LGI Limited (LGI.XA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I am Vik Bansal, Chairman and Director of Board of LGI and it is my pleasure to welcome you to the company's 2025 AGM. Before we begin the meeting, I would like to acknowledge the traditional owners of the lands from which you are joining this meeting and pay my respect to the elders, past and present. I will now introduce you my fellow directors who are here with me, Mr. Adam Bloomer, who is sitting on my left-hand side; Dr. Jessica North; Mr. Tim McGavin who is not here, but he's online; Mr. Andrew Peters and Ms. Abigail Cheadle. Can I also introduce our Chief Executive Officer, Mr. Jarryd Doran; our CFO and Co-Sec, Mr. Dean Wilkinson; our Co-Sec, Ms. Pia Rasal, and our company auditors, BDO represented by Ms. Stephanie Ponting. We are also joined by representatives of the company's share registry, Computershare. No written questions were submitted from shareholders for BDO with respect to the conduct of the audit and the auditor's report as per the process set out for this in the Notice of the AGM, however, I am certain that the BDO would be pleased to address any questions shareholders might have during the meeting. It is now just past 11:00, the nominated time for the AGM meeting, and I'm advised that a quorum of shareholders is present. I'm pleased to declare the meeting open. Before we deal with the formal business of the meeting, I would like to provide shareholders with an update about the company's progress in 2025 financial year and our outlook for the current financial year. My address will be followed by the presentation from our Managing Director, Adam Bloomer. Financial year 2025 is another example of LGI delivering to its commitment. Before I start, I want to thank all our shareholders for the support to recent equity sales and a share placement. LGI continues to grow as signing 6 new contracts over the period, half of these contracts are for long-term landfill gas rights, which LGI will monetize to create ACCUs. The remaining contract is for battery energy storage system to be built, owned and operated by LGI on a closed landfill at Belrose in Northern Sydney. In addition to the new signed contracts, LGI has been able to vary an existing contract and accrete to the extended terms. LGI increased its electricity capacity by 44% from 14.7 megawatt under management in FY '25 and finishing the year with 21.1 megawatts. Our Canberra power station increased generation capacity by 50% and commissioned the 4-megawatt Eastern Creek power station in Sydney. Both the Canberra and Sydney projects were delivered on time and in budget, demonstrating increased project management capabilities within a complex regulatory framework. Stage 2 of the Canberra facility upgrade to incorporate 12 megawatts/24 megawatts of battery capacity is very well advanced. Tesla batteries and transformers are at site. Work is well advanced preparing the AEMO application for full registration of power stations. During the year, LGI added Grafton to our operating carbon projects, bringing the number of operating carbon projects at the year-end '17. At the time of announcing our recent equity base, LGI updated the near-term development pipeline to over 80 megawatts of its projects in execution at project and development. The last year saw the drafting of new landfill gas carbon treatment methodologies, which the Clean Energy Regulator is working to implement by calendar year end of 2025. LGI is supportive of new methodology, which only rewards abatement achieved for all landfill gas projects above baseline established industry-wide. This is an important step forward for improved integrity in our industry. Due to legacy reasons, some of the largest landfills in Australia have lower than default baselines, while newer projects assessed under more recent methodologies have received higher than default baselines. This proposed new methodology will see a more consistent approach applied when determining its lines to all landfill gas projects when registering under the new method. The LGI management team has done an excellent job throughout the year, delivering on key power station projects, securing new contracts, all while maintaining a very strong focus on customer and markets. I would like to thank all of our LGI staff and my fellow directors for another strong performance this year, delivering projects while maintaining focus on the operational side of the business as well as providing valuable service to our stakeholders. Lastly, thank you to all our shareholders again for your support for the company and our mission to expedite the transition to renewables by delivering clean energy and lower carbon solutions. I'll now hand over to Mr. Bloomer.

Thanks, Vik. Good morning to everybody, and thanks for joining us on our fourth AGM, and it's pretty amazing how quickly that's gone by. I think I'm just getting old. By all metrics, FY '25 is a solid year for LGI. We have achieved new highs for all of our key operational drivers, safety, biogas recovery through to megawatt hours and ACCU creation. LGI continues to achieve availability rates over 95%. LGI is focused on investing in our people, assets, parts and parts inventory. This is demonstrated by our FY '25 availability, achieving 98% across the generation fleet, which has been pretty phenomenal. LGI continues to develop and refine our proprietary dynamic asset control system or DACS, as our fleet of assets is evolving, the development of DAC system is staying one step ahead. Our overall volume of generation has reached over 100 gigawatt hours annually, equivalent to panning 24,000 of Australian homes. Our people and their safety is our highest priority when planning and undertaking our work, with an increasing team and increase in overall hours worked across the business, our team focuses on safety resulted in 0 lost time injuries in FY '25. Biogas recoveries continued to increase with over 127 million cubic meters of gas extracted from our long-term landfill gas sites, 11% increase year-on-year. We generated over 109,000 megawatt hours of electricity across our fleet of renewable power stations in FY '25, which included generation for our 2 new units at Canberra and new power station at Eastern Creek. This represents a 13% increase from our FY '24 performance. In FY '25, we created more than 493,000 Australian Carbon Credit Units, or ACCUs, across 17 carbon abatement projects registered under the ACCU scheme, representing a 14% increase compared to FY '24. The company's strong operational performance is reflected in our financial results for FY '25. We increased net revenue by 10% compared to FY '24 to achieve a $33.9 million in FY '25. EBITDA increased by 14% to $17.4 million. The Australian government recently announced 2030 emission reduction target of 62% to 75% with a focus on achieving 82% renewable electricity generation by 2030. This key policy agenda is driving the electricity transition away from coal-fired power station, more towards wind and solar as lower emissions intensity sources of generation. Whilst wind and solar generators are environmentally friendly, they further increase the wholesale electricity market to the influence of weather, meaning that the grid is becoming more volatile. Observing this change over the past decade, LGI is strategically positioning its assets for flexibility to both protect our assets from downside pricing and achieve improved financial outcomes through embracing the volatility by generation -- by generating into higher prices. Our portfolio of geographically diverse and increasingly flexible and responsive energy assets connected to existing distribution networks are well positioned to take advantage of this volatility. LGI's low-cost 24/7 highly responsive assets in combination with our DAC system puts us in a rare position in the National Electricity Market. Looking out to FY '26. LGI is confirming its guidance. Underlying EBITDA is expected to grow by 25% to 30% versus FY '25, subject to market dynamics and timing issues outside the control of the company. The performance of FY '25 would not have been possible without the hard work and dedication of our team. Everyone is contributing to LGI's ongoing success. The team is working on the gas fields, our asset teams, project delivery teams, business development team and people supporting our business. I also thank our Board for their guidance throughout the year. And finally, thank you to all our customers and shareholders for continuing to support LGI. Back to Mr. Bansal.

Thank you, Adam. A copy of these addresses and the AGM presentation have been lodged with the ASX and will be published on the company website. This meeting is being held as a hybrid meeting. Its shareholders are able to attend either in person or online by the Computershare meeting platform. Shareholders online can listen to our live webcast and watch our presentation. They can also ask questions and submit votes online. We will now move to question-and-answer and voting process of the meeting. Given this is a hybrid meeting, the shareholders are able to attend either online or in person, there are a few matters I need to run through. Only shareholders, representatives and attorneys of the shareholders and proxy holders who are attending in person today and holding blue admission cards and those attending online are entitled to ask questions or vote during this meeting. For attendees attending in person, to ask a question, you will need to raise your hand when I invite questions at the appropriate time. Online attendees can submit questions at any time by selecting the Q&A icon on your device, select the topic your question relates to from the top dropdown box and type your question into the chat box at the bottom of the screen and press the Send button. Online attendees can also ask verbal questions by following the instructions written below the broadcast window. Although online shareholders can submit questions at any time, I will only address those questions only at the relevant time during the meeting. If we receive multiple similar questions on the topic, we will try to group them together, and I will ask Ms. Rasal to read out the question at the appropriate time. On voting process, voting today will be conducted by a poll on all items of business, I'll open -- and I'll open the voting shortly. For attendees who are present in person, on the reverse of your blue admission card is your voting paper, show that, this one. You will need to follow the instruction, mark the box beside the motion on the voting paper to indicate how you wish to cast your vote and then lodge it in the ballot box before voting closes. Proxy holders here in person have attached to their blue admission cards a summary of the proxy votes, which detail their voting instructions. By completing the voting paper, you would be deemed to have voted in accordance with those instructions. Proxy holders who are entitled to cast any open votes will need to mark a box beside the motion to indicate how you wish to cast your votes. For attendees online, a vote icon will appear on your device when voting opens, clicking on the icon will bring up the list of all the motions that present you with voting options. To vote, select your voting direction, a tick will appear to confirm receipt of your vote. To change your vote, select Click Here to Change Your Vote and press a different option to override. You simply select one of the options for the relevant motion to cast your vote. There is no need to hit the Submit or Enter button as the vote is automatically recorded. You may change your vote at any time up until I declare voting closed. All attendees whether online or in person, can submit votes at any time from when working opens until I declare the voting as closed. Finally, I appoint Lewis Brimelow of Computershare Investors Services to be the returning officer and he is present here to conduct the pole for the meeting. Formal business of the meeting. We will now progress to that. I have been informed that the notice of meeting was appropriately sent to all registered shareholders and I now table the Notice of the Meeting. Unless there are any objections I will take the Notice of this Meeting is read. The first item of the business of this meeting is consideration of audited financial statements and related reports for the year ended 30th of June 2025. Although shareholders are not required to formally vote on the company's financial and related reports, I welcome any discussion or questions on that report. There is no formal resolution required for this item, and the resolution appears on the screen. I will take that it being read. As I mentioned previously, the company auditors are BDO and Ms. Stephanie Ponting is here. Responsible for the audit of the financial statements is present at the meeting today and able to answer any questions on the conduct of the auditor or the conduct of the report. I'll now invite any questions or comments on the financial report of the directors and the auditor's report for the year ended 30th of June 2025. I ask shareholders who are present in person today, if they have any questions on the financial reports. If there are no further questions from shareholders attending in person, I ask shareholders attending online if there are any questions.

No questions have been received online.

Thanks. As there's no further questions, I will now move on to the next item. The next item is the Remuneration Report. It thought fit, the adoption of the remuneration report as a nonbinding resolution. The resolution appears on the screen, and I will take it as being read. A summary of valid proxies received for the resolution are shown on the screens. The Board recommends you please vote in favor of the resolution. In my capacity as Chair, I intend to vote all open proxies in favor of the resolution. I will now open the meeting up to a question in relation to this item. I'll ask shareholders who are present in person today if they have any questions related to the remuneration report. If there are no further questions from shareholders attending in person, I ask shareholders attending online if there are any questions on this item of the business.

No questions have been received online.

Thank you. As there are no further questions, can I please request you to lodge your vote on the resolution. I will now move on to Item 3. Item 3 is Re-election of our Director, Ms. Abigail Cheadle. Ms. Abigail Cheadle who was appointed as an NED, or nonexecutive director, on 12th of April 2021 and was last reelected as a director at 2022 AGM. Under this resolution, Ms. Cheadle has elected to retire by rotation and being eligible and seeks reelection as a Director of the Company, this AGM. Abigail is a nonexecutive director and Audit and Risk Committee Chair for us. Abigail is currently Chair and NED of Shriro Holdings; the ARC Chair and NED of Reef Casino Trust, and ARC Chair of NED of AIS Limited. She has also served as a member of Audit and Risk Committee of the Queensland Department of Transport and Main Roads, as an NED of 6 other ASX-listed companies, holding positions as Chair, ARC Chair, R&C Chair, and on large unlisted public companies and government-owned entities. Her industry expertise spans technology, renewable energy, infrastructure, finance, professional services, and consumer products. Abigail brings 30 years of international experience across Australia, Asia, Russia, and Jordan. She has held senior executive roles (including partner) with Kroll, KordaMentha, Deloitte, and Ernst & Young, where she built and grew practices across Asia in corporate finance and risk management—, most notably driving the more than tenfold increase in the market capitalization of BFI Finance Plc, Indonesia during her tenure. Abigail holds a Bachelor's of Business Accountancy from the Queensland University of Technology, is a Chartered Accountant and a graduate of the Singapore Institute of Directors course. The Board believes that Ms. Cheadle's depth of experience and knowledge will continue to help LGI to create shareholder value. The resolution appears on the screen, and I will take this being read. The Board recommends you vote in favor of the resolution and in my capacity as a chair, I intend to vote all open proxies in favor of this resolution. A summary of valid proxies received for the resolution are now shown on the screen, I will now open the meeting to your questions and ask shareholders who are present in person today if they have any questions on this item.

In the future, can we just have the directors say a few words at the meeting and that. You read out their experience and all of that sort of thing, but it'd be nice to hear from the actual director?

Okay. I appreciate that. Any other questions? If there are no further questions from shareholders, I ask shareholders attending online, if there are any questions on the side of the business.

Yes, we received 1 question on this item, but we've also received a request from Mr. Mann to put a question on the SPP before the question for Abi's reelection. Are you happy for me to read out.

Sure.

What was the total value of SPP applications from the 470 shareholders applied? Given that you had 1,342 eligible shareholders, 5 million was always an unreasonable cap given that if all shareholders applied for the maximum 30,000, you would have received 40.26 million in total application. Very few companies refuse to disclose that total SPP applications by applying the scale back. So what was the number?

Okay. Thank you for the question. So just clarifying. At the SPP record date of 22nd of October, LGI had 1,342 shareholders that were eligible to participate in the SPP. LGI received application from 470 shareholders. So not all of 1,342, which was expected. The total money raised through SPP was $9.8 million, which was then scaled back to $4.9 million. So that was the -- that is how it worked. It wasn't 40 million. So it was -- the return was 2x. But the institutional shareholders money we received was 4x, which was scaled back accordingly.

Thank you. Should I read out the question?

Yes, please.

What is Abigail Cheadle's personal history when it comes to treatment of retail shareholders in capital raisings. Was this week's LGI SPP scale back, the first time she has been involved with the Board, which struck rigidly to an announced SPP cap when there were over-subscriptions. Also, could Abigail, please explain, how it was fair to only allocate $5 million of a $57 million capital raising to retail shareholders. How did we not even dissolve to be given 10%.