operationally, all of our tourism assets were impaired. The management team has done an incredible job of reacting to COVID to scale their businesses accordingly and protecting shareholder value. Additional government support has been pursued to minimize costs and retain our most important asset, our people, during the period of limited revenue in the tourism business. Fortunately, only 11% of our workforce required JobKeeper support, and this payment kept our people connected and engaged with the business. The full year result demonstrates the resilience and diversification of the new SeaLink business. The result contains our full year trading results for marine and tourism, but only 5.5 months contribution of the Transit Systems Group. As Jeff highlighted earlier, the group delivered an underlying profit of $37.2 million for the full year FY '20, which is a number net of one-off adjustments. The reported result was a net loss of $13.5 million. The yellow portion of this slide illustrates what the result would have been if the Transit Systems business was owned for the whole of FY '20 rather than just the 5.5 months. Indeed, a much larger and strong business. The other key highlight of this year's result is the demonstrated strength of the operating cash flows and a strong balance sheet position. We ended the year with a liquidity buffer of approximately $200 million. As part of the completion of the TSG acquisition, it was very timely that we put in place brand-new, group-wide corporate debt facilities in January 2020 with a combination of 3- and 5-year terms. The business has done an excellent job of generating cash and preserving cash leading to some very strong balance sheet metrics. Net debt of just $150 million and leverage of 1.4x net debt-to-EBITDA. Before I briefly talk to our 3 divisions, I thought it would be useful to put the new SeaLink into context by showing the split of our contracted versus uncontracted revenue, which now also closely mirrors the split between commuter and tourism patronage. This clearly illustrates that the part of the business that is more discretionary is a much smaller component than it was before the TSG acquisition. As of the 30th of June, approximately 87% of the now $1 billion-plus annual revenue is fully contracted with governments around the world and some large corporates here in Australia. We still retain exposure to tourism and the prior success that we have enjoyed in this sector, but is now a much, much smaller component of what we do. The largest of our divisions performed extremely well through the year and particularly well through the last 4 months of the financial year. All contract revenue continued to flow and in parallel, we saw significant future growth secured in this division with the awarding of a new contract in Perth; a new bus contract in Adelaide, on top of renewing existing contracts; and our participation in the group's very first light rail contract. EBITDA generated from the Australian bus division for the 5.5 months was $29.7 million. Our International division also performed very well, contributing $7.9 million of EBITDA to the group result but endured far more challenging operating conditions in the U.K. and to a lesser extent, in Singapore. Again, this division is underpinned by government revenue. So irrespective of the community challenges, our services are required to keep the cities moving and connected with many essential services professions relying on us to get them to work and thus, the contract revenue remain resilient throughout this period. The expansion of our electric bus fleet in the international businesses is really exciting and positions the group well as a leader in zero-emission heavy vehicle technology. As I mentioned, the Marine and Tourism division experienced 2 distinct halves. The first half, a very strong start to the year, traveling into one of our strongest first half performances, followed by the second half that included a period of nearly 3 months where tourism activities were completely shut down. By the end of the financial year, we were ramping up most of our destinations again, and we're seeing strong support from intrastate domestic travel. FY '20 EBITDA for the Marine and Tourism division was $34.1 million versus $47.4 million in the prior year, a 28% decline. Despite the operating challenges, this division did not lose sight of the opportunities and most significantly, secured the contract to operate the iconic Brisbane River ferry contract. It is the first time that this contract has ever changed hands, and I think it is testament to the powerful combination of our public transport experience and marine credentials. While it would seem that COVID pandemic is far from over, we have a business position to perform even stronger even in a COVID and post-COVID world. Over 87% of our revenue in the coming year is contracted with governments and top-tier corporates. I'm pleased to report that our first quarter of FY '21 has exceeded our expectations. All contracted revenue remains consistent, and the cost controls and disciplines that we focused on during the COVID period have lasting effects that will translate into stronger performance in the public transport side of the business during FY '21. Ongoing challenges and operational risk management in our International division will continue to be a focus for us during the coming year. We are evaluating the position of Tower Transit in the London market as the growth prospects in a post-COVID environment look to be limited. The trajectory of domestic travel in Australia is impressive. SeaLink serves 14 island destinations around Australia, and all of our tourism offerings are unique island-based experiences. With the weight of travel money and pent-up demand in Australia, we believe that SeaLink is well positioned to benefit from strong domestic travel due to its unique offerings. To capitalize further on this, we have launched our national brand, Brilliant Travels, to bring all of our destinations into one convenient channel. Sydney and Perth dining and sightseeing businesses will continue to be challenged until we have formal interstate border restrictions lifted. While all other businesses have lifted out of requiring JobKeeper support, we anticipate that these 2 businesses will continue to receive support at least through to the end of December. SeaLink also has an impressive growth opportunity pipeline that comprises further organic tendering opportunities and some select M&A opportunities that stand to unlock new markets. We were really excited to receive the news recently that our Singaporean operation is set to double in size in September next year with the re-award of the Bulim contract and the award of the new Sembawang-Yishun contract. The pipeline of very significant bus contracts in Australia is well advertised, and work is advanced towards all of these processes, and we look forward to continuing our recent run of success in tendering for these large contracts. Over the medium term, we expect the tendered bus contracting opportunities to continue to arise, and our plan is to incorporate sensible M&A opportunities to unlock new markets both here in Australia and in new international geographies. Finally in Kangaroo Island, where SeaLink started, is an ongoing key focus and securing the next generation of ferry license with the SA government is of the highest priority, along with expanding our tourism and accommodation offerings or KI itself. All in all, I'm sure you will agree that FY '20 has been a truly transformational year for SeaLink. Whilst there are some one-off costs and sensible impairments running through the result, the underlying result is very strong in the context of the trading environment. And the cash flow generation and balance sheet strength is testament to the diverse quality earnings base that the company now enjoys. Thanks for listening, and I'll now hand back to the Chair to move to the formal part of meeting.

Thank you, Clint. That was terrific. There are 5 main items of business listed in the Notice of Meeting for today. To allow more time for shareholders to vote, I now declare the poll open for all resolutions. The items before the meeting today are: number one, in consideration of the financial statements; number two, adoption of the remuneration report; number three, election of Director, Neil Smith; number four is the election of Director, Lance Hockridge; and number five is the reelection of Director, Jeffrey Ellison, myself. No vote is required for item 1. The vote for the remuneration of board is advisory only. However, we will take into account the outcome of the resolution when reviewing our remuneration report and practices. Items 3 to 5 are ordinary resolutions. This means that more than 50% of the votes cast on the resolution must be in favor of it for the resolution to be passed. During discussions on each resolution, the way in which proxyholders have voted will be displayed. Only shareholders and proxyholders are entitled to vote. The voting procedures, as I have declared the poll open, the resolutions and the voting choices will now appear for shareholders and proxyholders who have registered as such to vote. Some key points about voting are shown on the next slide. To vote electronically now that the poll is open, the vote is accessible by selecting the voting icon at the top of the screen. The vote simply select the direction in which you would like to cast your vote. Once the option has been selected, the selected option will change color. There is no submit or select button. Your selection is automatically recorded. As previously mentioned, all resolutions at today's meeting will be determined by poll. The polls for all items are now open and will be closed at the end of the meeting. A summary of the proxies and voting outcomes will be lodged with the ASX once finalized. As a reminder, as Chair of the meeting, I will vote all directed proxies in accordance with directions given by shareholders. I am also holding open proxies as Chair of the meeting. These will be voted in favor of all resolutions. Any directed proxies not voted at the AGM automatically vote to the meeting chair, and I will vote those as directed. In accordance with the company's constitution, each shareholders entitled to vote -- attendant vote at the meeting is entitled to a direct vote on a resolution. Shareholders can cast direct vote using the electronic platform as explained in the Notice of Meeting. Please ensure you can have registered a shareholder on the Lumi online platform to enable you to vote online and ask questions. If you have any queries about how to vote or ask questions, please refer to the virtual meeting guide coming the Notice of Meeting and available by the Boardroom share registry page or SeaLink website. I have been advised by our share registry that all proxies received have been checked, and I declare them valid for the meeting. Moving to the first item of business. Consideration of the financial statements. Item 1 is to receive and consider the financial reports, the Chairman's report and the auditors' report for the year ended 30th June 2020. The financial statements have been made available through our website and lodged with the ASX. Now is the right time to ask questions about the business or anything contained in the Chairman's report, CEO's report or financials. I also have David Sanders here from our auditors, Ernst & Young. David is able to answer any questions that relate to the conduct of the audit, the independence of the auditor, SeaLink's accounting policies and the preparation and content of the auditor's report. If you have any questions on the remuneration report, please hold them until that item. I now invite any questions you may have on the financial statements or the company's operation.

Mr. Chair, I have a question from a shareholder, Mr. [ Sheppard ], on the financial reports. On Page 17, there is a note that 4 vessels in Sydney have been hired to Harbour City Ferries. As a passenger, I have noticed that all signage identifying ownership of the vessels has been removed or covered. Was this a condition of hiring or was a decision of the hirer?

Thank you, Mr. [ Sheppard ], for that question. I would suggest that it would definitely be a condition of hiring because wherever possible, we like to display our brand even when we're working for other government contracts.

Mr. Chair, I have a further question from Mr. [ Sheppard ] on the financial reports. In Note 16, contingent liabilities, unsatisfied performance obligations for 2020, are $3.697 million. I am unable to identify any such amounts in the financial statements. Will you please explain exactly what they are and where they appear in the financial statements?

Thanks again, Mr. [ Sheppard ]. I might hand that to our CFO, Andrew Muir, to answer that question.

Thanks, Jeff. Thank you, Mr. [ Sheppard ]. You're referring to Note 16 on Page 53 of the annual report. Just a point of clarification. The contingent liabilities are a $3.7 billion or $3.6 billion, not $3.6 million, and these relate to the unfilled contractor service obligations primarily relating to government bus contracts. As these services are delivered, revenue will be recognized in the future periods and this liability will be reduced.

Thank you. Any other questions, Joanne?

No more questions on the financial reports. Thank you, Chair.

Okay. Are there any questions for our auditor?

There are no questions for our auditor.

On that basis, as no formal acceptance of the accounts is required, I'll move on to Resolution 2 which is the adoption of the remuneration report. This resolution is for adoption of the company's remuneration report. The remuneration report is an ever evolving process for many companies and SeaLink fits into this category. We always strive for transparency in our reporting in order to clearly identify the alignment between the achievement of strategic objectives of the company and shareholder value creation. The Board continues to apply rigorous and significant oversight to ensure that the remuneration framework is fit-for-purpose and the reason in setting the framework is clearly disclosed. This year, we're mentioned in the media regarding the payment of executive bonuses while also receiving JobKeeper for some of our employees. I think this is worth addressing at this time. We, as a Board, consider these 2 events as independent. For our employees, we continuously strive to do our best. We were pleased to secure JobKeeper for those in the tourism businesses most affected by the devastating COVID pandemic. In total, at end of June 2020, around 11% of our group employees were eligible, and we were able to access JobKeeper to secure an income for those affected by the closure or reduction of operations during this time. Without JobKeeper, the company would not have been in a position to keep most of these employees while at the same time acting prudently to protect shareholder value. JobKeeper payments reflected only 1% of revenue for the financial year, and were passed through to employees as required by the federal government. It is our view that JobKeeper, therefore, enabled us to retain and keep employees engaged in our business activities. On the other hand, bonuses paid to key management personnel reflected their performance during the year and was assessed against a number of criteria. Such criteria included, number one, completing the acquisition of the Transit Systems business in January 2020 after some 18 months of due diligence, contracting, negotiating new banking facilities and a very successful capital raising. This was, without doubt, the most complicated transaction the company has ever pursued and delivered for the greatest benefit shareholder. Management staff worked far beyond their position requirements to achieve this outstanding outcome. Secondly, the integration of the Transit Systems business into the SeaLink business, which was achieved without disruption to either business' performance and include achieving synergies to date far greater than those forecast in the initial business case. An outstanding achievement. Also, responding to the challenging circumstances of the bushfires during the second and third quarters. Also, the successful renewal and expansion of a number of key tenders and contracts, including in Western Australia, renewal of the current contracts and being awarded additional metropolitan bus contracts. In South Australia, again, renewal of the current contracts and being awarded additional metropolitan bus contracts, including the iconic Adelaide tram operation with our joint venture partner. In Queensland, been awarded the Brisbane Ferries operation contract. And in Singapore, tendering and subsequently, post the period, winning the renewal of the current contract and being rewarded an additional bus service contract. In total, these activities secured over $3.8 billion in future contracted revenue, an outstanding achievement by management. And finally, the management of the COVID pandemic. This included securing alternative work for employees in our tourism-affected businesses, communicating and managing staff, development of training and professional development projects, providing cross-skilling opportunities, encouraging staff engagement and options focused on maintaining mental health and well-being of staff, all very important to our company. FY '20 was an unprecedented year for SeaLink but the team had -- was able to grow market value of the company from $369 million on the 1st of July 2019 to $965 million at the 30th of June 2020 and now, around $1.3 billion. The successful growth of SeaLink to date represents a small part of the long-term growth trajectory for SeaLink. After the successful transition year that was FY '20, we look forward to you, as our shareholders, continuing to share in SeaLink's future success with us. On this basis, we are pleased to present the SeaLink remuneration report and recommend this report to you for approval. Resolution 2 is to consider and if thought fit, to pass the following as a nonbinding, ordinary resolution. That the remuneration report, as set out in the director's report for the company and its controlled entities for the financial year ended the 30th of June 2020, we adopted. Is there anyone who wishes to speak in relation to this motion?

Mr. Chairman, I have 2 questions from the Australian Shareholders Association. The first question on the remuneration report. As Jennifer Westacott, Chief Executive of the Business Council of Australia, on the Insiders program on the 6th of September stated, "In my view, companies should not be paying executive bonuses if they are receiving JobKeeper." Given that SeaLink received $14.9 million in JobKeeper payments and other government aid, how can the large vines is paying to several executives at SeaLink be justified?

Thank you for that question. I'll now pass to our Chairman of the Remuneration Committee, Andrea Staines.

Thank you, Jeff, and thank you to the Australian Shareholders Association for their questions. I believe that the Chairman has specifically dealt with this question in his comments on a moment ago 2 steps on length. So I will leave the comments at that.

Thank you. Is there any other questions?

I have a second question from the Australian Shareholders Association on the remuneration report. There is insufficient clarity regarding the details of the STI performance hurdles or shareholders to confidently judge the rigor of the metrics used to calculate the outcome. Will you please include clearer details of the STI and LTI hurdles in future reports?

Thank you, again, from the Australian Shareholders Association. I'll pass back to Andreas Staines to answer that question also, please.

Thank you again, Jeff, and thank you again to the Australian Shareholders Association for the question. Yes. As SeaLink continues to grow, we are improving the layout of our remuneration report. And we have been listening to the shareholders throughout the year and have committed and already begun, in fact, the process of presenting a clearer remuneration report next year. May I also add that behind the remuneration report, we do have a rigorous set of incentive performance requirements and KPIs, and we are committed to continuing that rigorous assessment of management going forward. And as I said, being more clear about that in future years.

Thank you, Andrea.

Chair, I have a comment from shareholder, Mr. [ Sheppard ], on the remuneration report as follows: The LTI is partly based on share price. In my opinion, this is an inappropriate measure. Incentives are intended to send a signal to management of where the Board wants it to give attention. Management can only directly influence share price by going out and promoting the shares. This measure has a number of undesirable consequences. Its use should be reviewed and removed. Management are employed to run the business.

Thank you, Mr. [ Sheppard ], again for your comment this time, and we will take that on board as we move forward and develop our remuneration strategy. Thank you.

At this time, I have no more comments or questions on Resolution 2.

Thank you, Joanne. Well, on that basis, I'll move forward to -- as you'll see on the screen, we have received proxies, and that slide shows the number of proxies for the business. The Board recommends shareholders vote in favor of the resolution and the Chair intends to vote undirected proxies in favor. Moving on to the next item of business, which is the election of Neil Smith as a director of the company. This item of business is for the election of Neil Smith, who having been appointed as an addition to the Board since the last Annual General Meeting of the company, resigned and being eligible, offers himself for reelection. Resolution 3 is to consider and if thought fit to, pass the following as an ordinary resolution. To elect as a Director of the company, Mr. Neil Smith, who having been appointed as an addition to the Board since the last Annual General Meeting of the company resigns in accordance with Clause 58.2 of the company's constitution and Listing Rule 14.4 and being eligible, offers himself for election. Information about Mr. Smith is set out in the Notice of Meeting. Neil was one of the founding shareholders of the former -- and the former Chairman of the Transit Systems Group prior to the acquisition by SeaLink. He has over 30 years of commuter transport operation experience. The Board considers him a valued contributor to the Board, and that he brings considerable expertise and skills in public transport systems and in contracting international organizations and demonstrated leadership into the Board. I welcome Neil to the meeting and now ask him to say a few words of introduction to shareholders.

Good afternoon, and greetings from London. I have had the privilege over the past 2 years of participating in SeaLink's transformational journey as it grew into a $1 billion company and the largest provider of passenger transport services in Australia. I began that journey as the Chairman of the Transit Systems and Tower Transit groups and completed it as a Director of SeaLink. I bring to the Board a lifetime of experience in delivery of urban passenger transport services. This has included key executive roles in operations, industrial relations and government relations across both bus groups. Teaching roles at the University of Sydney, University of South Australia and the Massachusetts Institute of Technology in Boston and participation in industry associations in Australia and the United Kingdom. As an Australian citizen, but long-term resident of the United Kingdom, I bring an international perspective and experience of the challenges inherent in offshore expansion for Australian business. I believe my experience and skills will assist the Board to continue to build SeaLink as a respected, effective and growing provider of transport services and through this process, maximize shareholder value. Thank you.

Thank you, Neil. Neil is available to ask any questions from shareholders and proxyholders. So is there any questions? Or does anyone want to ask a question in relation to Neil's appointment?

I have received no questions or comments in relation to the resolution for Neil's election, Chair.

Thank you, Joanne. I note that details of proxies received are outlined on the slide for the resolution. The Board recommends shareholders vote in favor of electing Neil Smith as a director. And the Chair intends to vote undirected proxies in favor of the resolution. I will now move to the next slide concerning the election of Mr. Hockridge. This item of business is for the election of Mr. Lance Hockridge, who having been appointed to fill occasional vacancy in the Board since the last Annual General Meeting of the company, resigns and being eligible, offers himself for election. Resolution 4 is to consider and if thought fit, to pass the following as an ordinary resolution. To elect as a director of the company, Mr. Lance Hockridge, who having been appointed to fill our vacancy on the Board since last Annual General Meeting of the company resigns in accordance with Clause 58.2 the company's constitution and Listing Rule 14.4 and being eligible, offers himself for election. I note that information about Mr. Hockridge is set out in the Notice of Meeting. Mr. Hockridge has extensive international experience in the transportation, manufacturing and logistics sector with a focus on safety, operational financial transformation of the businesses. The Board values Lance's contribution to the meeting, including sharing his expertise in these areas. I welcome Lance to the meeting and now ask him to say a few words of introduction to shareholders.

Thank you, Jeff. It's great to be with you today, and assuming that I am elected this afternoon, I'm certainly excited about the opportunity to contribute to the future of our company, which I believe has built a tremendous foundation, is well managed and well positioned to continue to grow value for its owners. I joined the Board after an extensive executive career at BHP, BlueScope Steel and Aurizon in manufacturing and transportation and logistics. I've worked and lived in Australia and overseas, which has given me extensive experience in areas such as government relations, regulation and labor relations as well as policy and operations in the maritime, land transport and rail sectors, including indeed many examples of business transformation. I led what is now Aurizon through its privatization by IPO and subsequently was Managing Director of that ASX 50-listed company for more than 6 years. Since retirement from executive life, I've been active in the not-for-profit endeavors as well as commercial interests in areas such as technology and asset management together with logistics. My great passions are for achieving world-class safety and business performance, and I thank you for your consideration of my election to Board.

Thank you, Lance. Lance is available to answer questions from shareholders and proxyholders. Is there anyone who wishes to speak in relation to this motion?

Chair, I have no comments or questions in relation to the resolution for election of Lance Hockridge.

Thank you. I note that details of proxies received are outlined on the relevant slide for your information. The Board recommends shareholders' vote in favor of electing Lance Hockridge as a director, and the chair intends to vote undirected proxies in face of the resolution. As the next item relates to me, I will pass the meeting over to our Chair of the Audit and Risk Committee, Fiona Hele, to conduct the putting of the resolution to the meeting.

Thanks, Jeff. This is of business is for the reelection of Mr. Jeffrey Ellison, retires in accordance with Clause 59.1 and 59.4 of the company's constitution. And being eligible, offers himself for reelection. Resolution 5 is to consider and if thought fit, to pass the following motion as an ordinary resolution that Jeffrey Ellison, who retires in accordance with Clauses 59.1 and 59.4 of the company's constitution and Listing Rule 14.4, be reelected as a director of the company. Information about Mr. Ellison is set out in the Notice of Meeting. Jeff previously held the position of Chief Executive Officer and Managing Director until January this year. And under his leadership, the company has seen significant growth and created value for shareholders over that time. I now invite Jeff Ellison to say a few words to shareholders.

Thank you, Fiona. I'm very pleased to offer myself for election to the Board of SeaLink. As many of you are aware, I was, until February this year, employed by SeaLink, most recently as Managing Director and CEO. During this time, I have developed many friendships and business contacts that I believe will continue to serve the objectives of the company. I have recently been appointed to the position of Acting Chairman of the Board to assist in guiding the company through the current pandemic and associated economic challenges. I've also been appointed to the Board of Tourism Australia, recently being promoted to Chair of the Audit and Finance Committee and Deputy Chair of the Board. I'm very passionate about SeaLink and confident that we can continue our history of strong growth through winning contracts and acquisition. I am a chartered accountant and enjoy the rigor of analyzing financial performance and seeking business efficiencies and opportunities within the current operations. Thank you for considering my reelection and allow me to continue to support the company. Thanks, Fiona.

Is there anyone who wishes to speak in relation to this motion?

I have a question from the Australian Shareholders Association on this resolution. The ASA does not support a non-independent chairman. However, given the importance of Mr. Ellison to the transition of the company, we will support the reelection of Mr. Ellison in this instance. We would like to see in the near future an independent chairman. In addition, we would like to see a greater proportion of independent directors on the Board as we do not accept the reason for reclassification of Directors Dodd and Smerdon from non-independent to independent. We would like to hear your perspective on both these issues.

Thanks, Joanne. I'll pass this over to Andrea Staines as Chair of our Remuneration Committee. Thanks, Andrea.

Thank you, Fiona, and thank you again to the Australian Shareholders' Association for its interest in SeaLink. The Board is very aware of the importance of board composition in maximizing company performance and shareholder value. Early in calendar year 2021, the Board will holistically consider 4 areas that affect Board composition, areas such as succession planning, the independence of directors, skills mix, chair role and size of the board. These are all interrelated topics, and we will consider holistically the best way forward for SeaLink to maximize SeaLink's performance and our shareholder value. Until then, we will continue to focus on successfully working through the multiple challenges of calendar year 2020. Thank you.

I have no more comments or questions on Resolution 5 from shareholders.

Thanks, Joanne. I note that details of proxies received for this resolution are outlined on the relevant slide. The Board recommends shareholders vote in favor of reelecting Jeff Ellison as a director, and the chair intends to vote undirected proxies in favor of the resolution. The Board considers that Mr. Ellison's skills and experience of the tourism and marine industry as well as mergers and acquisition and growth are an important part of the overall Board skills composition mix. I'll now hand back to Jeff to continue with the meeting.

Thank you, Fiona, and thank you, Andrea. Now that we've finished the formal business of the meeting, I will address any general questions that have been received and relate to the AGM. I will now address the questions that have been submitted via the online platform. Are there any questions?

Chair, I have one question from a shareholder, Ms. [ West ]. What is the company policy regarding the permanent use of virtual meetings to replace normal meetings? Has the company made a submission to the government inquiry?

Thank you, Ms. [ West ], good -- that's a good question. This virtual meeting is all new to us, as it is to many other companies. But I think longer term, we look forward to holding our traditional Annual General Meetings in the traditional format. We're learning through this process, but I think there are benefits in running an old Annual General meeting. Regarding the submission, we have not sent a submission to government in regard to virtual meetings.

There are no further comments or questions, Chair, received at this time.

Thank you. With there being no further business which may be properly brought forward, this now concludes the formalities. Please ensure that you have voted, and I declare the meeting closed, subject to finalization of the polls. Thank you for your interest in our company and your attendance online for this year's meeting. Please note the results of the poll will be displayed on the ASX website once compiled and also be shown on the company's website. Thank you very much, and I now close the meeting.