M.P. Evans Group PLC (MPE.L) Earnings Call Transcript & Summary

Ladies and gentlemen, it is now 10:00 a.m. the time appointed for the annual general meeting. And I have pleasure in welcoming you to the meeting. Sadly, not this year, at our usual value of Tallow Chandlers hall, but instead, here in our Tunbridge Wells office. I'm sorry that we will not be seeing you this year in person and having the opportunity to chat with you after the meeting. But I'm glad that you at least have the opportunity to view the proceedings. And indeed, 1 or 2 of you all have asked some questions, which we shall have pleasure in answering a little bit later. A quorum of 2 members is required, and I confirm that the required quorum is present. I'm joined in the room by our Chief Executive, Tristan Price; and our company Secretary, Katya Merrick. I'm also joined via video link by the rest of the Board, by Matthew Coulson, our Finance Director, by Jock Green-Armytage, who is our Senior Independent Director and Chair of the audit and remuneration committee; by Bruce Tozer, who is an Independent Director -- Non-Executive Director; by Philip Fletcher, Non-Executive Director; and of course, former Managing Director and Chairman. And I have great pleasure in welcoming to her first AGM, Dr. Darian McBain, who joined the Board at the start of the year and a number of shareholders have expressed their delight at the news of our joining. Given her grace, experience and high recognition in the world of sustainability, both in the academic and indeed the corporate side of sustainability. And we are already benefiting from excellent contribution in that regard and what is for us an extremely important area. So welcome, Darian. And on the matter of Board of Directors, I'd just like to say, and I'm so sorry that we can't be with him or he can't be with us in person. But to say to Richard Robinow, who retired at the end of the year, a huge, huge thank you for -- I think, Richard, you have tuned in, you are listening to us, watching us. Your extraordinary contribution to the group over so very many years since -- amazingly, you first joined one of the M.P. Evans Group companies, dare I say, in 1983 and have been involved one way or another with M.P. Evans ever since and we have benefited hugely from your wisdom and your advice over the years. We miss you but we look forward to staying in touch and indeed to seeing you at the AGM next year. Now the notice of meeting has been in the hands of members for the statutory period. And for the record, I know that the members present have read it. The independent auditors report of the members of M.P. Evans Group plc is set out on Pages 51 to 55 in the annual report and accounts. The report is on the group's financial statements, including the parent company financial statements. Again, I note that the members present have read it. Notwithstanding that attendance to the meeting is restricted of this occasion with only 2 shareholders, Tristan and I, physically present. Given the overwhelming support for all but one of the resolutions, evidenced by the proxy votes received, the Board has decided that voting at this meeting by a show of hands of those members present remains appropriate for all proposed resolutions other than resolution 10. The reports and financial statements have been sent to all members, and I hope they provide shareholders with a clear explanation of the group's strategy, its activities and its profit and financial position as at the 31st of December 2019. Now before putting a resolution to the meeting, I should like to refer briefly to one or 2 things. Firstly, to the updated trading statement, which was released to the stock exchange at 7:00 a.m. this morning, which I hope you may have had a chance to see and which is available on our website, but I thought it might be helpful just to provide a summary of the key points from that statement, as follows: first of all, with regard to COVID-19, our operations have been remarkably unaffected by this. I won't go into any more detail because Tristan will be speaking more about this later. With regards to oil-palm, fresh fruit bunch, FFB, crops, for the first 5 months of the year to the 31st of May, 2020, the group crops for the group estates, which we have a majority share of, had been 16% higher, pleasingly, at some 276,000 tonnes. Similarly, the crops for the same period for the associated smallholder schemes, the projects attached to many of our new projects, has risen by 17% to just over 70,000 tonnes. So the upward trend continues and is projected to continue for some considerable time yet, as Tristan will also show later in his presentation. With regard to crude palm production, the increase was even higher, one of 35% up on last year to 106,000 tonnes of crude palm oil, the vast majority of which was processed in our own mills, but the rest processed by outside mills. And this has continued at the same high extraction rates that we have performed in former years. Now the reason for the higher increase of the crude palm oil versus the already significant increase in crops was because this year, we bought in almost 3x the amount of outside crop from what we call the third-party smallholders, not those parties -- the smallholders attached to our own projects, but external shareholders -- sorry, external smallholders, to utilize the maximum capacity that we can in our mills. Now moving on to prices. The average price, c.i.f. Rotterdam, to which our ex mill-gate price is very much linked, was $659 per tonne for the 5-month period, considerably up on the $533 per tonne for the same period last year. It has moved around quite a bit at the start of the year very strongly at some $800 a tonne. Then following the outbreak of the pandemic, it fell to something under $500 a tonne. But encouragingly, in the last couple of weeks or so, it has increased by some $100 a tonne back to around the $600 a tonne level. And it seems to be more influenced now by the fundamentals of supply and demand and less by perhaps market sentiment. On the matter of sustainability, the group is a long-standing member of the Roundtable for Sustainable Palm Oil (sic) [ Roundtable on Sustainable Palm Oil ], the RSPO. In 2019, the group achieved 65% of its output as being certified sustainable. Now there's a good reason why the balance was not certified sustainable. And rather than repeating ourselves, Tristan will be addressing this, I think, actually under one of the questions later. So if you hold on, we will explain more about that then. Finally, I think it would be worth my reading out the last paragraph under strategy as follows: thanks to the strength of the balance sheet and positive operational cash flows, the group has the financial resources to deliver its planned investment program. Over the next 3 years, the group expects to commission new mills in Kota Bangun, that's our biggest project in East Kalimantan. In Bumi Mas, that's our new project in East Kalimantan. And in Musi Rawas, that's the -- our newest of all project in South Sumatra, to maximize the oil obtained from its growing crop of FFB at the lowest cost. The increasing maturity of its planted areas and its application of high operating standards means the Board is confident in its ability to deliver crop growth, which is the foundation for improving results. I should now like to ask Tristan to make a presentation about the 2019 results.

Thank you, Peter. Although we're not at Tallow Chandlers hall, we thought we would continue what we started about 3 years ago in making a short presentation to shareholders about, in this case, COVID-19, a short look at 2019 and also what the group does in terms of its approach to sustainability. So if we could turn to the first slide. I think the headline says what we want to say that operations are currently not affected by COVID-19. Crop processed in the first 5 months, as you've heard from Peter, were 35% up on last year and mill extraction rates continue at very good levels. In some senses, we have a natural resilience to the spread of the virus because the group's operations are widely dispersed and quite remote. But nevertheless, we've taken active preventative measures to manage the risk of the virus. And for example, in all our estates, we've closed the public spaces. So schools, mosques, churches, all the sporting facilities have been closed. And we've put a social distancing measures in place. The medical staff there are properly protected, they have the right equipment and are alert to the emergence of the virus, either amongst our own workforce or in neighboring villages. Our Jakarta office, we put on to remote working a little bit ahead of the Indonesian regulations. And so we were actually able to lease enough laptop computers still to enable all of our staff to work from home. And at the moment, we've only had a single confirmed case of COVID-19 amongst the group's 8,000 or so workforce. Of course, we will continue to monitor this extremely carefully and respond to risks as they emerge. Turning to the next slide. Change of topic a little bit and a look back at 2019. So crops were on a strong upward trend again, group and smallholder crops increasing by about 16%. And we regained the growth path, which we've been a little knocked off following the El Nino, the very strong El Nino in 2015, '16, which casted shadow through 2017, '18 crop performance. The result of that was the total crop for processing, including the purchases from independent smallholders, exceeded 1 million tonnes for the first time in the group's history, quite a milestone. And that underpins 20% growth in the production of crude palm oil. There was a small increase in unit cost, and that was associated with quite large areas of hectarage becoming mature and in their early years of maturity, the costs of those ponds that are not quite yet as productive as they will be as they age, pulled up the costs a little bit. We expect the downward path to resume. And 65% of the group's production was certified sustainable. We place great weight on being a producer of sustainable palm oil. And we would address in one of the questions put by shareholders why that percentage is not higher now and why it will become much higher in the next 2 to 3 years. The next slide, please. So whilst in terms of production and operations, it was a successful year. And that only partly offset a poor average price for CPO. It was, in fact, 5% lower than the year before. But nonetheless, revenues increased by 10%. We had strong operating cash flows that enabled us to fund nearly all of the capital program that Peter touched on. And it will come to an end in about 3 years, at which point we will have completed the investment in the projects we currently have. The dividend was maintained, although not covered by profit for the year, strong crop growth projections for the future enabled the Board to conclude that the right thing to do was to maintain or increase its dividend here where that is possible. In the past, the Board has concluded that we can afford to be a little bit leaner in the good years and a little bit more generous in the leaner years. So moving to the next slide. The last section of the presentation addresses the question of how the group is approaching sustainable production. We are a producer of sustainable Indonesian palm oil. And the first time -- for the first time, we produced a self-standing sustainability report in January of this year. And we drew together all of the activity that we undertake. And having consulted all of our stakeholders, including a number of the shareholders, including all of the larger shareholders, we identified 3 areas of focus for how we promote the production of sustainable palm oil. The first one of those was protection of the environment, and we want to minimize the impact of greenhouse gas emissions, and we want to protect forests and their diversity. The second area was about supporting the production of sustainable palm oil. And in first instance, that means traceability and making sure that you know exactly where the fresh fruit bunches originate that are processed in your mills. And it's also about conserving water and managing water resources well. The third focus was a social focus around community and making sure that the communities where we operate, benefit both directly, financially from our presence, but also learn new skills. And we want to be a good employer. There's a point about fair labor. We want to be seen as a benchmark for treating workers properly, paying them properly and making sure there is no discrimination amongst the workforce. And turning to the next slide. Whilst those were our 3 areas of focus, we also perhaps could just look briefly on things we have done in those 3 areas of focus. And in protecting the environment, we've expanded our biogas facility, our methane capture at Kota Bangun, and we are about to begin supplying the electricity grid with green electricity generated at that plant. We're doing detailed soil surveys on all of our estates that will enable us to minimize our use of inorganic fertilizers and maximize the impact of the organic of the organic compost that we ourselves produce at our mills. And a small thing, but we stopped our plant as routinely removing bird's nest ferns from field from palms. They are a naturally occurring fern that grows on the trunks of some palms and are an excellent habitat for invertebrates, those little bugs and beetles and things. So we've allowed them to thrive, we hope, amongst the palms. In the second area, and we see this really as possibly the primary activity that we're undertaking under sustainability. We think it is so important that there is a flow of sustainably produced palm oil. And part of that is making sure that not only commercial producers, but also independent smallholders, the small farmers with a few hectares can grow their crops sustainably and find the market for it. So we participated in a working group on the Roundtable for Sustainable Palm Oil (sic) [ Roundtable on Sustainable Palm Oil ], the standard setting body in this field that was specifically aimed at trying to draw in those independent smallholders. So we helped and contributed to writing that standard. And we've launched our own projects to try and qualify the independent smallholders at our project in Bangka to qualify into that standard and sell -- and therefore, sell sustainable bunches to us that enables us to produce sustainable palm oil. And another small advance that we've eliminated the use of those single-use plastic water bottles and indeed, now get much bigger water containers and refill reusable bottles. On the social side, we not only have trained our own workforce in what is a modern slavery, how to identify it, how to report suspicions of it. But we've also visited our largest suppliers to test their commitments in this field to make sure that they understand the importance of eliminating modern slavery in the modern world. We also continue to work to understand our relationship with the villages and people where we operate. The University of Indonesia has nearly finished a cycle of reports that look at the social aspect of the villages where we are. And this identifies ways in which we can improve our relationship with them immediately. But more importantly, it also sets a baseline against which we can measure how this changes in the future. Next slide, please. So to conclude, we've had a long history and we believe we have a very bright future. So we continue to carry out our strategy, generating income and value growth for shareholders, and we're doing this in a sustainable way. And I know that shareholders would be disappointed, I think, if I didn't show the chart in the bottom quadrant of the slide, which has been shown at every presentation so far of our crop growth. And there, you can see how that crop has grown from 2010 and how it will continue to grow into the future. So we expect the crop just from our own areas and those of our scheme smallholders to -- so without buying any crop from independent smallholders to reach 1 million tonnes in 2021. And then it will continue to grow right through to the end of the decade. So that concludes the presentation for this year's AGM. And with that, I'd like to hand you back to Peter.

Thank you very much, Tristan. I'm now pleased to deal with the general questions as particular points on the reporting financial statements, which we have received from shareholders in advance of the meeting.

Now thank you for these. There were quite a few questions submitted. One or 2 of them were very similar. So in those cases, we've amalgamated them into a single question. But we should address, I think, all of them but one, I think, where there was a request to comment on an analyst commentary about us, which we felt was inappropriate to do. We don't generally comment on analyst reviews. But other than that, I hope we can address all your various points. And we'll divide up the answers between the 3 executive directors: myself, Tristan and Matthew. I'll kick off with 2 or 3 and then Tristan will deal with some -- perhaps his emphasis is more on the operational side and then Matthew on the financial side. So the first question was, are there any benefits to being a larger plantation company having multiple 15,000 hectare estates spread far and wide throughout Indonesia and Malaysia? Well there were 1 or 2 points arising from this. First, we no longer have any estate of significance in Malaysia. In fact, some 15 years ago, we started the program of selling our smaller Malaysian estates to help to fund the expansion and development of our new projects in a sustainable way in Indonesia. What we have left in Malaysia is a small parcel of land, which is a carryover from former years, which has significant property development value but will, at some stage, be sold to help to fund further development in Indonesia and of our share of Bertam Properties, which is a property development company, which also ultimately is intended to sell our share of to fund more sustainable developments in Indonesia. With regard to the general point about size, I mean, there is certainly some benefit to being larger and being able to dilute central overheads, such as the Jakarta office over a greater volume of CPO. But essentially, a really efficient sized unit, if you like, plantation unit is a 10,000 to 12,000 hectare estate with a 60 tonne per hour mill of processing capacity servicing that mill. And you don't necessarily increase the economies by being any larger than that. And that's one of the reasons why we haven't sought to build up really big areas in a single location, partly because we believe it's helpful to have these economic units, if you like, dispersed across different parts of Indonesia, which reduces risk not at least in terms of weather risk. Sometimes we get very dry spells in Bangka or indeed at Kalimantan or Sumatra. And we spread our risk, particularly, on the weather side. But as long as we have these units of that sort of size, then we believe we have very great efficiencies. And we do indeed have -- most of our plantations are of that size. We have about 15,000 hectares in Kalimantan, and we will aim ultimately to get closer to 20,000 hectares. So effective there will be 2 units of 10,000 hectares with 2 mills serving those 2 areas. We have a second project were recently acquired in Kalimantan, the Bumi Mas project, which is again around 10,000 hectares, where there's a mill yet to be billed. We have our Bangka project, where we have a mill servicing that 10,000 hectare area. We have our newest project in Musi Rawas, which is 8,000 hectares, which we plan will rise to 10,000 hectares. And then we have our old estates, 7,000 hectares in North Sumatra around the Pangkatan project with a 40 tonne mill, and then there's a small estate in Aceh, which isn't large enough to have its own mill at Simpang Kiri. So I hope that answers that point. There's just a short point here, a shareholder, has pointed out on Page 23, where it says the upward trend in crop is expected to last into the end of the decade. They just wanted to clarify which decade we have in mind. So just to confirm, as Tristan has showed in his slide that it is up until the end of the 2020s. Have some purest belief that the decade hasn't yet finished and that the recent decade doesn't finish until the end of 2020, but I won't get involved in that debate. But anyway, the point is the crop growth will continue until the end of the 2020 -- 2020s. And another shareholder has written very kindly to say, I'm concerned about the health of the company's employees in the context of coronavirus. Can you provide some detail? And can you make it known on behalf of all shareholders are concerned for them? Well again, I think Tristan has made clear that, well, we had only 1, have had one incidence of coronavirus amongst the entire workforce and our operations have not been affected at all, but we will certainly pass on those good wishes and concern. So thank you for those. So perhaps I'll now ask Tristan to continue with some further questions.

Thank you, Peter. I've got 6 questions relating to operations. The first one was, will you maintain the 8.5 year average oil palm age? So the first point here is that our average age is, in fact, at the moment, just a shade over 7 years. And it is right to say that we have relatively limited areas left to plant in Musi Rawas in South Sumatra. And despite a continuous replanting program on the more mature estates as the palms reach between 20 and 25 years, the average age will slowly start to rise. However, it's worth bearing in mind that the peak productivity of the palm is between about its -- sort of its 9th and its 15th or 16th year. So seen in that context, we still have an extremely young estate. And therefore, the potential for great growth in crop in the years to come. The second question is, is land available to expand the group's hectarage? I would say that we are off at land very regularly. And if it's not weekly than probably fortnightly. I mean, it's that sort of a frequency. I think our bias now given that environmental regulations are tightened, would be to look for, I think, what we would in this -- in the U.K., at least call brownfield sites. So existing plantations that perhaps are reaching the end of their life or partly planted plantations. So those are certainly available. But our strategic focus at the moment is absolutely to maximize the oil out of the existing hectarage that we have and then to add perhaps incrementally to the projects where we have mills, which will, in due course, be all of them, in order to maximize the throughput in those mills. So that, for the time being, remains our strategic focus. Although in due course, we would like to add a further project that will push out that crop growth that we saw until beyond the end of the 2020s. The third question was about -- explain about the group's plans to build 2 more mills. I think Peter has already touched a little bit on this. We have 3 mills already and a fourth mill. In fact, a second mill in Kota Bangun is being commissioned in August. So very shortly, and it's almost complete. We then will move on to Bumi Mas, the other project in East Kalimantan, where we expect to commission a mill probably in the third quarter of next year, 2021. It's a little bit difficult to commit fully to that until we understand the full effect of the COVID-19 would have had on manufacturing. But we're in very close consultation with the contractors. And for the time being, we remain confident that, that should be commissioned in the third quarter of next year. And the year after that, we should be completing our set for the existing projects and building a mill at Musi Rawas in South Sumatra by the end of 2022. The fourth question was, are your estates adequately protected against flooding? I think I'd like to answer that by looking at the different areas in which we operate. I think in Musi Rawas in South Sumatra and in Bangka, flooding is not a significant operational challenge. In 2 of the North Sumatra estates it is, but they're very mature estates, and there is a well-established system of drainage channels and water gates, and we've invested, since we took over the direct management of them, further in improving mainly water gates and improving the maintenance of the drainage channels. But the work there is complete, and the situation is very manageable. In Kota Bangun, we've written about this over the last years in our annual and interim reports, a significant investment has been made in water management there. And that has been both to build high bunds or earthen defenses against river, the rising outside our estate and reaching into it. But also from water that's coming from behind us and flowing through the estate, we don't want it to collect and sit there. So we've invested in constructing a series of compartments with pumps, very large pumps to move that water through quickly, so it doesn't sit in the estate and affect the productivity of the palms. But the work there, I would describe as largely finished, and we should expect to see an increase in yield in the affected areas over the next, I would think, 24 months. So fairly immediately from that investment. There may still be one or two smaller, much smaller areas that we turn to, but that work is largely complete. In Bumi Mas, we've -- the water management challenge there is about seawater incursion. And we've built temporary flat gates there, which are managing the problem. And we will build more permanent water management infrastructure once we really fully understand how the water behaves. The final point I'd like to make here is that just as important as physical investment or infrastructure is attentive management, and that's something that we place enormous emphasis on in those estates where we know this is a challenge for us. The penultimate question is why were fatalities not disclosed in the annual report and why have injuries increased? I should begin by saying that we regret any fatality amongst our workforce or the contractors working for us that happen in or around our estates. All are recorded and very thoroughly investigated by us. Our approach currently is to disclose and regularly update information on this on our website. So it's available there. We've noted the point about whether that should also be included in the annual report and it's something that we will consider for the next annual reporting. On the question of the fatality, the fatality was, in fact, the last fatality on the group's operation was in December 2018. And as such, it was included in the sustainability report, which used data and information for the year to June 2019. But obviously, it falls outside the calendar year 2019. We have, in the last 18 months, really increased the measures that we're taking to improve operational health and safety. And indeed, we've recruited quite a senior manager working from Jakarta to improve what we do in this area. And he has improved recording, very thorough individual, a meticulous individual, as a first step to injury reduction. And we are currently running a pilot of a series of new measures that we intend to deploy at our Kota Bangun estate. So there's a pilot going on in Kota Bangun. We should have the results of that probably during July of this year, and then we will roll out those initiatives as amended as necessary to the rest of the group's operations. And the final question is the one that we've already mentioned a couple of times, which is why is only 65% of our production sustainable? We absolutely emphasize the fact that we're a producer of sustainable Indonesian palm oil. So why only 65%? Again, I'd like to start by pretty great emphasis on the fact that all crop grown on M.P. Evans estates or by its scheme smallholders is grown to RSPO standards. However, RSPO certification attaches to mills, it doesn't attach to estates. So where we sell our fresh fruit bunches to third parties for milling by them that does not qualify as sustainable. But once the mill building program that we've mentioned several times during the course of this meeting is complete, then M.P. Evans will mill nearly all of the fresh fruit bunches that it produces, so increasing its sustainable production percentage quite significantly. There's one thing I've not mentioned yet, which is that where we buy fresh fruit bunches from independent smallholders that is not currently certified as sustainable. I touched on this in the presentation because the group has a project running in Bangka to achieve RSPO certification for the independent smallholders there. And once that is registered and running with the RSPO, those smallholders will directly benefit because they get access to a premium for the sustainability of their bunches, and we will increase our percentage of sustainable production because they're sustainable bunches then contribute to our sustainable production. That brings to an end the questions, the answers rather to the questions that we were asked on operational matters. So at this point, I'd like to hand over to our Finance Director, Matthew Coulson, to address the more financial questions put by shareholders. Thank you.

Thank you, Tristan. So we've received 4 questions on finance matters that I'd like to run through with you now. The first of them was, where are you as a group on the production cost curve? And how competitive is the group compared with other oil palm plantation companies? So the first thing to say in response to this question is that it's actually quite difficult to provide reliable benchmarking for the group against other companies. There's no really standard way of measuring cost of production. Hence, that's why it's quite difficult to give that benchmarking. What we can say though is that we do focus very much on controlling and reducing our cost of production. As you can see from the annual report, it's something that we report as one of our KPIs. We absolutely do believe that we are a low cost operator, and we expect our unit costs to continue to fall as our crops increase. The second question on finance matters is in relation to palm kernels. It states the accounts note that the group made a loss on palm kernels in 2019. Are we competitive? Well I should start by saying that the palm kernels really should be thought of it, in this case, as something of a by-product of milling process. And obviously, our main product is the oil, the CPO that we sell. And yes, a small loss was made on kernels in 2019, really being a reflection of the market prices for kernels in that year. And as I just explained, the group is very much a low cost operator, and that's what we focus on. The third question is around tax. And it asks, is the Indonesian tax rate high or discriminatory? Well the headline rate for Indonesia for corporation tax is higher than in the U.K., but I certainly wouldn't describe it as discriminatory. And in fact, the rate is coming down. It was 25% in Indonesia. This year, it's coming down to 22%. And next year, it will decrease again to 20%. On tax matters, it's worth also pointing out that the mill-gate price that the group receives is impacted by the export levy that the Indonesian government charges on CPO, but the government in Indonesia is committed to investing that levy in biodiesel. So that helps increase demand for the group's products. The last question on finance matters is in relation to borrowing. And the question is, does the group have any plans to increase the level of debt? Now alongside other smaller facilities, the group has a $120 million facility put in place in 2018 with the group's bankers. These facilities were designed to deliver the group's investment program. If there's any fall in CPO prices then the group has a choice to make, do we look at making any adjustments to our investment program or potentially, we may look at taking on a small amount, a modest amount of additional debt. So those were the 4 finance questions that we had received. And with that, I'll pass back to Peter.

Thank you very much, Matthew. There were quite a few questions. I hope that didn't take too long, but they were interesting questions. So thank you very much for all those of you who submitted them. Perhaps we can now return then to the more formal part of the meeting. I now propose that the report of the directors and the audited financial statements for the year ended 31st of December 2019, now laid before the meeting be received. I put the resolution to the meeting. Those in favor? [Voting]

Those against? [Voting]

I declare the resolution carried. In accordance with The U.K. Corporate Governance Code, I announced that we have received proxies in respect of 27,340,904 shares, although voting on 6,832 shares has been withheld on resolution 2. And voting on 1,000 shares has been withheld on resolutions 3, 4, 5, 6 and 7. Voting on 5,379 shares has been withheld on resolution 9 and voting on 925 shares has been withheld on resolution 10. Notwithstanding this, of the votes cast, not less than 99% are in favor and not more than 1% are against resolutions 1, 2, 3, 5, 6, 7, 8 and 9 and not less than 94% are in favor and not more than 6% are against resolution 4. And not less than 58% are in favor and not more than 41% are against resolution 10. Now I have pleasure in proposing that Dr. Darian McBain be elected a director of the company. I put the resolution to the meeting. Those in favor? [Voting]

Those against? [Voting]

I declare the resolution carried. I have pleasure in proposing that Mr. Philip Fletcher, a director retiring in accordance with the company's articles be reelected a director. I put the resolution to the meeting. Those in favor? [Voting]

Those against? [Voting]