NEXTDC Limited (NXT.AX) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the 12th Annual General Meeting of NEXTDC. Limited. My name is Doug Flynn, and I am the Chairman of NEXTDC, and thank you for attending today's meeting. As this is a hybrid format of meeting may be new for some, let me take a moment to outline today's proceedings. Firstly, let me assure you that you will have the journey to participate today, irrespective of whether you are here in person or attending the meeting virtually. For those online, the platform will allow you to ask questions either via the website or the dial-in facility and to vote using electronic voting card. I will provide some more details on these processes later in the meeting. I would also encourage you to download the online portal guide from the NEXTDC website, if you've not already done so. Links to the guide can also be found in your AGM notice letter -- in the notice of meeting or you can also go directly to the Investors Section of the NEXTDC website. A link can also be found in the portal you are now viewing. If we experience any technical issues that have an impact on aligning the 2 audiences attending this meeting, I'll assess the circumstances as they arise and communicate further with you. I've been informed that a quorum is present. Accordingly, I declare the meeting open. Let me introduce you to my fellow directors. Here in Sydney are Mr. Stuart Davis, Dr. Greg Clark, Ms. Jennifer Lambert and Dr. Eileen Doyle, and joining us from the U.S.A. is Mr. Steve Smith. Our CEO and Managing Director, Mr. Craig Scroggie, is also in attendance, together with our Company Secretary and Chief Legal Officer, Mr. Michael Helmer. On your screen, you will also see the names and faces of our leadership team and each of these are joining the AGM today either in person or by audio link. I'll also point out that our Chief Financial Officer, Mr. Oskar Tomaszewski is with us here in Sydney, in particular, to manage shareholder questions on the web interface. So I'll refer to him when it comes time to answer any questions the shareholders have submitted. The notice of meeting was made available and communicated to all shareholders on 10 October 2022, and I'll take it as read. I confirm that the holders of approximately 301.8 million ordinary shares or 65.87% of the company's total shares outstanding have submitted their proxies for the purpose of this AGM. The annual financial statements of the company and its controlled entities as well as the reports of the directors and auditors for the year ended 30th of June 2022, have been published and distributed to shareholders. They can be accessed at our website at www.nextdc.com. Our auditor, Mr. Michael Shewan from Pricewaterhouse is also present. Mike is available to answer questions relating to the conduct of the audit and audit report and accounting policies and the preparation of the financial statements. The auditor report is in our annual report, which is also available at our website. Today, I intend to provide a broad overview of our performance over the past year. Then we'll hear from our CEO, Craig Scroggie, who will update you on business activities. And after that, we will turn to the formal business of the meeting and the resolutions set out in the notice of meeting. As part of receiving the financial statements and reports, we will also take questions in relation to the board, management or the auditor at that time. We would encourage you to submit your questions now or at least prior to receiving those reports. Because we are conducting today's meeting both in person and in a virtual environment, I will spend the next few minutes explaining the process to ensure all participants attending virtually are also clear on how to use the platform, how to vote and ask questions. Voting on the resolutions will be conducted by a poll using the electronic voting card you received after clicking the Get a Voting Card button. Shareholders can submit written questions on general issues or specific resolutions during the meeting by clicking on the Ask A Question button. I do encourage shareholders who have questions to submit them as soon as possible. We have functionality to allow our shareholders to dial in and ask questions by voice. To use this teleconference facility, shareholders must use their unique pin provided to them by Link Market Services. If you do not have a phone pin and would like to ask a question via the phone, please contact Link on 1 (800) 990-363 now to get your pin. When you dial in online, you'll be asked to mute your online sound and listen to the meeting by phone. If you wish to ask a question, you will need to dial Star 1 on your keypad to indicate to the moderator, you wish to ask a question. The teleconference moderator will require your name and will introduce you, prompting you to ask your question by unmuting your line at the relevant time. If you have trouble using the platform or dial-in facility, please check the online guide on the NEXTDC website or contact the helpline shown on the screen. I'll run through these steps again when we come to the formal part of the meeting to ensure you are clear on the process. If you're attending in person, there are also some matters to note. You should have registered your attendance as you entered the room today. If any member or proxy holder has not registered their attendance at the door with our share registrar Link Market Services, could you please do so now, staff from Link are here to assist you. Visitors are also registered electronically on Links meeting registration system used to speak on a matter at an appropriate time, raise your hand and state your name and, if applicable, the name of the shareholder you represent. It will be appreciated if all mobile phones are switched off and recording devices are not used. And with that, I will move to my address. Ladies and gentlemen, on this 12th Annual General Meeting of NEXTDC, I'm pleased to report that this past financial year has seen us once again achieved continued growth in key areas, including new benchmarks for the company's performance. In FY '22, we continue to focus on building the digital infrastructure that is the engine to our growth. We're also investing in our people, processes and technology as we target new standards of excellence to safety, reliability, sustainability and customer experience. The company's vision remains clear. We are focused on helping enterprises harness the digital age and improving our society through the advancement of technology. NEXTDC's purpose is to be the leading customer-centric data center services company. Digital transformation continues to change the world in exciting and disruptive ways. Data centers have become central to the way today's enterprises manage the surging data being generated, stored, shared and analyzed across the economy. Our brand promise is that our customers will receive a 100% uptime for the critical infrastructure in our care. This means that when their digital platforms are hosted in our facilities, they will always be powered, secured and connected to the higher standards. In FY '22, our key performance highlights included revenue increased by 18% to $291 million. Underlying EBITDA increased by 26% to $169 million and contracted utilization reached 83 megawatts, up 10%. New customer acquisition continued to climb and finished the year up 7% to 1,613. Our interconnection strengthened, increasing 13% to 16,613. On screen, you can see the details of our built capacity and billing versus contracted utilization. We continue to expand at a solid rate, driven by the accelerating demand for premium data center services. During the year, NEXTDC increased its contracted utilization by 10% from 75.5 megawatts at the end of FY '21 to 83 megawatts at the end of FY '22. This now represents 73% of our built capacity. The 6 megawatts of new capacity brought online at M2 as well as the recent opening of S3 and M3, we now have a great portfolio of inventory to sell in Australia's 2 largest markets where hyperscale enterprise and government demand continues to accelerate. As at 30th of June, 2022, NEXTDC was billing for 72.8 megawatts of capacity, up 11% from 65.4 megawatts in FY '21. There was a total of 18.1 megawatts of new build capacity added in FY '22 with contracted utilization increasing by 10% or 7.5 megawatts year-on-year to a record high of 83 megawatts. A total of $604.8 million in new capital was invested during FY '22 with activities during the year, including the completion of the S3 Sydney Stage 1 on time and on budget despite a pandemic and importantly, record rainfall in Sydney during 2022. The facility opened with 12 megawatts of available capacity and Stage 1 will deliver 40 megawatts of IT capacity when fully fitted out. M3 Melbourne construction also progressed on time and on budget during FY '22 and practical completion for Stage 1, initial access for customers were achieved in Q1 of FY '23 with the facility formally opened in October of this year. Meanwhile, M2 Melbourne's target capacity increased by 40 megawatts or 67% to 100 megawatts through adjacent land acquisitions with 6 megawatts of new capacity added in FY '22 to support customer requirements. As has been the case for all our second-generation facilities, our third-generation data centers have been designed and built to Uptime Institute Tier 4 standards. Both S3 and M3 sites have been certified Tier 4 for design and have also undergone rigorous testing required to receive Tier 4 certification for built. New facilities continue to be designed according to the highest standards set by the Uptime Institute for Tier 4 Gold, including certification for gold operational sustainability. NEXTDC is still Australia's only data center provider to achieve this level of independently certified design, build and operational accreditation. Now from this slide, you can see we remain well capitalized with June 2022 liquidity of approximately $1.9 billion, including available cash as well as our undrawn debt facilities. Growth in the sector continues to present investment opportunities. Directors and management have a clear line of sight to the company's investment priorities. FY '22 was an important year for capital expenditure with the delivery of the company's 2 largest facilities to date, S3 and M3 delivered on time and on budget. With the initial establishment of S3 and M3, we are forecasting lower capital expenditure in FY '23, which is expected to be in the range of $380 million to $420 million. As you can see, NEXTDC continues to deliver strong year-on-year growth, both in customer numbers and in connectivity services. During FY '22, the number of customers grew by 7% to 1,630 while network interconnections grew by 12% to 16,613. Connectivity continues to be the enabler of cloud. Customers need to interconnect with multiple environments. And during this reporting period, we saw the average number of interconnections per customer rise to 10.3, up from 9.8 a year prior. This growth in average interconnections per customers over time highlights the increased use of hybrid cloud and the need for connectivity both inside and outside the data center as customers expand their ecosystems. This growth, in turn, drives higher margins for us and improves customer retention. Our customers -- our partners and customers have a need to interconnect with a thriving ecosystem that is secure, private and direct. NEXTDC continues to be at the center of the need to enable flexible and resilient connectivity as a service. These numbers demonstrate that NEXTDC has the leading data center ecosystem with more than 70 networks and a total of more than 770 specialist ICT organizations, providing a range of telecommunication cloud systems integration and IT services. At NEXTDC, we are passionate about building a reliable, secure and energy-efficient service delivery model. We continue to operate with Commonwealth Government certified carbon neutrality for our own corporate function and seek to support our customers to achieve their own sustainability objectives. Our facility and operational innovations reduce power utilization to a minimum, reducing power costs for our customers. Next, neutral allows customers to offset the carbon footprint they generate from infrastructure housed in our data centers. Our market-leading energy efficiency is complemented by a continued focus on improving our water usage and a goal of continuing to reduce NEXTDC's and our clients' materials to landfill footprint through our zero waste initiative. As digitization accelerates, data center power draw continues to grow as a percentage of overall global electricity consumption. As more DCs are built to support the future requirements of customers, we are very aware that power consumption within our expanding fleet will also continue to grow. And this translates into a significant social responsibility for NEXTDC. In FY '22, NEXTDC maintained its industry-leading levels of energy efficiency driven by innovative designs, engineering and operational excellence. We embrace changing community and stakeholder sentiments on climate change to make our data centers the most power efficient and sustainably managed facilities in Australia. By aggregating our customer processing activities in a best-of-class facility, we act as an enabler for the digital economy and assist them in reducing their collective carbon footprints. NEXTDC data centers run at the lowest power utilization efficiency ratings in the country, a benefit that will continue to have a direct bottom line impact in a market where energy prices are rising. Energy efficiency also represents a significant competitive differentiator for NEXTDC as hyperscale enterprise and government customers sharpen their focus on ESG performance. We use a range of innovative data hall management tools and processes to tune our facilities in real time. This includes using machine learning based on years of data to optimize variables such as fan speed and water usage. We have a sophisticated temperature monitoring to take advantage of free air cooling, and we recycle air suppliers when conditions allow. Our sustainability focus extends to investing in renewable energy initiatives to reduce our overall need to use grid power. Rooftop solar arrays are progressive from being rolled out across facilities with new solar arrays recently delivered in Sydney and Perth. We've also been a principal partner in the Melbourne Renewable Energy Wind Farm project since its inception in 2014. The carbon offsets we procure for ourselves and on behalf of our customers under the next neutral program, continue to fund critical environmental projects. These projects include replanting native vegetation in critical wetlands as part of the Great Barrier Reef Restoration project and Indigenous Fire Abatement projects in West Arnhem Land. These commitments to sustainability extend our ongoing legacy and pioneering environmental initiatives in our industry. Our M3 and S1 data centers were the first in Australia to achieve a NABERS 5-Star certification for energy efficiency. Both these facilities have large, privately funded solar arrays on their rooftops. FY '22 was another year of double-digit growth despite the ongoing disruption of the pandemic, which continued to impact markets and communities. Our risk management strategies around supply chain, skill shortages and rising power costs have served us well. I'm very proud of the way the team continues to drive the business and achieve success metrics during challenging times while maintaining our focus on innovation and continual improvement across our business functions, especially in product design, service quality and energy efficiency. We've come a long way from a startup to an ASX 100 company in 12 years. And we continue to manage risk in this time of great change, whilst continuing to drive growth and revenues. For our shareholders, we are confident that the best is yet to come. We remain vigilant to business risk. We also know we have the capabilities and differentiation that drives growth and builds trust. And finally, I would like to thank my fellow directors, our management team and our employees across the country who are capably led by our CEO, Craig Scroggie. On behalf of NEXTDC, we thank you, our shareholders, for your ongoing support. It is now my pleasure to hand over to Craig, who will provide you with some further detail on the state of the industry and strategic direction of the company.

Thank you, Doug. Ladies and gentlemen, it is wonderful to have the opportunity to see everyone again in person. And for those that could not travel today by video, this is the best of both worlds, a post-pandemic new normal, and what we expect the future of hybrid work to be. Today, I'm excited to share our thoughts on customer priorities. Our industry, what's driving technological change, and how we are preparing to meet our customers' needs in the future. I'll also touch on our '22 performance, the pillars of our growth engine, and how we're preparing to take advantage of those opportunities and the priorities that will drive our success over the next decade. In addition to our people, financial and operational priorities, as well as the performance of our business. There are many important societal issues that continue to evolve, safety, security, diversity, sovereignty, and I plan to share insights into these important topics as well. During '22, the world emerged from the single largest work from home experiment in history. The way we live and work has changed forever. Here in Australia, we are no stranger to managing the most challenging of circumstances mother nature can throw at us, whether they be damaging floods or raging bushfires, but our focus on business resilience has never been higher than in a post-pandemic world. Despite the many and varied new challenges presented by the pandemic, like closed borders, hard lockdowns, masks, social distancing, we adapted, we innovated and global communities forged paths to a new world order. We hope these extraordinary events are one in a lifetime, but they demonstrate the many reasons mission-critical data centers play a critical role in protecting our economy. This goes to the core of our brand promise; power, secure and connect. This is our 100% uptime guarantee. For our customers, the role co-location data centers play as critical infrastructure to support enterprise and government's ability to operate safely and securely has never been more important. For many who are unable to easily access or support their on-premise networking, compute or storage, the post-pandemic transition to mission-critical co-location data centers and cloud computing emerged as a compelling event for the business community and disaster recovery preparedness. Today, our national digital infrastructure platform is well positioned to help customers harness the digital age. Mega trends are at the forefront of our everyday lives. Author and XPRIZE Founder, Peter Diamandis calls the intersection of these mega trends unexpected convergent consequences. The leveraging of exponential growth technologies such as blockchain, machine learning, AI, virtual and augmented reality, 5G, the Internet of Things, 3D printing and cloud computing. The crossroads of our physical and digital worlds has never presented so many opportunities for technology-led advancements in the future of health care, commerce and sustainability. At the same time, advancements of technology behind these mega trends create significant challenges when used for crime and corruption or to wage cyber warfare. Our communities are increasingly exposed to the devastating impacts of cybersecurity incidents through data breaches and ransomware attacks. The shift in global economic powers, energy sustainability, climate change, food security, geopolitical instability. Protecting our critical infrastructure assets has never been more important. At this time, we're reminded not only of the importance of protecting users and their personal information, but the legislative protections that continue to evolve and play an ever-increasing and important role in protecting our critical infrastructure assets, their ownership and information from bad actors. Our federal government DTA certification demonstrates we have the physical security controls in place to both protect and secure the assets and infrastructure of our customers to the highest federal government standards. Today, more than ever before the retirement of legacy on-premise data centers is a top customer priority to address the operational performance and business resilience of their organizations. The flexibility of cloud and network services, sovereign security, increasing compute density, better sustainability and improved energy efficiency are all important benefits of data center migration. The combination of these factors is a force multiplier, which will reduce risk, cost and complexity for customers and will serve to accelerate migration over the coming years. Doing more with less is an important priority in an environment of rising inflation and supply chain interruptions. This involves our customers extending their previous replacement cycles of their existing infrastructure to address short- to medium-term supply chain imbalances, but improve longer-term returns on invested capital. We're also observing the fluidity of supply chain machinations where positions on procurement are changing from just in time to just in case. It's an interesting challenge to manage scalability for future growth in the current supply chain inflationary environment. Gartner estimates that approximately 10% of organizations have closed their on-premise data center and moved to co-location and cloud. Gartner also predict this could move to as high as 80% over the next few years. It's a significant opportunity for us to help these customers retire their legacy assets, to recycle their capital and to harness the digital age. Digital infrastructure is now intrinsic. It's deeply ingrained in our daily lives, health care, education, lifestyle and entertainment. That is not going to slow down anytime soon. Indeed, it is universally accepted that digitization is going to continue to accelerate, and we're increasingly operating in an application-driven world. We are living in extraordinary times. Technology is pervasive and global data creation is about to explode. According to Forbes, 90% of the world's data was generated in the last 2 years, more than 2.5 quintillion bytes of data are being created every day. We are in an information economy fueled by data, the currency of our digital age. Today, interconnected infrastructure connects everyone everywhere to everything. We see this deep ecosystem of thousands of commerce interconnections continuing to evolve right inside our data center networks. This is the new digital reality. It is the fourth industrial revolution. That takes the adoption of digital services to the next level. It introduces smart autonomous systems, managing ever-increasing volumes of data. Modern business is increasingly powered by the cloud. The technology is utilized in interconnected environments, leveraging big data, machine learning and the Internet of Things to drive growth. This revolution is enabling the reinvention of entire industries and society as a whole. Technology is now expected to make organizations more flexible and agile as well as creating new levels of security, productivity, sustainability and innovation. Co-location combined with on-demand computing can be a deflationary force for our customers in these ever-increasing inflationary times. We play a pivotal role in this new fourth industrial revolution, where technology is being built upon technology as increasing compute density and increasing power demands require the next generation of infrastructure to support the future of compute and hyperscale and enterprise. As this digital acceleration continues, our geo-diverse footprint becomes critically important. It really is the very beginning of the cyber physical age and the greatest opportunities for our platform are in front of us. Today's business leaders understand they cannot be sure where the next disruption is coming from. The cloud allows flexible solution that is agile, responsive and scalable. In Flexera's '22 State of the Cloud Report, 89% of organizations surveyed are using more than 1 public cloud platform and 80% are using hybridized combinations of public and private cloud. The best way for organizations to capitalize on digital trends is by embracing flexible network compute and storage resources that enable rapid scaling up and down to meet their ever-changing needs. The enterprise of the future intertwined with the concept of hybrid IT, and efficient allocation of physical and virtual resources to enable capability where and when it is needed. These trends have accelerated exponentially over the past 2 years. Study by 451 Research found that since the start of the pandemic, 84% of organizations acknowledge that hybrid IT is embedded in their business model. '22 represented another year of robust growth and outstanding achievements for NEXTDC. In '22, Data Center Services revenue increased by 18%. Contracted utilization was up 10% and our interconnection revenues continue to climb. EBITDA rose by 26% and a new $2.5 billion senior secured debt facility was in place providing additional liquidity and improved terms, extended tenure and significantly reduced cost. These are strong numbers, landing above the guidance we provided at the start of '22. We faced new funding in place. The company had more than $1.9 billion in liquidity to continue to invest in our customers' growth priorities. But in '23, we're facing very different economic conditions for those faced in recent time, particularly when it comes to rising inflation and interest rates as well as significantly higher power prices. And with respect to inflation, the company has significant revenue offsets in the form of built-in contractual revenue escalators as well as having been fortunate, contracting for our major construction projects at fixed price rates at a time before the cost of construction started rising. As a result, we are in an enviable position of having recently completed major construction projects and added significant capacity at pre-escalated costs. On the topic of power prices, the company has strong power cost protection built into contracts in the form of power pass-through mechanisms, resulting in most power costs being passed directly through to our customers. Our strategies relate to energy efficiency, and they're critically important for success to ensure that our customers have the lowest possible energy costs, that is facilitated by our highly efficient cooling designs that deliver the industry's lowest operating POEs. And with liquidity of approximately $1.9 billion, the business has the flexibility to take advantage of value-enhancing growth opportunities as they arise as well as to continue to invest in our business as the company's record sales pipeline continues to convert into contractual commitments. S2 was the first of our second-generation builds and one of our most valuable customer learning experiences. It was the first high-rise hyperscale development project that we've undertaken. And it has informed the methodologies underpinning the success of our recently delivered can [ third ] generation developments. While S2 is largely sold during '22, it underwent seamless critical HV power upgrades that continue to support customer IT load growth and that will underpin strong earnings leverage in '22 and beyond. In Melbourne, the M2 campus had its target IT capacity increased by 40 megawatts to 100 megawatts. That was through the acquisition of adjacent land. And in '22 6 megawatts of new capacity was added during the reporting period to support customer growth. Additional land has been secured adjacent to both M2 and M3 for longer-term expansion to support forecast customer growth. With 2 significant public cloud platforms launching in Victoria, we are very well placed to convert customer reservations over time to support our clients' success in those markets. Bringing our third-generation data centers online is a significant achievement for the medium-term domestic growth of the company. Having a strong pipeline of scalable inventory right now, in Australia's 2 largest markets is critical to enabling our success and to support our customers' long-term strategies. One of our most exciting highlights in '22 with the advancements we made in extending the infrastructure platform we're building to meet our customers' growth in Australia in our 2 largest markets and cater for state availability zones as well as dual business continuity and disaster recovery solutions. S3 Sydney opened on time and on budget with 12 megawatts of capacity and the entire sovereign NEXTDC ecosystem was available on day 1. S3 when fully complete, will be our largest Sydney facility to date and bring 80 megawatts of IT load to support customer growth. This magnificent facility is the 5th Uptime Institute Tier 4 certified facility in our fleet. Construction at M3 Melbourne progressed quickly during '22, with Stage 1 completed early in '23. The M3 site was developed and launched within 12 months. It's quite an achievement given a large part of the project space building construction took place during lockdown. We formally opened the M3 facility in October with 13.5 megawatts of initial built capacity and an additional 4.5 megawatts being brought forward to support our enterprise pipeline and anchor hyperscale capacity. M3 is designed to support 150 megawatts of IT load over time in a campus configuration. And it is now the 6th Uptime Institute Tier 4 certified facility in our fleet. Both the S3 and M3 facilities are strategically located 9 kilometers from their respective CBDs, making them large-scale centerpieces in our metro access networks. As established, a new cloud platform scale into the regions, our flexible and agile service positions us well. We are poised to take advantage of our customers' future growth opportunities, which, in turn, drives further market growth across the digital economy. Our extensive enterprise and government footprint continues to attract new cloud on ramps to our metropolitan locations, allowing customers to leverage secure, low-cost and low-latency connectivity to public and private cloud. We are keeping a keen eye on regional growth opportunities. And to that end, we secured expansion land at P1 Perth, P2, B2 Brisbane, and that's putting us in a great position to continue to support growth in those deeply established network-rich regional ecosystems. We expect continued growth in Western Australia, where the resources industry is accelerating digital transformation connected by subsea cable to Sydney and Singapore. P2 is certified as Tier 4 for design and construction and is generating significant resonance with the state government and the booming mining and exploration sector. B2 also certified as Tier 4 for design and construct underwent its third data hall expansion in '22, and now has new inventory on hand to support client growth over the next 12 months. To cap off our regional expansion in '22, we also secured land for new government-supported developments in both Darwin and Adelaide. In conjunction with the Northern Territory government, we announced plans to develop a new world-class data center in Darwin, a facility, which will underpin its digital territory strategy. With multiple new international submarine cables, plan to terminate or transition through Darwin, the Northern Territory is rapidly expanding and emerging as a gateway for sustainable, proximate and sovereign secure data center services for Asia. D1 will be home to the Vocus Darwin-Jakarta Singapore cable system. Design and development approval for D1 is well progressed, and construction is expected to start during the latter part of '23. Completing our presence in Mainland capital cities, we also reached agreement with the South Australian government to purchase land in Adelaide CBD. In partnership with the state and the city of Adelaide, A1 will become the centerpiece of a high-tech innovation growth agenda that further expands the South Australian government's significant work at their Lot 14 Technology Precinct. Edge computing is a distributed computing model, where data processing takes place right at the network's edge. It's close to the data source. And this model supports a local compute service, where only the data that needs to be processed is then sent to metropolitan sites as opposed to sending all data to the central service for processing. This can reduce latency and energy consumption by as much as 60%. Edge computing can help reduce carbon footprint and by using renewable energy sources such as solar and wind at the edge, providing financial, operational, latency and sustainability benefits for our customers. Our Edge strategy is customer-led and commenced with the opening of our first facility at Maroochydore on the Sunshine Coast in partnership with the Sunshine Coast Regional Council. SC1 hosts the landing station for the 7,000 kilometer Japan, Guam, Australia South submarine cable. The first East Coast submarine cable outside of Sydney. It's estimated by RTI that 1/3 of Australia's Internet traffic will pass through our building by the end of '24. This is an exciting piece of communications infrastructure that supports the Sunshine Coast regional economic development plans in the lead up to the Olympics for 2032. Our edge data centers will be designed for regional data-intensive industries, supporting applications that range from specialized location-specific submarine cable landing stations to 5G networks, satellite uplinks and remote operations. Advanced autonomous mines, mining telemetry services, renewable energy, agriculture and the delivery of government services at the areas where demand for edge data centers is emerging. These industries are adopting automation and remote operation through latency-sensitive applications. They're processing substantial amounts of data in real time, something that was previously uncatered for. We continue to collaborate closely with our customers on designing solutions that meet their future edge network and computing needs. This is an evolving area of interest that we are very ready to support. We've secured land in Pilbara region for the development of a new edge data center in Port Hedland, supports our customers' specific need for these specialized edge computing environments in both the telecommunications and mining industries. PH1 will be home to the new Vocus cable landing station for Port Hedland for the Northwest cable system infrastructure that runs from Port Hedland all the way around to Darwin via the North West Shelf. When it comes to real-time data center intelligence, our customers want self-service and automation that cuts down complexity and increases speed. We enable this through ONEDC. The platform that provides our customers with comprehensive telemetry for their DC footprint. Not only does ONEDC enhanced customer experience, but it also dramatically improves our own efficiency. It aggregates the tools our customers require to manage their infrastructure, consolidating real-time data on temperature, humidity, and reporting in a single location. It enables customers to manage service requests, car park booking, tours, secure meeting rooms, rack access, technical support, all through a single pane of glass. Our customers and partners appreciate that our telemetry platform is continually being enhanced. And based on their feedback and future needs, it continues to evolve. Users can also tick a box to opt into our next neutral carbon offset program as well as placing a service order to activate NEXTDC's free e-waste disposal service on decommissioned equipment. In a similar fashion to remote access and telemetry services for the data center, customers are increasingly looking for central and remote operation support for mission-critical operations. This can be in metro locations for network and security operations or at the edge for applications like autonomous vehicle operation, mine safety systems, satellite ground uplinks, ag tech telemetry or forward operating defense deployments. Whatever they need, we can support customers' mission-critical operation requirements from the core to the edge. Digital transformation continues to change the world in exciting and disruptive ways. With customers connecting to multiple clouds, there is a need for a new generation of elastic connectivity. Our partnership with the world's leading technology companies, Microsoft, Amazon, Google, IBM, Oracle, Alibaba, OVH cloud and others continues to flourish. When combined with our cloud center ecosystem of more than 770 of Australia's ICT and digital services providers, we are well positioned to provide our customers with access to the widest range of premium-grade multi-cloud vendors on the market. With more than 70 networks and 15 public cloud on ramps, no data center service provider in Australia has more diversity in telecommunications choice, combined with direct access to the world's leading clouds. In '22, we announced the launch of our fourth Amazon Direct Connect interconnection in Sydney. In addition, we announced Australia-wide connectivity to Google Cloud through our Axon network with physical direct on-ramp both at M2 in Melbourne, B2 in Brisbane. These ecosystems are a key enabler for the Internet of Things, where real-time data transfer is critical between cloud, on-premise systems and users. From the core to the edge, billions of devices, trillions of sensors and billions of users, they all combine to leverage unparalleled network compute and scale. Submarine cable networks play a critical role both for diversity and risk mitigation of Internet services in Australia. And they play a vital role inside our network connectivity systems. The growth of submarine cable continues to be a very important focus for our ecosystem's depth and breadth over the coming years. We are very excited about our strategic partnership with Vocus to support their project Horizon cable infrastructure at Darwin and Port Hedland data centers. And our partnership with our RTI at the Sunshine Coast data center is home to the JGSA cable. And at P2 in Perth, we are home to the Indigo consortium cable system. There are over 1.35 million kilometers of submarine cables in service globally. And as of this year, there are 530 active and planned submarine cables in development. It is fair to say that the demand for subsea connectivity is once again outgrowing its existing capability. And we continue to collaborate closely with our customers on new locations to support more cable landing stations and direct interconnect services to facilitate the handoff of subsea traffic to the data center to the cloud for Metro [indiscernible] 5G and satellite networks. 5G rollouts across the country are providing new connectivity to regions that really need it. 5G can connect more than 1 million devices per square kilometer with latency performance 200x better than 4G. 5G will deliver up to 1,000x more capacity than 4. Australia is a global leader in 5G. And by the end of '21, Australia's mobile network operator had installed 4,000 operational 5G base stations across the country. The population coverage puts Australia in the top tier of nations rolling out innovative technology. We've been very fortunate to support the rollout of many of these systems throughout our national network. Today, according to the GSMA Mobile Connectivity Index, Australia is ranked third in 5G connected devices per capita. By '25, it's expected that 95% of Australians will have 5G coverage. Austrade recently partnered with PwC to explore potential investment opportunities in 5G. And the research found Australia's world-leading 5G ecosystem has the potential to unlock billions of dollars in productivity improvements across multiple industries that include health care, mining, transport, manufacturing and utilities. Satellite is no longer an expensive niche technology. There's lots of bandwidth coming online, especially with the big geo-station re-orbit satellites driving the cost of bandwidth down. Supporting the emerging space and satellite industry is a very exciting area of growth for the company. We are thrilled to be working closely with the team at ViaSat and our partner, Telstra, to support the rollout of ViaSat's new flies at 3 satellite infrastructure. The ground infrastructure ViaSat is building for ViaSat-3 for the Asia Pac satellite is not only located in Australia, but that supports all of Asia. If you've flown in a Qantas airplane and connected to in-flight Wi-Fi, you would already be familiar with some of ViaSat services today. Satellite connects the unconnected. The new generation of satellites with their capabilities and lower cost of bandwidth, are supporting new innovative use cases. ViaSat [ the killer app ] is mobility and use cases include IoT to space, mobile to space, earth observation and more. It's a very exciting area for us in the future. Whether it be 5G, satellite, subsea, metro or cloud connect, the role our networks play is critically important to serve the future of work. In a post-pandemic world where digital HQs and remote work features heavily, information increasingly lives outside our organizations rather than inside them. The architecture of our networks, the latency of applications and database response times and the security and resiliency of our systems needs to continue to evolve. Having access to secure on-demand elastic network is very important to support the new ways in which we work and live. Work is increasingly being categorized as something we do, not somewhere we go. Its location will be defined by the outcomes that are needed, the type of activities undertaken and the people involved. Our values are what we value. Our values are what we aspire to be. Our values define the behavior and skills that we expect from our team in the pursuit of excellence. We continue to strive to live our values every day, and we're conscious to ensure our actions align with the behaviors, which our values embody. Our goal is to ingrain these in how we work with our customers, but also our partners, our suppliers, our community and our people. Our customer-first value is approached with dedication and passion by our team. Now tireless attention to delivering outstanding customer experience is always top of mind. Putting the customer at the center of everything we do starts with having our security, customer service and technical support personnel available 24/7, 365 days a year. We have customer-focused empowered front of house and management staff to ensure customer interactions are frictionless, and that we continue to strive to help customers succeed and find solutions to their technology challenges. It extends to expanding our data center platform in partnership with our customers to meet their ever-changing technology or location, network specific requirements in the future. Our customers are building solutions for their customers' success, and our digital infrastructure platform continues to be built with customer centricity in mind. Our journey over the last 12 years has been an incredibly exciting one. You would have guessed how dramatically the IT landscape would evolve. And one can only imagine where it will be a decade from now. We can be confident that demand for co-location services will continue to boom. Importantly, we have the skills, experience and knowledge to continue to build the infrastructure platform needed to support the growth of the digital economy. We are home to Australia's largest and most active technology ecosystem. Data volumes continue to compound at exponential rates. Gartner forecasts that global cloud revenue will total $474 billion in '22, up 16% in '21. In Australia, the spending on public cloud service is ahead of global averages, we forecast from Gartner suggesting a 17.6% jump to $18.7 billion in '22. Meanwhile, IDC forecasts compound annual growth on cloud infrastructure of 12.6%, from the period of '21 to '26. When you consider that 91% of businesses have now adopted or plan to adopt the digital-first business strategy, and global investment in digital transformation is projected to grow at a compound rate of 21.1%, these numbers bode very, very well for our company. We are very excited about digital acceleration in Victoria and the opportunity it presents. As cloud has grown and availability zones expand to meet latency and data resiliency requirements, so too is the importance of Australia's second largest city grown as a new cloud computing hub. In addition to the 6 megawatts of new capacity commissioned as part of the M2 expansion, the M3 development advanced rapidly. Opened in early '23, our first customers are already live in the facility and continuing to move in over the next few months, which means that we're now in a strong position to support multi-site resiliency for government and hyperscale in Victoria. Sydney was the first major megawatt computing market in Australia and has been home to many organizations deploying Cloud First in Australia. The size and scale of the region is now hundreds of megawatts. Spread across multiple availability zones, it continues to grow. The Sydney market has the potential to reach a gigawatt of compute capacity in the coming years. We aim to provide and maintain a safe and health working environment for all our workers, for our customers and for our visitors. Safety is at the heart of everything we do. Whilst our culture embraces this concept by having achieved ISO-45001, we can independently demonstrate the safety culture is process-driven and disciplined. Our safety management systems address the unique hazards and processes associated with operating a data center. NEXTDC has a dedicated in-house WHS team that oversees both the capital works and operational aspects of our business. We empower all employees and contractors to act in a safe manner and to be an active advocate for safety. We seek out global best practice through engagement with our teams, our customers, the industry and WHS peak bodies and want to achieve our safety first goal of 0 injuries in the workplace. In '22, we reduced our operational total recordable injury frequency rate from 5.7% to 0, an outstanding effort from all our operational and customer service teams. Working closely with our construction partners, we also reduced our capital works project TRIFR from 15 to 10. In addition to this 33% reduction, we saw zero recordable lost time injuries across our data center operations. The mental health of our teams is also a critical area of focus for us. We actively partner with health service provider Sonder to promote well-being and personal safety across the organization. We now have 26 employees across the country trained as mental health first-aid offices. We continue looking for new ways to achieve and sustain safety first goal or zero injuries in our workplace and those of our construction partners. Today, all organizations need to focus on sustainability, and that is at the core of managing technology and infrastructure. We are focused on that journey and know that responsible and environmentally sound data center practices and not only a moral imparities, but a competitive advantage. We're committed to supporting our customers' needs for building digital infrastructure that is dependable, secure, energy efficient. We have prioritized the procurement of renewable energy through increased engagement with our energy providers and the further development of our rooftop solar now in M1, S1 and P1. The future of the power industry is in incredibly significant focus when considering the current energy market challenges, securing it will continue to be an important factor in our expansion plans. In '22, we saw 188% growth in new customer selecting NEXTneutral, a simple ONEDC opt-in enabling customers to offset the carbon emissions from the IT footprint in our facilities. That allows them to make simple effective progress towards their own sustainability goals. Next, mutual build for our own corporate operations, under the Australian Federal Government's Climate Active Program. Our goal is to reach 100% renewable in 2030. We seek to take action to minimize carbon emissions directly and where we cannot avoid it, we procure carbon credits for our business through the Quantas Future Planet program. We have been a principal partner of the Melbourne Renewable Energy Project since its inception in 2014, which is the first for a data center operator in our region. MREP's 80 megawatts, Crowland Wind Farm in Victoria began delivering power to the grid in January 2019. In '22, we maintained the highest levels of operational energy efficiency in the country. Our NABERS certification continues to demonstrate an independently certify our highly efficient designs and operational standards. Our facilities are also compliant and certified at the industry-leading ISO-14001 standard for environmental management systems. Our evaporative cooling designs allow us to deliver the lowest possible PUE to our customers. This is a topic of significant focus for the industry and a driver of cost saving for customers and a source of competitive advantage for our company. Moreover, it's critically important for the environment, both today and into the future. Waste management is also playing an increasingly significant role in our sustainability strategy. We recycle all our cardboard, fluorescent light tubes. We manage our waste for our own operations and for our clients across our national network. We've set achievable targets for zero waste with the facilities management and central operations team, who worked diligently on the process and infrastructure to deliver it, not any one action, but a combination of many actions that continue to create positive momentum in our commitment to achieving sustainable operations. In '22, NEXTDC continued to be recognized for our global industry leadership in data center engineering, customer experience and energy efficiency. We continue to invest in our Uptime Institute Tier 3 for our first generation facilities and Tier 4 certification for design, construction and operation for our second and third generation sites. Both S3 and M3 now have undergone and received Tier 4 certification. The program gives NEXTDC a clear differentiator in the marketplace. It creates trust in our fault-tolerant ability to deliver on our 100% uptime guarantee. It builds confidence that government hyperscale enterprise organizations need to have in their data center services partner. More broadly, the industry continues to recognize our achievements in innovation, engineering and operational excellence. In June '22, we were recognized for the second consecutive year as Frost & Sullivan's Australian Data Center Services Company Of the Year. The award was presented for NEXTDC's expertise in data center in the industry and our dedication to customer experience and commitment to excellence. NEXTDC has long been committed to our people building a keen sense of connection with the local community. Our Live to Give corporate social responsibility programs allows our team members to give back to their communities. It continues to be an important part of working at NEXTDC. With interest rates and the cost of living on the rise, there has never been a more crucial time to support those people in our communities that need it the most. Our corporate partnerships with the Smith Family, UN Women, SolarBuddy and the Red Cross, further underscore our commitment to giving back. We're also part of the Pledge 1% movement and have an active workplace giving program with dollar-for-dollar donation matching for partner charitable organization. In '22, we also increased the number of paid volunteer days for every employee from 1 to 3, and introduced paid emergency management leave for up to 4 weeks. These benefits served a critical purpose when recent extreme weather events affected some of our team and their communities. We encourage team members to participate in skills-based volunteering opportunities such as emergency response, marine rescue and bush fire brigades. We continue to build upon a culture of respect and belonging. Aiming to ingrain inclusion and diversity as a central tenant, we believe that continuing to focus on diversity will drive new ways of thinking, innovation and, therefore, create further competitive advantage. 33% of our workforce is female with a strong representation of mature workers. We're a signatory to the 40-40 vision statement and have adopted targets to achieve gender balance at the executive level by 2030. There are functions in the business that reflect female participation rates at or above 50%. Company also demonstrates this gender diversity at the board level, we're 1/3 of our Nonexecutive Director Board members are female. Web 3 has the potential to change the way we think about commerce and trust. While there has certainly been considerable controversy around blockchain and crypto in recent times, the underlying technology has extraordinary potential. We continue to see new ecosystems emerging as Web 3 platforms develop and evolve. One of my favorite quotes is from Bill Gates, "Most people overestimate what they can achieve in a year and underestimate what they can achieve in 10 years." It is believed that Gates was paraphrasing, Roy Amara, who was a Stanford computer scientist. In the 60s Amara told colleagues that he believe that we overestimate the impact of technology in the short term and underestimate its effect in the long run. In 1999, author and inventor, Ray Kurzweil said that the law of accelerating change developed evolutionary systems at an exponential rate. While this is most obvious for technology, Kurzweil hypothesized that the principle is relevant to numerous other areas. In an essay he wrote on the topic, an analysis of the history shows that technological change is exponential. Contrary to the common sense intuitive linear view, so we will not experience 100 years of progress in the 21st century. It will be more like 20,000 years of progress at today's rate. The returns such as chip speed and cost effectiveness, increase exponentially. Just think about how much has changed for us in the last 10 years. S1 was designed for 11 megawatts, S2 for 30, S3 for 80. And in the next few years, S4 will have a target future capacity of 300 megawatts. We've witnessed an order of magnitude change in 1 decade, what will the next decade hold? That's why NEXTDC continues to expand its strategic land bank, why we're putting ourselves in a position to take advantage of the next decade of opportunities with expansion capacity aligned to our customers' needs. And that's a nice segue into the topic of future planning for S4. In early '22, we announced our single largest landholding in Western Sydney, the site is in Horsley Park and will be the location for an amazing technology campus with a target capacity of 300 bank. When added to M3's Melbourne campus located in West Footscray, we've secured critical expansion capacity for the next decade of growth in the 2 largest markets in which we operate. In addition to these significant markets, we've also secured additional land adjacent to B2 in Brisbane and M2 in Melbourne, P1 and P2 in Perth to allow us to extend our capacity in those already very well-established markets. A few years ago, we set up a small team of key personnel in Asia to begin exploring the opportunity to develop a regional business that could replicate the success that we've had in Australia over the past decade. Our strategy is to build a highly diversified ecosystem that is consistent with our core network and co-location products and go-to-market strategy. Now while the Singapore government has not approved any further land allocations for data centers since introducing its moratorium on further development. And obviously, through COVID, it slowed travel, we wanted to advance our plans in the past 2 years. But despite all these challenges, has not dampened our enthusiasm for the region. The economy SCA22 report, which was compiled by Google, Singapore's Temasek and Bain as Southeast Asia's largest and most digitally connected economies, predicted that the region's digital economy would top $200 billion in '22, significantly outpacing previous projections. We remain committed to finding a disciplined path to building a successful business in the East Asia, excluding China region over the next decade. We continue to identify new opportunities for greenfield developments in partnership with our customers in these very exciting markets. You will be pleased to hear that we've had a strong start in '23. The guidance we provided reflects the company's expectation of further solid revenue growth between 17% and 22%. We expect underlying EBITDA to rise between 12% and 17% and capital expenditure to be in the range of $380 million to $420 million. As mentioned earlier, whilst FY '23 is broadly looking like it will present a more challenging economic -- macroeconomic environment, the company has strong inflation and power cost protection built into its contracts in the form of revenue escalators as well as power pass-through mechanisms resulting in the majority of power costs being passed through to customers. We have inventory across all markets and are in the fortunate position of having the strongest sales pipeline in the company's history, including a record backlog of customer reservations that we expect will convert into material new contractual commitments over the next 6 to 12 months. And it gives us great confidence that the next few years will be significant for the company. We've entered '23 with strong liquidity of approximately $1.9 billion, provides the business with the flexibility to take advantage of value-enhancing growth opportunities as they arise as well as the ability to continue invest in the business as the company's record sales pipeline starts to convert into contractual commitments. As NEXTDC continues to grow, we remain focused on scaling our people, our process and our technology to ensure that we can take advantage of the exciting opportunities in front of us. In closing, I'd like to thank our board for its continued support and commitment for driving excellence and good governance. I'd like to thank my executive team sincerely for its leadership and dedication as well as every team member for their passionate contribution as we continue to work towards the goal of achieving our vision and purpose. Finally, I would like to thank you, our shareholders, for your support. It is exciting to be in such a strong position when the industry is just emerging and has extraordinary exponential growth in front of it. With the opening of our third-generation hyperscale campus data centers in Sydney and Melbourne, we are incredibly well placed to sustain our success going forward. We hope you will continue to share this journey with us. And I look forward to answering your questions later in the proceedings. In the meantime, I will hand the meeting back to Doug. Thank you.

Thank you, Craig. Now before proceeding with the business of the meeting, I'd like to just remind you of today's procedures. Link Market Services have been appointed returning officer for this meeting. I'm satisfied as to their independence. We'll be conducting all voting on the agenda items by poll. On a poll, every member present in person or by representative, attorney or proxy is entitled to one vote for each share held. If you are intending to vote in person, you should register with Link Market Services to do so. If attending online, you can cast your vote using the electronic voting card received after you register to get a voting card. You'll then be asked to enter your shareholder number, which is your SRN or HIN, plus post code if you're in Australia, or a country if you're outside Australia. Then to cast your vote, click on the submit vote button. The proxy votes already received for each resolution will be viewable on the platform as we move through the resolutions. These will be counted as at the proxy voting deadline, which was 11:00 a.m. Sydney Time on Wednesday, 16th of November 2022. Any undirected proxies in my favor as Chairman will be voted in favor of the relevant resolution. Following discussion with all items of business, I will close the poll 5 minutes after the meeting ends. As the results of the poll will take a little while, they will be announced on -- to the ASX this afternoon. Shareholders can submit questions during the meeting, and if you are attending online, you can also do so by clicking on the Ask A Question button. To ensure questions reach us in time, I ask that you submit them now if you have not already done so. Again, general shareholder questions submitted online during the meeting will be addressed after we receive the financial reports and when the formal business is completed. If we're not able to get through all of them today, or if there are specific questions that would be better addressed on an individual basis or respond to them after the meeting. If we receive multiple questions that are the same or of a similar theme, we'll try to amalgamate them into one or choose to answer the broadest question, which covers off others. Due to time constraints, we may not be able to answer all your questions. And if this happens, we will endeavor to answer all questions via e-mail following the meeting. For this reason and to ensure all shareholders have an opportunity to ask a question today, we will ask -- we'll accept up to 2 questions from each shareholder for each item of business. Accordingly, we ask you to submit your questions to each item separately. I will now move to the formal resolutions. The first item on the agenda deals with the receipt and consideration of the financial reports and the reports of the directors and auditor for the financial year ended 30th of June 2022. No shareholder vote is required in relation to this item of business. However, shareholders can now ask questions or have discussions on these matters. NEXTDC's financial report, directors report and auditors report for the year to 30th June 2022 is incorporated in the 2022 annual report, which has been sent to all shareholders who have requested the report and which is available on the company's website. I would encourage any shareholder who has a question on these reports or on any of our business in general to raise them now. This is also an appropriate time to raise any questions you may have of the auditor, which are relevant to the conduct of the audit and the preparation of the content of the audit report. Are there any shareholders in the audience who wish to ask a question? Sir?

[Technical Difficulty] in the near future to close the old plant, B1, which has been causing considerable news noises to local residents. That's B1, the 20 Wall Street which dates back to 2011, I think, and which has a fairly small capacity.

Thanks for that question. I'm going to pass that to Craig.

Is it possible to close B1? The answer would be no. It's hosting mission-critical operations services for Queensland Health hospitals, other important mission-critical services. It hosts the power grid in Queensland. So in the context of closing it, if I was to rephrase the question, if the concern is relation into noise or local resident impact, we always take those matters very seriously. The noise abatement issues that we have, generally, the data centers, the only noise they create is from the chilling systems. B1's chilling system. Obviously, it was the very first facility that we built, and whenever facilities are in a CBD location, they're very, very close to residential buildings. We have continued to ensure that we are finding new solutions to reduce any unnecessary noise. We are aware any time that we get any concerns from residents that we work closely with relevant authorities and our team to find solutions to reduce noise that is concerning people. It's a very different issue to, are we meeting our noise abatement requirements in the context of local government. So generally, the majority of our areas we are going to -- have to comply with ambient noise maximum levels, but if there are any concerns that are ongoing, we will continue to work very closely to ensure that we can reduce any noise for local residents. It is something that we take very seriously. We know that the data centers play a critical role in supporting, hospitals and other mission-critical infrastructure services, and they do need to live inside our communities, but we have to pay very close attention to ensuring that they don't have an impact on the residents and acknowledge that that's something that we must continue to focus on. Thank you.

There was another question over here.

This is a question to the board. We have yet another year of a trading loss, $1.6 million this year. So it's getting better, but the company hasn't actually made a profit for 4 years. So this is an ASX 100 listed company. It's got plant and equipment in place worth about $2.4 billion, but it just doesn't generate a profit. Now every year, we see the same old excuse that this is a growing company, and that's why it doesn't generate a profit. Well, when I look at the data centers in the annual report, 9 of the 11 were in place in 2018. So they are quite mature businesses. They should be generating a profit. And secondly, even if the company is buying new plant and equipment, they are capital items. They are not expense items, and I'm particularly looking at someone with an accounting background. So why does the company simply not make a profit? And I also look at competitors. And the company's largest competitor is the large U.S. company, Equinix. And every quarter they report and when you go through their quarterly reports, almost without fail, they're making a profit of 9% of revenue. And in the last couple of quarters, they've upped it to 11%. Now if this company were making 9% of revenue, that would be pretty good. So the question is, why isn't the company making a profit? And what's the board going to do about it?

We -- every single person here could give you the answer, but I'm going to pass it to Craig as the key guy driving the company.

Yes. Thank you for the question. I'll pick 2 topics and then if there's anyone else that wants to add, please feel free. First, the Equinix example is an important one. They're the global leader in building data centers, a $70 billion company. They've been in business for more than 20 years, and we are incredibly privileged to have their former President and CEO, Steve Smith, who lives in the U.S. on our board. Steve has been with us for a couple of years now, and he was responsible for building Equinix over the last decade into the world's leading data center and interconnection platform. I regularly discussed this topic with Steve in relation to growth and investment capital. So I would answer your question in 2 ways. The first one is in our first generation of data centers, S1, M1. Once they were full, if we had essentially stopped investing in future customer growth, those facilities were producing more than a 30% return -- 30% at the EBITDA level. And the company would be producing very significant operating cash flow. But given the customers continue to grow, the industry is really at its infancy but we are a very young company. The opportunity is so significant for us to continue to grow our infrastructure platform that it's not really a question for us of whether we think that we can continue to produce those very, very good economics, it's really just a question of in the future at what point in time we decide to stop investing in new capital, new developments. So Steve would answer this question by simply saying that Equinix, as a REIT, a slightly different structure, but they're 20 years in the business. and they operate in every country in the world. As we continue to invest and add more facilities, we have to scale the business' capability to operate across multiple geographies as well. There is not a simple one answer to the question you asked because it's actually a very, very complicated issue when you pull apart the balance between us deciding should we just have significant runoff cash and return that to shareholders? Or do we believe that we can continue to make a very good return on invested capital over the course of the next decade or 2 or 3? And I strongly believe that the opportunity is in the future. We've only really just begun. Doug?

Thank you. Any further questions from people here?

I've got a question about Note 2024 in the annual accounts. The purchase -- correction, the placement of shares in the company sovereign cloud holdings. Now Note '24 indicates that, that took place in November '22, which is next week. So clearly, that's an error -- that's correct. There's an error in the annual report about that. Are there any others that we should know about that are significant?

Not that we've noticed.

Okay. Now the company took part in a placement that -- and we're paid $12.4 million. Then it also acquired some more shares in a pro rata rights issue. So the total cost was in the order of almost [ $70 ] million. And I see that there was an impairment charge of $7.9 million because the value of the shares decreased from about $0.50 to $0.245. So clearly, that doesn't look like a very good investment, does it. And I also see that the share price has gone down from 24.5 as at [ 30 June ] to now about 18 today. So will we expect there to be another impairment charge this financial year if the share price continues on its current trajectory?

I think broadly, we see this as a strategic investment, we were not expecting this to suddenly turn into [ exceptionally ] profitable gain overnight. This is a longer play than that. Perhaps if I ask Craig to...

So we see the sovereign security concerns. We're seeing that play out in the news every day, Medibank, Optus, these type of issues. The Infrastructure as a Service and security space for sovereign Australian organizations is critical. And this is a very young company. They've just started. They have quite a talented small team, and they are building security and infrastructure technology for Australian critical infrastructure assets. It's a very niche small space. Unfortunately, the share market goes up and down. If you look at the U.S. share prices of tech companies and other things, we can't control those and we can't control the share price of this company. We do believe that the long-term space that they are in is very interesting. As a company, we don't want to be in that category because we are very focused on being the best in the world at what we do. But we see the ability to learn and be part of their journey as they are building a sovereign secured platform that is desperately needed in this country. So my position is that simply the outcome on paper is an accounting one. And our expectation when we made an assessment of the company is that they would be successful at what they're doing over the next 5 to 7 years. It's a very big space. Cybersecurity is a very complex problem, but we believe they've got a really talented team, and we want to support what they're doing.

So that accounting issue so far resulted in $9 million being blown away. And I also see from the notes to the accounts that participate in the placement NEXTDC incurred transaction costs of $1.1 million. That's unbelievable. Yes. So who was it paid to? And what did they do for $1.1 million?

Do you want to answer?

Yes. So when we make an assessment of a company, we need to do due diligence on the technology, on the IP rights and ownership looking at very complex software platform for security. So all of the due diligence that goes into ensuring that they own the underlying technology, their capability that we think the platform is right. We measure twice and cut once to ensure that we're investing in...

So if the $1.1 million paid to a firm of lawyers or something like that?

Lawyers, advisers, finance review, all of the professional advisers as part of due diligence in choosing the right company.

I find $1.1 million to be extraordinary, particularly as I've had a look at sovereign cloud holdings, its costs are doing the rights issue where they had to employ underwriters, employee brokers, prepare presentation was less than $1 million. NEXTDC blew away $1.1 million just to buy a 20% share. It's unbelievable.

I think we've had that question. This could have been a private company investment, it would have been a different conversation. So do we have any further questions?

Relating to your debt to equity measures are starting to increase to levels and our interest cover are starting to increase is actually going down. I'm just wondering, is there a policy on your level of debt? And are we getting close to how high it should be?

So we are -- we remain well within our debt covenants -- and there's no expectation of going anywhere near our bank debt covenants as we look forward. It's appropriate for the company to have a mix of debt and equity, and we wouldn't want to be funding everything out of equity in terms of trying to drive returns to shareholders as we go forward.

I didn't ask whether it was appropriate to have debt. I asked how much depth in relation to your equity because it looks it is definitely increasing.

There is a board, the Board looks at this continuously with the advice and support of our CFO. I'm not sure, Oskar, whether you'd like to add anything to that?

Thanks, Doug. We look at this continuously. We're a growing business. We're not yet at a point of maturity where like others like Equinix and Digital Realty which are quite mature, they look at particular debt-to-EBITDA ratios. And it's younger from Equinix in particular at a similar stage of its evolution. It had a very similar capital structure to the one that we have today. There's no particular ratio that we are looking to move towards every year when we look at our debt equity funding mix. We look not only at the current stage of development, but also the future earnings that we will generate from the investments that we're making.

Are there any further questions?

In all of the presentations that we get each year, we always get the figure of growth in earnings before interest, taxation, depreciation and amortization. It almost seems that you think that these costs are not proper business expenses. And the growth figure -- the top line figure always looks impressive. But what we don't get for guidance purposes and you put guidance up on the screen. What we don't get is what are the increases in those costs, i.e. interest. And given that you borrowed more, it's going to be more depreciation and amortization, given that you've got more property, that's going to be more depreciation costs given that there were borrowing costs and intangibles, that's going to be more amortization. And if haven't forbid, the company actually made a profit, there might be some taxation. So we're getting half the story. We're getting the top line figure of growth in EBITDA. But what we're not getting is the components that make it up, i.e., interest, depreciation and amortization and taxation.

It's -- look, it's a good point. However, in terms of the number of elements and lines that we can sensibly give guidance on, we've chosen to. One is revenue and the other is EBITDA. And that is pretty common in many businesses. You're right, we can choose multiple lines there, but that's all shown and available in our financial reporting in any case, but we don't do a look forward in terms of guidance on -- at multiple layers, but it's all available in our financial reporting. I'm not sure whether there's much more to add to that, Jennifer.

Sort of your first question. And this question is somewhat related. So one aspect, I guess, that -- to your first question about depreciation and I guess interest [indiscernible] they're all related to the capital structure of the business that's supporting the growth and the rate of expenditure that's supporting that growth. And as Craig spoke to, we are very customer-centric when we work out how we do that because we need to be led by our customers. The -- in building the data centers, they're fairly staged and they're staged deliberately to conserve capital. And what you find though is when you build the shell, so you buy the land, you build the shell of a data center and then you'll build out the halls. And there's about 3 stages in that. Once you've built the building, the whole building is depreciated, even if you've got no customers in it yet. So then conservatively, they'll build out sort of the first floor, that might be 1 or 2 halls. They will be depreciated even when there's no customers in them. And then progressively, you fill them up and then you go to the next stage. So the depreciation actually is running ahead of the revenue. And so that's -- I guess that -- I think what we're doing is managing the capital conservatively, but it doesn't -- it means there's probably a bit of a misalignment in what you're looking at in the profit and loss at each point in time. Sure that helps.

Any further questions?

Thank you. I'd just like to thank Craig for a very detailed rundown of the company. You're obviously running hard. How hard are your competitors running? And are you concerned that you're getting more competition looming?

Thank you for the question. And I appreciate the support. The competitive landscape continues to evolve. If I go back to when we started doing this opening M1 10 years ago, we said that the facility was designed for sort of 11 or 12 megawatts. And when we opened the very first data hall and we did exactly what Jennifer just described very well. And you've got to buy the land, you build the base, building the shell in place, but to conserve capital, we've only buy the exact number of generators and UPS systems that we need. We don't fit out anything that it would essentially be capital. It's not in a position to generate a return. So we need to be a little but not a lot. Over time, people asked us the question early on. There wasn't a lot of competitors, but the industry we're building buildings that were considerably larger than the whole market. And why would we do that? And we passionately believe that this cloud computing thing would take off. So there was legacy data centers outsources, HP, CSC, IBM. But the cloud -- Amazon were a bookstore and IBM was selling software licenses. And in a very, very short few years, we sold that whole building. And then before we even started building the 2s we've largely sold like S2, most of the building we sold before we even had started construction. So we went from building things demonstrating that we could be successful filling them up and then sold even more to the point where we hadn't even started building them. I think we're in this -- an incredible position now. We are opening the 3s. We've got that balance right with building enough inventory to position ourselves to win and to support growth, but not too much that we've got capital deployed before it's required. As it specifically relates to our competitors, we have more in the market today than we've ever had at any other point in time. Data centers have become mission-critical feature of all global markets. When we started getting money from superannuation funds and others, the risk tolerance is low, the risk is high and maybe that we won't fill these data centers. And today, every major sovereign wealth fund in the world is a core holder of data center platforms. Digital Realty and Equinix and many other global companies have been hugely successful. More data center M&A transactions have taken place in the last 2 years than at any other point in history. So we've got the asset class now being considered as core or core plus. A lot has changed in a very short period of time. So there's no question that we've got more competitors because more global sovereign wealth funds want to get behind companies. Some of them get behind us, some of them get behind competitors. The industry is still growing at an extraordinary rate. And whether it's public cloud, private cloud, on-premise data center, the way we use technology, our phones, our photos, social media, connectivity, security, online commerce that all going to continue to grow. So I acknowledge we pay attention to competitors. We are not a price-based company. We've never set out in life to be the cheapest operator. We set a very clear vision to be the builder and operator of the world's best, highest-quality data centers at Tier 4. So sure, we see competition. We know that more money is flowing to the sector than at any other point in time in history. But I'll leave you with this one interesting fact. Every other sort of single billion digit data center operator in the world has been acquired. Other than Digital Realty and Equinix, it's $70 billion plus scale. We're the only public data center company left other than one in China. So the desire for people to want to have and own these infrastructure platforms is at a higher point than it's ever been in history. I hope that we can remain public and continue to be owned by all of us. But there certainly is competition. People want to own and invest in data centers. But we have an incredible product. We have a very, very clear competitive advantage. And we're not a price-based company. We're a quality company that focuses on building and operating the best data centers in the world. I think we've got the right strategy, and I hope to continue to demonstrate that over time.

What you really need to do is make sure you've got a lot of commonwealth government work in those data centers because if, in fact, next DC is a critical piece of infrastructure processing data from the Commonwealth, that would be a very good reason why a foreign takeover might not be permitted.

Can we just sort of respond to that. It's a good point. But effectively, that's true now. So only companies from a 5 eyes country can acquire data centers in this country. So -- but we could still be acquired by an American, British, Canadian or New Zealand enterprise, not by anywhere else.

We -- I mentioned it in my speech. In those remarks, I talked about the federal government's digital transformation agency, sovereign secured certification. So we have DTA certification, which means that as a critical infrastructure provider to federal, state and local government, not only would you require further approval, but there are contractual commitments that we have made to the government about ownership. So that is true today. That's a good, good comment.

So do we have any more questions in here before we go -- it's [indiscernible]

I had a question about this government. I can't remember what you call it, the government security standards. We all know that they fail dreadfully, a fail [indiscernible] consumers dreadfully in all sorts of ways. So it's good that you meet those standards, but are the standards adequate?

There are many standards, the federal government today outsource the operation of a number of government services. They still operate in-house government services. I can't really, I guess, comment on the government's own level of preparedness. We certainly comply with and meet federal government standards that they put on us to be a supplier. We serve many and varied federal and state government customers. I talked about supporting health care, hospitals and others that we consider mission critical. And whatever the government requires of us in terms of certification of our standards, we'll continue to meet those. That includes matters like top secret security, classifications. It's the PSPS security standards related to the design of the facilities, the guards, guns and gates requirements that government placed on higher levels of security zones. It is a complex area, and we'll continue to meet the government's needs as far as certification is concerned.

Any further questions? Here? Okay. Oskar, do we have anybody online, -- question.

Mr. Chairman, the first question comes from Mike Saket from the Australian Shareholders Association. I would like to know how concerned should shareholders be that NEXTDC's long-term debt has doubled over the past 2 years to EUR 1.1 billion. And is also asking the data center business seems to be one of [indiscernible] incremental capital spend. Can you give us some sense of where NEXTDC is on the long-term capital investment curve?

I think we've kind of answered the first part of that question. As I said, we're well within our -- inside our bank covenants, and those shareholders should not be concerned about the change in mix. And we continue to pursue an appropriate mix of debt and equity to maximize returns at minimal risk. As to the second part of his question, I'd like to go forward 20 years and look back and say, we're more likely at the beginning of the journey rather than the end. We don't -- we think that there is such a long way to go. We look at our current situation with the strongest pipeline of new client discussions, discussions around drawing down options and reservations, the strongest period we've ever seen in the company's history. I put that together with our capacity that we have available in the marketplace, and we are probably the envy of the entire industry. So I think we're feeling more like we're at the beginning rather than the end. Are there any further questions, Oskar?

The next question comes from Stuart Clausen. I would like to know do you envisage a time when NEXTDC will become a dividend paying share as opposed to a gross share? And when do you envisage NEXTDC's growth will level out?

On the first part, we are unlikely to be a dividend paying share for the foreseeable future. Dividend payment in Australia tends to be out of franked earnings unless you've run out of places to spend company's resources. Returning money to shareholders at this point in the cycle is effectively paying shareholders back their own capital and likely triggering a taxable event by doing that. So we think we're unlikely to be a dividend-paying company, given the fact that we have very strong use, a very strong capital demand for the future. When do we expect NEXTDC's growth will level out. Well, again, given what we're facing at the moment, thinking about the presentation that Craig did, we see incredible demand for digital infrastructure for the foreseeable future and really cannot -- we cannot from where we sit now, see that leveling out occurring unless we choose to do so as a company. Any further questions, Craig? Sorry, Oskar.

Mr. Chairman, the next question also comes from Stuart Clausen. I would like to know, is it appropriate for the company to donate charitable causes when it is not currently making a profit?

I think the donations we make to charitable causes are very much at the margin. And I don't think we're significantly impacting shareholders' assets. Are there any further questions, Oskar?

Mr. Chairman, there are no further questions online at this time.

Are there any questions on the phone line?

Chairman, we have no questions from the phones.

Okay. Thank you very much. There are no further questions, I would now like to move to consider the formal motions of the meeting. I refer you to Resolution 1 of the notice of meeting in respect of the adoption of the remuneration report of the company. This is a nonbinding resolution. The company's remuneration report is set out in the 2022 annual report. No votes may be cast on this resolution by or on behalf of a member of the company's key management personnel, including the Chairman and other directors with their closely related parties. If you do not provide proxy voting directions to me as Chairman, and you are not a prohibited voter, you will be taken to have authorized me to vote all available proxies in favor of this resolution, even though this resolution is connected directly or indirectly with the remuneration of the key management personnel. You can now see the details of the valid proxies lodged on the screen. Before opening the discussion, I would like to mention that the NEXTDC Board unanimously recommends that you vote in favor of this resolution to adopt the remuneration report of the company. Are there any shareholders in the audience who wish to ask a question? Doubt to see. There are no questions from those present. Oskar, do we have any questions online?

Chairman, there are no questions online at this time.

Do we have any questions on the phone?

Chairman, we have no questions from the phones.

Thank you. [Operator Instructions] So if there's no discussion, I now put the motion to the meeting to adopt the remuneration report for the company for the financial year ended 30th of June 2022. Please cast your vote. I now refer you to Resolution 2 of the notice of meeting in respect of the reelection of Dr. Gregory J. Clark, AC as a Director of the company. Dr. Clark has been an independent Nonexecutive Director of the company since April 2014. In accordance with Article 58 of the company's constitution, he has retired by rotation and offers himself for reelection as a director. The explanatory memorandum accompanying the notice of meeting sets out a brief description of his experience and qualifications. You can now see the details of the valid proxies lodged on the screen. NEXTDC Board, other than Dr. Clark, unanimously recommend that you vote in favor of this resolution. Are there any shareholders in the audience who wish to ask a question? Oskar, are there any shareholders online who wish to ask questions or make comments?

Mr. Chairman, there are no questions online at this time.

Are there any questions by phone?

Chairman, we have no questions from the phones.

Thank you. There's no discussion. I now put the motion to approve the reelection of Dr. Clark as a Director of the company. Please cast your vote. I now refer you to Resolution 3 at the notice of meeting in respect to the reelection of Ms. Jennifer M. Lambert as a Director of the company. Ms. Lambert has been an independent Nonexecutive Director of the company since October 2019. In accordance with Article 58 of the company's constitution, she has retired by rotation and offers herself for reelection as a director. The explanatory memorandum accompanying the notice of meeting sets out a brief description of her experience and qualifications. You can now see the details of the valid proxies lodged on the screen. NEXTDC Board, other than Ms. Lambert, unanimously recommend you vote in favor of this resolution. Are there any shareholders in the audience who wish to ask a question? Are there any shareholders online who wish to ask questions or make comments?

Mr. Chairman, there are no questions online at this time.

[indiscernible] there any questions on the phone line?

Chairman, we have no questions from the phones.

If there's no discussion, I now put the motion to approve the reelection of Ms. Lambert as a director of the company. Please cast your vote. Resolution 4. I now refer you to the resolution 4 of the notice of meeting in respect to the reelection of Mr. Stephen Smith as a Director of the company. Mr. Smith has been an independent Nonexecutive Director of the company since July 2019. In accordance with Article 58 of the company's constitution, he has retired by rotation and offers himself for reelection as a director. The explanatory memorandum accompanying the notice of meeting sets out a brief description of his experience and qualifications. You can now see the details of the valid proxies lodged on the screen. NEXTDC Board, other than Mr. Smith, unanimously recommend that you vote in favor of this resolution. Are there any shareholders in the audience who wish to ask a question? Oskar, are there any shareholders online who wish to ask questions or make comments.

Mr. Chairman, there are no questions online at this time.

Are there any questions on the phone line?

Chairman, we have no questions from the phones.

If there is no discussion, I now put the motion to approve the reelection of Mr. Smith as a Director of the company, please cast your vote. I now refer you to Resolution 5 of the notice of meeting in respect to the approval of the grant of performance rights to Mr. Craig Scroggie, ASX Listing Rule 10.14 requires the approval of shareholders to be sought where the company intends to issue securities under an employee incentive scheme to a related party. Mr. Scroggie is considered a related party under the listing rules. The proposed issue of performance rights constitutes the giving of a financial benefit, so we also seek shareholder approval in accordance with the Corporations Act. In his role as CEO, Craig is a key executive and plays an important role in the growth of the company's business and strategic objectives. A summary of the main terms of the proposed grant of incentive rights, vesting conditions and the valuations, valuation of the rights is included in the explanatory memorandum, which accompanies the notice of meeting. You can now see the details of the valid proxies lodged on the screen. The next DC Board, other than Mr. Scroggie, unanimously recommends that you vote in favor of this resolution 5. Given his interest in Resolution 5, Mr. Scroggie makes no recommendation to shareholders with respect to this resolution and is precluded from castings his vote on this matter. Are there any shareholders in the audience who wish to ask a question?

I note that the conditions under which the CEO's employment, if the CEO's employment is terminated for cause or the CEO resigns, unvested performance rights will lapse unless the Board determines otherwise. Can you provide us with more information about how you would determine whether or not those performance rights would lapse.

How they would lapse or why that would lapse?

Well, why. Why he would be allowed to keep them, why he would not be allowed to keep them?

I have to say it's a very much -- it depends sort of answer.

I'm sorry. I know it will be, and it depends, but we're seeing some very egregious payments for people leaving companies, and I don't want to be a part of a company that's paying out to egregious.

Stuart?

I was going to say, it all depends. But it's -- the reality is it does depend upon the circumstances at the time. I have said as the Chairman of the Remuneration Committee, and I think I speak on behalf of the rest of the Board is that in the case of resignation or dismissal for cause, then it's one of those decisions which the Board would take very seriously. And it would take exceptional items for the Board to users discretion, or what would those situations be? I must have been at the moment, I can't think of any reason why that would happen. But as I say, it would depend on the circumstances in a particular time. And I don't think I could be more definitive than that other than acknowledging that there have been some, yes, egregious waiving by Boards in some other circumstances, but that's not the philosophy or the culture of this board.

Any further questions? Do you have any questions online?

Mr. Chairman, there are no questions online at this stage.

Do we have any questions on the phone line?

Chairman, we have no questions from the phones.

If there is no further discussion, I now put the motion to approve the -- to approve the grant of performance rights to Mr. Scroggie. Please cast your vote. Resolution 5 was the final resolution, and so that concludes the formal business of the meeting. I'd now like to take the time to address any general questions that have been asked by shareholders. Are there any shareholders in the audience who wish to ask a question?

You talked about the Singaporean government not granting any more land. Can you talk more generally about who's supporting the data centers in Asia? And where they're getting their data centers managed from. And what that's likely to look like?

The Singapore situation is quite unique because it's such a small country. The government have been reviewing the role that data centers will play in the future. And given the size and scale of data centers in Singapore, all submarine cables in the world sort of stopping Singapore for the distribution to all countries across Asia. Singapore is quite a unique market where submarine cables coming from Africa, coming from China, coming from Japan, coming from the U.S. and Australia all go to Singapore to meet sort of where all the traffic comes into a single location to be handed from one system to another. Not dissimilar in Australia, if you're thinking about if you're a Telstra customer, your traffic needs to be handed off to an Optus network. That's true. Singapore is the key place. So the government decided that because of the amount of power and land that was being allocated to data centers, they needed to have a moratorium to decide whether they believe the economic value of data centers flowed to Singapore or whether it flowed through Singapore. And one of their scarcest resources being power and land, if it didn't benefit the Singapore economy, maybe it wasn't the right place for them to be. As far as the region is concerned, what that has meant is the emerging markets, Malaysia, Indonesia, Philippines, Vietnam and Thailand, have seen quite significant growth. So Microsoft, Amazon have just recently announced new regions in Indonesia. We expect to see the same in Malaysia. So people are starting to go around Singapore. But it's not only because of the government. If you've got populations of 100 million or 200 million, you think about the size of these markets relative to Australia, they're very, very significant populations. And at the end of the day, the role that we play and that our customers play is really building infrastructure based on the size of the population and how much information we create and whether it's downloading movies and watching Netflix or using Spotify or business tools like Microsoft or Amazon, all of those markets are starting to grow considerably. We would love to have been established in Singapore now. But we had to change our plans because of those circumstances. When the facts change, you need to change your plan. And so we decided that we would prioritize Japan and Malaysia as markets whilst we waited to see if we can secure land in Singapore over the next few years. The moratorium will potentially come to an end, and there are applications open for data center operators. To give you some context to the demand, the entire Singapore market is hundreds of megawatts and the government may make a hard cap of 60 available. That's the equivalent of probably a small building in Australia. So there are more than 70 people hoping to secure a license to operate and probably only 3 that are going to get the chance to. So in the meantime, we're very focused on building out our business in Malaysia, putting ourselves in a position to secure customer commitments. We get those customer commitments and we find the right sites. We think the next 5 or 10 years for those markets will be quite exciting. Japan is very different. We haven't looked at China because it's highly complicated. India is complicated as well. We've looked at the markets in South Asia or ex China, where our customers can commit to us and we can do it together. And at the moment, that's our plan. So we think the region is very exciting. Our product, our go-to-market strategy is still quite unique and it would be unique in those Southeast Asian countries. So demand is strong. Our product would have a clear differentiator. And as long as our customers want us to go, I think we'll have a reason to develop in those countries in the future. Thank you for the question.

Any further questions in your end?

Firstly, I'd like to congratulate the Board for actually running a live meeting and not purely running the meeting as an online meeting. I'd also like to congratulate you for a fabulous video that you ran before the meeting started, which gave us a good indication of how the buildings were being built. I personally found them fascinating, and I hope other people did too. But to ask a question, hopefully, a fairly simple question. Are you intending to continue to run live meetings as well as hybrid meetings if the laws have changed to permit hybrid meetings only?

Our expectation is to continue to run live meetings. But we -- I think -- my feeling is that the hybrid meetings are going to be -- probably going to be here to stay, and it will probably be doing both unless we get shut down by politicians, I don't know, but our preference would be to have live meetings. But I think the hybrid aspect is here to stay.

Great.

Any further questions from the audience? Oskar, any questions online?

Mr. Chairman, there are no questions online at this time.

Are there any questions by phone?

Chairman, we have no questions from the phones.

Ladies and gentlemen, I think -- Yes, done. My thanks to all of you. The -- we can declare the closure of our Annual General Meeting. If you intend to vote on the formal business of the meeting, you should now finalize and submit your votes as voting will close in 5 minutes' time. As mentioned earlier, the results of the vote will be published on the ASX later today once all the votes cast in this meeting have been counted with sincere thanks to all our shareholders for attending. I now declare the meeting closed. To finish with, we would like to share a short video with you on the company's recent activities and initiatives. And for those at the venue, I look forward to also speaking to you as we catch up over refreshments. Thank you very much.