Pact Group Holdings Ltd (PGH) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the 2023 Annual General Meeting of your company. My name is Raphael Geminder, and I'm delighted to address this meeting as your Chair. I would like to welcome everyone attending and remind everyone that the presentations being given today have been lodged with the ASX and are available on our website at pactgroup.com. A recording of the proceedings of the meeting will be made available on the company's website. The Notice of Meeting was sent to shareholders and the ASX on the 12th of October 2023, and I will take the notice as read. The company secretary informs me that we have a quorum present. I, therefore, declare this Annual General Meeting of Pact Group Holdings Limited open. I would now like to introduce your directors and certain senior managers who joined me online today. Directors in attendance are Carmen Chua and Michael Wachtel. We also have our Managing Director and Group Chief Executive Officer, Sanjay Dayal as well as Paul Washer, our Chief Financial Officer; and Kathryn de Bont, our Company Secretary. I would like to thank our directors and senior management for their efforts, strong focus, ongoing diligence and governance. Also in attendance are David Shewring and Wilfred Liew, our lead audit partners from Ernst & Young. David and Wilfred are available to answer any questions regarding the conduct of the audit and the preparation and content of the auditor's report. Christina Piccolo of Computershare, the company's share registry, is also with us today and will be acting as our returning officer. The minutes of the 2022 Annual General Meeting have been approved by the directors and are available for inspection by any shareholder by contacting the company secretary. Now for some housekeeping matters. Today's meeting is being held online via the Computershare meeting platform. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can listen to the webcast of the meeting and watch the presentation. In addition, shareholders and proxy holders have the ability to ask questions and submit votes. Voting will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. The final results of the polls will be available later today on the ASX website and Pact website. If you are eligible to vote at this meeting, a vote icon will be visible at the top of the platform. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit the enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. Shareholders and proxy holders may submit questions at any time. [Operator Instructions] These instructions are also available in the online meeting guide. You can submit questions from now until the end of the meeting. For those shareholders and proxies who wish to ask a verbal question, an audio question facility is available. Instructions on how to ask a verbal question are set out on the Computershare meeting platform. Please note that your questions may be moderated or, if we receive multiple questions on one topic, amalgamated together. I will address questions at the end of the meeting. We will allow a reasonable amount of time to ask questions. If we run out of time to answer all of your questions, we will endeavor to answer them in due course via e-mail or posting responses on our website. If you require assistance during the meeting, please refer to the online meeting guide or call +61-3-9415-4024. I now declare voting open on all items of business. Please submit your votes at any time. I will give you a warning before I move to close voting. I'm holding open proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of the resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as Chair of the Meeting, and I'm required to vote those proxies as directed. Before we commence with the formal proceedings, I would like to reflect briefly on the company's performance over the last year. I will then invite the CEO to provide an overview of the company's businesses, its products and brands and strategies for future growth and development. I'm pleased to advise that for the 2023 financial year, the group delivered solid revenue growth, made excellent progress on our capital works program and accelerated our Circular Economy strategy. The group delivered revenue of $1.949 billion, up 6% on last year, which was a good result in what was a challenging year with damaging weather events in Australia and New Zealand, changes in customer spending patterns due to elevated inflation and a slowdown in demand out of China, which impacted on the second half of the year. Despite strong performance at the revenue line, the challenging macroeconomic and supply chain backdrop impacted Pact's earnings more significantly. Underlying EBIT was $145 million, in line with the guidance we have provided the market, and down 7% on last year's underlying EBIT of $156 million. Our underlying NPAT was $45 million versus last year's NPAT of $70 million. And reported NPAT was a loss of $7 million, with the difference between the underlying and reported results due to a noncash impairment for plant and equipment in our Packaging Australia business, and in China, as a result of retiring old equipment. Our year-end gearing at 3x is above the same time last year when it was 2.7x and slightly lower than the half year figure of 3.2x. The gearing reduction from the half year was achieved despite investing significant capital into our packaging assets to ready them to produce recycled product and a reduction in EBITDA. Reflecting on the external factors that impacted on performance and the significant investment in our packaging platform, our Board resolved not to pay a final dividend. Our target dividend payout ratio remains at 40% of underlying NPAT. However, we are continuing to focus on our capital investment program and debt reduction in the near term. Sanjay will provide further detail on the progress we have made towards our strategy shortly. As I've outlined previously, sustainability is not a nice-to-have in our business, it is our business. Sustainability underpins our vision, strategy and our business decisions. Pact is a leader in this area, and we remain focused on the Circular Economy. To that end, we work closely with our customers to develop sustainable solutions that help them achieve their sustainability targets. To support these partnerships and our other valued customers, Pact is continuing to invest in new recycling plants and in our packaging manufacturing capabilities to incorporate more recycled content in our product offerings. I am pleased to report that in FY '23, we achieved an average of 12% recycled content across our entire plastic product portfolio, up from 10%, 12 months earlier. Related to this increase in recycled content, we produced over 54,000 tonnes of recycled material during the year, 42% more than we did in FY '22, which is a fantastic achievement and positions us as a leader in the production of recycled plastic resin. And we will dramatically increase our plastic recycling capacity even further with two new Circular Plastics Australia facilities nearing completion in Melbourne later this calendar year, adding to the Pact-operated CPA PET recycling plant in Albury, New South Wales which has been operating successfully for more than 18 months. Once complete, these 3 facilities alone will have the combined processing capacity of 72,000 tonnes of high-quality resin per annum. In recognition of the contribution of these facilities to Australia's circular economy, the Circular Plastics Australia PET joint venture was named one of The Australian Financial Review's Sustainability Leaders for 2023 in manufacturing and consumer goods. During FY '23, we signed two important strategic partnerships with Woolworths and ALDI to supply plastic packaging made with recycled content for their own brand products. Pact will supply Woolworths with packaging for its own brand portfolio using around 18,000 tonnes of recycled plastic resin sourced from the Pact-operated and Australian-based PET and HDPE recycling manufacturing facilities. With ALDI, we will supply recycled plastic packaging for approximately 300 million units of the retailers' fresh food, dairy, beverage and home care products. As a result, ALDI's supply partners will have access to more sustainable options for ALDI's exclusive brand product packaging. We will source high-quality recycled resins from our existing and new recycling facilities and make it into sustainable packing solutions for Woolworths, ALDI and other customers. These are two very important partnerships because they act as proof points that our strategy to lead the Circular Economy is working. It is a strong signal that Australian retailers, and their customers, truly value our sustainable packaging. Central to Pact's success in FY '23 is our people and their commitment to our Circular Economy strategy as well as living our values of safety, customer, integrity, innovation and respect. I'd like to thank all of our talented and innovative people right around the group, including my fellow directors and our dedicated management team. Through our collaboration and creativity, the business is progressing its Circular Economy strategy during a challenging operating environment. Pact is committed to delivering a more sustainable future, and I look forward to partnering with our customers and other stakeholders as we continue to offer solutions that benefit the environment and deliver returns to our shareholders. Before I finish, I would like to acknowledge the current takeover offer from Bennamon Industries Pty Ltd, a wholly owned subsidiary of Kin Group, for all the ordinary shares in Pact Group. As you know, I'm speaking to you today in my capacity as Chair of Pact and not in my capacity as the owner of Kin. All of the relevant information for shareholders with respect to the takeover offer is available on the ASX and Pact website. As a result, I will not be addressing any questions in relation to the takeover offer in this forum today. I will now hand over to Sanjay Dayal, our Managing Director and Group CEO.

Thank you, Chair. I will cover the highlights from the 2023 financial year and outline our progress to strategy. The safety of our people remains our priority, and it is the first of our values at Pact: safety, customer, integrity, innovation and respect. We continued to invest in safety over FY '23, and pleasingly, our total recordable injury frequency rate was 7.1% at year-end, which was down 26% on the same time last year. This means we are keeping more of our people safe. I'm really proud of this outcome, particularly in the context of the large capital build program that the company embarked on over the year. I remain extremely proud of our talented and dedicated team at Pact, and I'm encouraged by the way we have all embraced our vision and values, which has resulted in a strong commitment to drive our strategy forward at the same time as having a focus on the safety of our people. I'm pleased to report that our revenue grew year-on-year to $1.949 billion for FY '23, a good result reflecting very strong cost recovery across our business, combined with some volume growth. Our underlying EBIT at $145 million was within our guidance range and reflected a year with damaging weather events, changes in customer spending patterns on the back of inflation and a sharp slowdown in demand out of China during the second half of the year. We delivered revenue growth in 2 of our 3 segments: Packaging & Sustainability, where we continue to see escalating customer demand for sustainable packaging; and in Contract Manufacturing, where we benefited from the trend to onshoring. Revenue was down in our Materials Handling & Pooling segment due to a sharp drop in garment retail demand which impacted on volume in our Retail Accessories business. We booked a noncash impairment for plant and equipment of $53 million in our Packaging Australia business as well as in China, which contributed to an underlying net profit after-tax loss of $7 million. This write-down was needed as we retired old equipment at the same time as we invest in upgrading our platforms. Our gearing was 3x at the year-end, primarily reflecting the scale of our capital program to invest in the Circular Economy Strategy. I'm delighted with the progress we have made towards our strategy in FY '23. The group has really accelerated our Circular Economy strategy. Our progress reflects the efforts of everyone at Pact as we strive to bring our strategy to life and to grow the business. We have entered an agreement to sell 50% of our Crate Pooling business, which is part of our Materials Handling & Pooling segment. This transaction positions us well as we review our portfolio of businesses, and we'll consider further divestments in line with our strategy. Our state-of-the-art liquid fill line at Horsley Park is closing completion and will be commissioned during the coming financial year, positioning our Contract Manufacturing business as a leader in the home care liquid market in Australia. In our Reuse business, which is part of the Materials Handling & Pooling segment, we invested in our SULO bin capacity in response to strong demand from councils for the fourth curbside bin rollout, and we are well positioned for accelerated growth in this segment. A significant focus over the year was upgrading our packaging platforms to allow us to produce high-quality packaging containing recycled content at scale. As outlined by our Chair, we signed two important strategic partnerships with Woolworths and ALDI to convert their own brand products to recycled content. And we had many other examples of our focus on leading the circular economy, including our Circular Plastics Australia joint venture PET facility in Albury being fully operational across the year, and 2 more facilities that will produce recycled resin are nearing completion. The One Pact Transformation Program was launched as a result of a number of internal and external factors. Our gearing has been above our preferred level, and we needed to continue to invest in our packaging platform to ensure we remain ahead of the market and able to produce recycled packaging at scale. The Dairy & Beverage platform will be key to meeting the needs of our customers. So further investment is required here. And we needed to reset our cost base. The external environment was challenging through the year, and the outlook is similar, with cost-of-living pressures, deflationary pressures in China, combined with rising domestic freight and energy cost in Australia and New Zealand. And of course, the sustainability agenda is gaining momentum with the federal government establishing a Circular Economy Ministerial Advisory Group, ongoing discussions in relation to recycled content legislation and the Remade in Australia brand being established. In response to these factors, we launched the One Pact Transformation Program late in the year with 3 pillars: cost restructuring and profit improvement, divestments and cash generation, and strategy delivery and circular economy monetization. Our first pillar is around rightsizing our cost base. We have commenced a cost-out program, which has resulted in a reduction of around 175 indirect roles as we streamlined our head office and corporate costs to ensure we have a lean business that efficiently services our customers. The focus of the savings here has been on our corporate and management teams with little impact at site level. We have developed the One Pact way of working so that we share our talented resources across Pact and work together to ensure our customers experience a streamlined and valuable Pact offering. The savings here are significant. With the exits we have already undertaken, we expect to achieve a $20 million annualized saving with at least $15 million in savings expected in FY '24. This will help mitigate ongoing demand and inflation headwinds that we are encountering. The cost of the program is in the order of $5 million. The next steps in this pillar are to continue redesigning processes to drive efficiency benefits and to generate savings through our supply chain and procurement process. Cash generation is a strong driver for Pact, particularly in view of our gearing level and the need to invest in our strategy. This forms the basis for Pillar 2. We will deliver the first divestment with Crate Pooling, which is on track to complete later this month, and further divestments will be considered. In relation to Pillar 3, our strategy is gaining momentum with strong demand from customers requiring our recycled packaging. So we continue to invest in our Dairy & Beverage platform, complete the next two recycling joint venture facilities, drive growth through the existing footprint and continue to grow capacity here. Now to the outlook. Revenue in the first quarter of FY '24 was $473 million, which was down 3% on last year. Underlying EBIT for the first quarter of FY '24 is in line with last year. Underlying EBIT for FY '24 is expected to be in line with consensus. I will now hand back to the Chair, who will take us through the formal resolutions.

Thank you, Sanjay. I will now move to the formal business of the meeting. Before we consider the items of business, there are a number of procedural matters which I wish to draw to your attention. There are 3 items of business to be considered at today's meeting. Each resolution will be put separately. As previously indicated, questions can be sent through at any time but will be addressed after all of the formal items of business. Questions should be addressed to and through me as Chair. It is my intention to vote all undirected proxies in favor of the resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as Chair of the meeting, and I'm required to vote those proxies as directed. I will now move to the items of business to be considered at this meeting. The first item of business relates to the tabling of the company's financial reports for the year ended June 30, 2023. The Corporation Act requires the financial report, the directors' report and the auditor's report to be received and considered at the AGM. Shareholders are entitled to ask our auditor questions relevant to the conduct of the audit and the preparation and content of the auditor's report and other related matters. As mentioned earlier, David Shewring and Wilfred Liew of Ernst & Young are in attendance online and are available to answer any such questions. I am advised by the auditor that there have been no questions received for their attention prior to the meeting. I asked the company secretary to record that the financial report for the company and its controlled entities for the year ended June 30, 2023, together with the directors' report and auditor's report, have been received and considered by shareholders. We will now proceed with the resolutions to be considered. Again, please note that only shareholders and proxy holders may vote. I now move on to Item 2, the adoption of the remuneration report. The Corporation Act provides for a vote on the remuneration report. Under the Act, this vote is advisory only and is not binding. The Board will, however, take into consideration discussions on this resolution when considering the future rem arrangements of the company. Pact Group's remuneration report is contained on pages 36 to 50 of the 2023 Annual Report. Pact Group's executive rem strategy is designed to attract, retain, reward and motivate high-performing individuals so as to achieve the objectives of the company in alignment with the interest of the company and its shareholders. These arrangements comprise fixed and variable or at-risk remuneration. Typically, the variable component consists of both a short-term incentive measured over a 12-month period and a long-term incentive available to the CEO and select executives, which is measured over a 3-year period. The fixed component is structured to attract high-caliber executives with the right mix of experience, qualifications and industry expertise. The short-term and long-term incentives are designed to reward executives for their role in the achievement of the group's financial performance, targets and their own individual performance targets. A half year incentive and certain other discretionary payments were paid to select executives in relation to the FY '23 year. The Board has determined that no long-term incentive grant will be awarded for FY '24, and the framework has been revised to comprise a fixed component only. Revisions proposed to executives' incentives are due to the Board requiring management to focus on short-term initiatives to accelerate improvement in the financial performance of the company. Voting exclusions are set out in the Notice of Meeting apply to this resolution. I will now put the resolution to the meeting, that the company's remuneration report for the financial year ended June 30, 2023, be adopted. Please now record your vote online for Item 2, if you have not already done so. Valid proxy votes received for this resolution are shown online. As indicated in the Notice of Meeting, I intend to vote valid undirected proxies given to the Chair in favor of the resolution. Item 3 relates to the reelection of Michael Wachtel as Non-Executive Director of the company. Michael Wachtel, who was appointed to the Board on the 21st of April 2020, retires in accordance with the constitution and, pursuant to ASX Listing Rule 14.4, offers himself for reelection at today's meeting. Michael's qualification, background and experience are summarized in the Notice of Meeting, and in the company's annual report. The Board recommends Mr. Wachtel's reelection. I will now put the resolution to the meeting, that Mr. Michael Wachtel, who offers himself for reelection and being eligible, be reelected as a Director of the company. Please record your vote online for Item 3 if you have not already done so. Valid proxy votes received for this resolution are currently shown online. As indicated in the Notice of Meeting, I intend to vote valid undirected proxies given to the Chair of the meeting in favor of the resolution. It is now my delight to turn to questions. Before we begin the Q&A portion of the meeting, I reiterate that I'm here today in my capacity as Chair of Pact. We will now address questions that the company has received prior to the meeting. We have received questions and comments from shareholders regarding the Bennamon Industries takeover offer and associated questions related to the takeover process as well as Kin Group's intentions and implications the offer may have on the business and Board governance. As I said in the opening, I'm here in my capacity as Chair of Pact, and it is not appropriate for me to speak in relation to or on behalf of any shareholder, including Kin Group. Information regarding the Bennamon Industries offer is outlined in the target statement and the business statement, both of which are available on the ASX and Pact websites. I will not be addressing any questions in relation to the takeover offer. Shareholders who have questions regarding the takeover offer are encouraged to contact the Pact shareholder information line, the details of which are set out in the target statement. The bidder also operates an information line, the details of which are set out in the bidder statement. So with that, I will now take questions, which have been submitted during the meeting. Written questions will be read out by our AGM moderator, Carolyn Ireland, General Manager of Investor Relations and Transformation.

Thank you, Chair. First question come from [ Jack Gringles ]. 3 questions have been asked. I'll put them together. Why is the meeting not in person? Why can't we see the Board in real time? And thirdly, does the Board intend to replace the 2 independent directors that retired? Thank you, Chair.

Okay. Thank you. Thank you, Jack, and welcome. Nice to have you on the call. So Jack, firstly, we do have a geographically diverse shareholding base with holders across Australia, New Zealand, Asia, Europe and the U.S. And I think for a range of reasons, we believe a virtual-only meeting is the most efficient, probably the most cost-effective and equitable meeting arrangement for the company and its stakeholders. So we do encourage shareholders and other stakeholders to contact and meet with our General Manager of Investor Relations year-round with the parameters, obviously, of our continuous disclosure policy. And interestingly, on the question of a virtual meeting, actually, the number of attendees from interested stakeholders has increased following the move from in-person to virtual meetings. So that's just an interesting insight. Obviously, we will take shareholder feedback regarding meeting format in mind when preparing for future meetings. So if there's an overwhelming feedback that we need to change the format, we'll obviously take that into consideration. In terms of the question related to independent directors, we have actually run a formal process to replace the independent directors. In fact, we hired a search firm, and we're quite advanced in that process. But to do that right now is definitely not appropriate. I'm just trying to think through all the questions. You asked a question about -- what was the third question?

About the independent directors, you've covered. In-person, you've covered, and see the Board in real time.

Yes. So I've sort of covered those. Any other questions from Jack?

There is a final question that's come through from Jack. Thank you, Chair. The question is, is Pact currently involved in any significant litigation? If so, please provide details.

So Jack, you would be aware of that litigation. And I'd point you to Note 2.3 in our accounts. Anything of significance like litigation is disclosed. There's been full disclosure on that particular litigation for a period of 2 years. So that's been in the accounts for the last 2 years, Jack. Any other questions?

That's the end of questions from [ Jack Gringles ]. Chair, we have received a number of questions from [ William Mune ]. They are quite long, so I will summarize them. The first one, and William has suggested they be appointed to Mr. Dayal, but I'll leave that with you Chair. I'll ask them one at a time. The first one, regarding material cost of production, how much relates to revenue of $1.949 billion? Related to that, do you have capacity to pass costs on? And are resin costs increasing? That's the first. Thank you, Chair.

Sanjay, would you like to respond to that?

Sure. Thank you, Chair, and thank you, William, for the question. In terms of the cost of goods, it's around $1.3 billion out of the $1.949 billion revenue, which we have listed. Resin is about half of that, of the total cost of goods, obviously, a fairly important part of it. Your question regarding passing it on, about 65% of the cost of goods we can pass on to customers, because we've got in our contracts a rise and fall, so that's how it's passed on.

Second question from [ William Mune ]. How do you justify the approximate $56 million spend on the Horsley Park facility? Thank you, Chair.

Sanjay, would you like to answer that question?

Sure. Thank you, Chair. William, we have a very robust capital management framework. And based on that, we believe that, that's a very good investment. Just to let you know what that does for us, it actually positions us, places us very well as a liquids manufacturer, in fact, one of the leading liquids manufacturer in the Southern Hemisphere. So there is quite a bit of benefit which comes out from that investment. Thank you.

The next question William has also asked, you have a $53 million write-down in Packaging Australia and in China. Can you provide more detail?

Well, I was going to direct that to Paul, but I will direct it back to you, Sanjay.

No. Thank you very much, Chair. I think the main message there is that the investment that we have done for -- firstly, for the write-down, it was really retiring old equipment as we have invested in our strategy and as we have invested in new platforms. The main aim of this platform is to modernize our current manufacturing base to be able to use recycled content. As you know, that's core to our strategy, to lead the circular economy, and that's what these investments do for us. Thank you, Chair.

Thanks, Sanjay.

The next question from William is, in relation to the transformation plan, will it save money for Pact? Thank you.

So is that the last question from William or any other questions?

There is another question. And in the interest of time, I will respond to that separately, Chair. This is the last one now.

Okay. Thank you. Sanjay, did you want to answer?

Yes. Thanks, Chair. Of course, that is going to save cost for Pact. That's the idea. As you know, the market has been quite volatile. There is a lot of headwinds in terms of demand. And the whole idea was to really go in for a cost reduction program so that we are able to manage these headwinds. And certainly, we can see the improvement in our cost base to manage the current environment through this transformation program. Thank you.

Okay. Thank you.

We have received one more question online from [ Simon Conn ]. The question is, it's been 12 months since 2 directors left the Board, why has it taken so long to run a process to replace them?

Thanks. Maybe I'll take that question. Simon, welcome. Well, these processes take a long time. And what I would say is that we've run a rigorous process. It's involved the entire Board. We've met with several candidates. And as I said in a previous question, it's probably not appropriate to continue that process. Any further questions?

We've just received another one, Chair, from [ Lisa Marie Doyle ], what rate of return is expected from the Horsley Park investment?

Lisa, thank you for that question. Maybe just a quick response to that, we've got an internal rate of return that the group works towards. And without getting too specific about what exactly that return is, it's fair to say that the investment in Horsley Park meets the hurdle both from a strategic perspective and from a hurdle perspective. Any further questions?

We just received another one, Chair, from [ Simon Conn ], a second question from Simon. CapEx has stepped up for the Reuse program. Once the current CapEx plans are complete, can management provide an estimate of stay-in-business CapEx?

Thank you, Simon. It's a really interesting question. And maybe I'll ask Paul to give a view on the stay -- or the maintainable CapEx. I would preface that by saying that we are not done with our growth CapEx phase. But perhaps you'd like to just respond to the stay-in CapEx.

Yes. Thanks, Mr. Chair. And look, the company has also been pretty consistent that it wants to spend $100 million a year until 2025, all of them we use. Half of that is still going into sustenance. Half of that's going to growth. And that will continue for the next couple of years until we reassess where we are in 2025.

Thanks, Paul. Do we have any further written requests?

We have no further written questions, Chair.

Sure. I'll maybe give you a minute or so, give the group a minute before we head into verbal questions. So if there are no more written questions, we will now take verbal questions.

Chair, we have another question coming online coming through. The question is from [ Michael Spencer ]. What is the Board's position on the current takeover proposal? Does the Board feel the current share price is representative of the company's performance? It's a question in two parts, Chair.

Thank you for that. As I've said in the opening, I'm here in my capacity as Chair of Pact, and it's clearly not appropriate for me to speak in relation to or on behalf of any shareholder, including Kin Group. And so it's probably inappropriate for me to respond to that question. Maybe I'll open that up. Michael, as the Chair of the Independent Board Committee, perhaps you'd like to answer.

Thank you, Ruffy, and thank you, Michael, for your question. So obviously, I'm not going to reiterate the Chair's comments about us not getting into questions and answers in regard to the takeover. But on your specific question, that is dealt with in clear detail in the target statement. It's very clear. And so I don't see any need to even try and attempt to amplify. If you go back to the target statement, you'll see quite clearly the view of the Independent Board Committee in regard to the takeover's offer price.

Thank you, Michael. So I think we will now move to verbal questions, operator. Do we have any phone line questions?

Chair, we have a question from shareholder, [ Craig Davis ].

I have several questions. So just a couple of quick ones to begin with. Sanjay mentioned the EBIT with consensus for FY '24. Is consensus $150 million? That is my first one, just to deal with the quick ones to begin with. The second one is I would echo what shareholder Jack has said regarding face-to-face AGMs or otherwise an opportunity to have some investor briefings throughout the year, which we haven't had. And other than Carolyn, who's been terrific, it's difficult to actually get to speak to management except at the AGM, so this perhaps we could address. And the third one, just a quick one, was to the CFO. What does he expect interest costs are going to be in FY '24? So those are 3 quick ones before I get into the detailed ones.

Thank you. So $150 million is appropriate. And your second point is noted. And your third point...

We would expect that the interest cost would be up roughly approximately around $20 million, if all things being equal, with all the company staying as it is. With no impact on the Crate transaction, we would roughly see the interest cost increasing by $20 million in the 2024 year.

Thank you. Do you have another question?

To $90 million? Is that $20 million from $70 million to $90 million, are you saying, sorry?

It was $80 million last year. It will go to $100 million this year.

Okay. Now just on the other things, I had a question for Michael Wachtel, if I may. So Michael, in the supplementary bidder statement, the bidder refuted quite a number of the claims made by the independent directors and the independent expert's report, but there was no supplementary target statement. And I'm just wanting to ask if you stand by that supplementary target statement and if you have any comment on some of the some of the things that the supplementary bidder statement called into question.

Thanks, Craig. Craig, we did not issue a supplementary target statement because there was nothing in the supplementary bidder statement where we felt the need to reassert the commentary in the target statement. So you can take both the target statement and our use of the independent expert's report as nothing has changed at this juncture in regard to the takeover proposal.

So you confirm everything that you've said in that target statement then, you stand by that?

Yes. There's nothing in the target statement which we feel the need to revisit. And the Independent Board Committee has taken notice, obviously, of comments made. And it's not unusual in a takeover that a bidder might challenge aspects of an independent expert's report. I regard that as fairly normal. But nothing has been raised which would require us to revisit the content of the target statements.

Thank you, Michael. With respect to some of the comments made in the target statement. You mentioned selling and contract manufacturing and also some other businesses, which I understand that there's some talk of selling. Can you comment on progress towards those 2 transactions?

So Craig, as the Chair really emphasized at the front end of the question session, we aren't looking to address any aspects or any detail in regard to the takeover. And your question would fit within that area that we've been very clear that we aren't going to be dealing within today's meeting. So I'm not going to go into those aspects of the target statement.

Okay then, thank you. And then I think my last question was the Board has spoken about dividends and a target of 40% of reported NPAT. I noticed the Chair had mentioned that in the short term, there wasn't a plan to pay dividends. Can you just give me an indication as to what that short-term thinking is, what time frame you're defining as short term?

Right. Maybe I'll take that question. The question of dividends are raised at the appropriate time. And at the appropriate time, we look at the cash flow of the company, we look at the CapEx of the company and we assess the company's ability to pay a dividend and if the company has an ability to pay a dividend within the construct of all of those elements, then the company pays a dividend. If a company doesn't have an ability to pay a dividend, it doesn't pay a dividend. I don't think it's any more complicated than that. Thank you. Operator, do we have any other phone line questions?

Chair, there are no further phone questions.

Thank you. We will now conclude questions. Ladies and gentlemen, that concludes our discussion on the items of business.I'll now pause for a minute in order for you to finalize your votes prior to closing the voting system. Please ensure that you have cast your vote on all resolutions. If you're having trouble finalizing your vote, please alert the company using the Q&A function. [Voting]

Carolyn, are any holders having trouble finalizing their votes?

No, nothing. No issues at all. Thank you, Chair.

Voting is now closed. I thank you for your attendance and participation, and I hope that this meeting has provided an opportunity for you to learn more about the company. The final outcome of the polls will be declared by the notice to the ASX later today and placed on the company's website. I now declare the AGM of Pact Group Holdings Ltd. closed. Thank you all.