Perenti Limited (PRN) Earnings Call Transcript & Summary

All right. Good morning, ladies and gentlemen. My name is Ian Cochrane. I'm the Chairman of Perenti. It is now 11:00 a.m. or it will be in a minute, and I welcome all shareholders to the 2020 Annual General Meeting of the company, both here in person and those who have elected to join the meeting online. Can you kindly switch off your mobile phone at this time? As we have a quorum present, I now declare the Annual General meeting open. I'd like to begin by acknowledging the traditional owners of the land on which we meet today. I'd also like to pay my respect to elders past and present. I'll now introduce your directors and officers: Mark Norwell, our Managing Director and CEO; Rob Cole, an Independent Nonexecutive Director and Deputy Chair for Perenti; Andrea Hall, an Independent Nonexecutive Director and Chair of the Audit and Risk Committee; Mark Hine, an Independent Nonexecutive Director and Chair of the People and Remuneration Committee; Alex Atkins, an Independent Nonexecutive Director; and Terry Strapp, an Independent Nonexecutive Director. Also with us and amongst you on the floor are Peter Bryant, Strati Gregoriadis. Where's Strati? There he is. Paul Muller, Scott Winter, Donald James, Vivienne Powe and Ben Davis. Craig Heatley, a partner of PricewaterhouseCoopers, the company's auditor, is also present. I ask that all shareholders attending the meeting in person ensure that they have registered their attendance with Link Market Services at the entrance to the meeting. Shareholders and validly appointed proxies, corporate representatives and attorneys will have received a yellow admission card. Nonvoting shareholders will have received a blue admission card. Please note that only those shareholders with a yellow or blue admission card will be allowed to ask questions or make comments on the company. For those shareholders attending the meeting online, please follow the virtual meeting online guide via the link on your screen to, firstly, register for a voting card and cast your votes online; and secondly, to ask questions or make comments on the company. You will only be able to ask questions or make comments once you've registered to vote. I would invite shareholders attending online to send through any questions as soon as possible after registration rather than waiting until each resolution is read. The notice of meeting has been made available to all shareholders, and if there's no objection, it will be taken as read. The procedure for today's meeting will be as follows. First, I will give a short address. This will be followed by the Managing Director and CEO's address to shareholders. We will then move on to the formal items of business as set out in the notice of meeting. All items of business will be voted on via a poll rather than a show of hands. Instructions regarding the poll will be given prior to commencement of the poll, and assistance will be available to any shareholders who have queries during the polling process. The results of the poll will be tallied and announced via the ASX platform as soon as they are available. After the poll has closed, shareholders will have an opportunity to ask questions about, or make comments on, the management of the company. The 2020 financial year was one that demonstrated Perenti's ability to not only successfully navigate unprecedented events but also deliver very strong results in the process. This is a testament to the depth and agility of the group and the high-caliber team we have built across the business who were able to rapidly respond to the challenges we faced in the year. In my address today, I'd like to expand on a few of the key operational and financial achievements we have delivered during the past 12 months. I will then invite Mark Norwell to give us an insight into the strategic initiatives progressed throughout the year and how these will possession -- position, sorry, Perenti for growth and the successes we have had to date in the 2021 financial year. Firstly, it goes without saying that the rapid spread of the COVID-19 virus tested the resolve of our people and the business. The commitment and response to the COVID-19 situation by our team has been outstanding. This was particularly the case with our expatriate workforce as many of them elected to stay on or fly back to site as the pandemic intensified, which meant working away from their families and friends for extended periods of time. It's a credit to our internal COVID-19 task force and the broader Perenti team that amidst the flight cancellations and COVID-19 border restrictions, our first expatriate crew changes were arranged and successfully completed in May 2020, and these continue across all of the company's international operations today. This measure was one of many that contributed to Parenti only experiencing isolated COVID-19 operational effects across its projects during FY '20 and enabled the business to deliver a very strong financial performance in FY '20. This included delivering record revenue of $2.04 billion, exceeding the $2 billion mark for the first time in the company's history, and record underlying earnings before interest and tax of $444 million. The group had strong cash conversion at 96%, reflecting the company's high-quality earnings, and maintained return on capital employed above 16%, in line with our strong focus on capital discipline under the Group 2025 strategy. Crucially, our strong liquidity position was further enhanced in the year as a result of our focus on capital management, ensuring the company was and remains well placed to withstand the ongoing global economic challenges from COVID-19 and has greater flexibility to fund growth opportunities. Prior to the onset of COVID-19, in November 2019, a terrorist attack near the Boungou project in Burkina Faso resulted in the tragic loss of 19 members of our workforce and injured a further 26. In response to the senseless attack, we provided rapid and ongoing care and support to the injured employees and the families, friends and work colleagues of those who tragically lost their lives or were injured. Our thoughts continue to be with them. As a result of this attack and continuing security issues in the Northern and Eastern regions of Burkina Faso, Perenti executed the Boungou and Bissa projects. It is also with sadness that I report that in June 2020, a heavy vehicle incident occurred at AngloGold Ashanti's Obuasi gold mine in Ghana, which resulted in the tragic fatality of an underground mining alliance employee, Justice Sarkodie. UMA, which is an incorporated joint venture between our subsidiary, African Underground Mining Services; and Ghanaian contracting company, Rocksure International, has placed the utmost importance in supporting the family, local community and colleagues of Justice. Through UMA, an investigation was undertaken into the cause of the fatality in conjunction with AngloGold Ashanti and the Ghanaian authorities with lessons from this tragic event applied to the Obuasi mine and where applicable across our business. Operationally, a key highlight in FY '20 was our ability to build on the successful Barminco acquisition in FY '19. A key example was the geographic expansion of our underground service offering into high-quality mining jurisdictions with the award of underground mining services contracts from Barrick Gold in Canada and Khoemacau in Botswana, together with a combined $1 billion. Underground delivered a standout financial and operational performance through the Barminco and AUMS businesses across both Australia and Africa in FY '20. Our surface ISG recorded a stronger result in the second half of FY '20, reflecting progress made in transforming AMS, our surface business in Africa. We were also successful in securing more than $550 million in surface contract extensions and new work during FY '20. The Board believes that Perenti's ability to deliver excellent financial results in a year that experienced significant and unexpected challenges is a positive reflection on the executive team's performance and the strength of the business. Accordingly, the Board reached a strong consensus that the executive team's performance exceeded expectations and that the business is well positioned for growth. In consideration of this performance, the Board approved FY '20 STI rewards, including the inclusion of the cash conversion target. The cash conversion target was linked to the NPAT, net profit after tax, however the Board considered the benefit to shareholders through strong cash management through COVID-19 by management and subsequently approved this portion of the bonus to ensure an alignment of benefits to shareholders and management. Even with the inclusion of the cash conversion component, the overall bonuses were substantially lower than in FY '19 due to the fact that the NPAT result was down against the stretch target included in the scorecard and due to the safety performance. There have also been changes at the Board level since the 2019 AGM. I was delighted to welcome Andrea Hall as a nonexecutive director in December 2019. Andrea has brought extensive directorship experience to Perenti that aligns with the company's strategy to provide shareholders with balanced representation, diversity and skill sets to underpin our long-term strategic vision. She was recently appointed as Chair of the Audit and Risk Committee. I'd like to welcome her here today. I should also note that Rob Cole was recently appointed to the role of Deputy Chair. In addition, I'd like to make special mention of Terry Strapp. Terry agreed at my request to remain on the Board beyond his intended retirement date and will now retire at the end of December this year. He was first elected to the Board of the company on 21 July 2005. He has made a fantastic contribution during his time on the Board, and his wisdom and experience will be missed by all and in particular, by me. This will be his last AGM as a Board member but hopefully not as last as a shareholder. So thank you again, Terry, for your contribution. A key component of the Board's focus is on strengthening Parenti's organizational health under the Group 2025 strategy, which includes enhancing our environmental, social and corporate governance measures. To that end, I'm pleased we developed our inaugural sustainability report in this year's 2020 annual report. This has been a step towards Perenti's long-term intention to enhance reporting and performance in this area with a range of ESG initiatives we are targeting. In addition, we have made tangible improvements to our governance procedures such as implementing a new code of conduct and policies. In closing, I would like to sincerely thank Perenti shareholders. I recognize the important steps taken in response to the COVID-19 with regards to our prudent cash management approach may have affected some shareholders, in particular, our decision in March 2020 to defer payment of the company's interim dividend until October 2020. Hopefully, the decision to reactivate the dividend reinvestment plan was of some assistance. However, as the situation developed and the strong measures taken by Mark and the group executive team took effect, including those to strengthen our liquidity position, the Board had greater certainty by June 2020 to bring forward the interim dividend of circa $15 million to 23 July 2020. In addition, with our strong financial performance in FY '20, the Board determined a final dividend of $0.035 per share, bringing the full year dividend payments to $0.07 per share fully franked and reflecting our commitment to provide value to shareholders. I'm immensely proud of how Parenti has risen to the occasion in the face of adversity over the past 12 months. The Board is very grateful to Mark and the management team for their extraordinary efforts and commitment during extremely challenging times. This has positioned the company for a very bright future that Mark will talk more about in his address. So thank you, and I will now hand over to Mark.

Thank you, Chairman, and good morning, ladies and gentlemen. I'm proud to be leading a company that has shown incredible resolve in the face of considerable challenge presented during the 2020 financial year. The way we responded has further cemented Perenti's position as a leading global mining services provider that creates enduring value and certainty for its stakeholders. I'm particularly proud of the commitment our people demonstrated as COVID-19 rapidly emerged across the globe. The dedication of our team to proactively identify and manage the challenges presented by the pandemic ensured the company only experienced isolated COVID-19 impacts in FY '20. This can be seen in our very strong financial results for the year with record revenue of more than $2 billion, record underlying EBITDA of $444 million, cash conversion of 96% and a strong return on capital employed at 16.6%, all impressive numbers by any measure. We entered FY '21 with $5.4 billion of work in hand, $600 million in cash and undrawn credit facilities and a robust pipeline of $8.8 billion, ensuring Perenti is well positioned for the future. We are, however, mindful that COVID-19 remains and will persist throughout FY '21. The structures we have put in place ensure we are well positioned to withstand those challenges and navigate the issues as the situation continues to evolve. This includes the ongoing rotation of our expatriate workforce as flights and border restrictions change in the countries we operate in. I'd like to profoundly thank all our people for their commitment during these difficult and challenging times. I'm joined with the Chairman in expressing my great sadness at the 2 devastating incidents, which took place during FY '20, the vicious terrorist attack near the Boungou project in Burkina Faso in November 2019 and the fatal heavy vehicle incident at Obuasi in June 2020. My thoughts continue to be with all employees impacted by these events and the families, friends and colleagues. Safety is a paramount focus for me and the whole business, and nothing is more important to us than ensuring our people finish their work safely every day. Our focus is on doing all that we can to protect our people, and this is reflected in our group health, safety and environment system. Moving on to our business strategy. In March last year, we launched our 2025 Group strategy, and considerable progress was made in the year to deliver against each of the 5 pillars of the strategy: operational excellence, strategic growth, organizational health, technology-driven future and financial capacity. Today, I'll provide a few key examples of the initiatives achieved under each of those pillars. Firstly, operational excellence. FY '20 represents the first full year of results for what is now Perenti, following the transformational acquisition of Barminco and the 50% of African Underground Mining Services that we didn't already own. The strong result delivered by Perenti is built on the exceptional performance and operational excellence of our underground business. It also demonstrates Perenti's ability to realize shareholder value through an acquisition and positions us well for further M&A activity. In addition to the positive Underground performance, our surface business in Africa, which has had some challenges during the year, delivered improved financial performance during the second half of FY '20 compared to the first half despite challenges presented by COVID-19. Whilst progress was made, the Surface business is still well down on our expectations, so a laser-like focus on improving this business continues into FY '21. The strength of the Underground business and the improvement in our Surface business demonstrates the benefit of running a portfolio of businesses. For the second pillar, strategic growth. We consolidated our rebrand to Perenti that followed the Barminco acquisition in FY '19. Our strategic growth has focused on building the presence and capabilities of our strong brands, targeting greater diversification of work to manage risk and delivering more value and certainty to shareholders. In particular, our regional expansion initiative has focused on allocating capital and management time towards attractive mining jurisdictions. There were some significant achievements in FY '20 in this area, which included the expansion of our Underground business with the award of new contracts in Canada and Botswana. This expansion provides significant growth opportunities in North America and Southern Africa with nearly 1/3 of our tender pipeline focused on these markets. Organizational health is our third pillar, which is underpinned by investing in our people. A number of successful initiatives have been implemented such as our frontline leadership training program that was delivered to 73 employees across Perenti during FY '20. Our ongoing commitment to upskilling our employees for the long-term health of the group was recognized with Barminco being named Australia's Large Employer of the Year at the National Australia Training Awards in 2019. The group also has an excellent reputation in investing in the communities we work in. Since commencing operations in Africa nearly 30 years ago, we have trained more than 25,000 Africans to be part of our business. A state-of-the-art training center was recently built by Barminco in Botswana where we plan to train over 500 local people to be an integral part of our operations at the Zone 5 mine. As the Chairman mentioned, an important piece of work has been to define our commitment and approach to managing and delivering ESG-related initiatives across the group. This is essential to achieve our aspiration to be the indispensable mining services company and to fulfill our purpose of creating enduring value and certainty. Technology is paramount to the future of mining, and we have made significant progress against our fourth strategic pillar, technology-driven future. During the year, we completed what we believe to be a world first with Barminco successfully operating an underground loader from its head office in Perth, working at a client's mine more than 750 kilometers away in the Goldfields region of Western Australia. In addition, Ausdrill deployed a semi-autonomous smart surface drill rig and has plans to leverage the autonomous potential of the drill to improve safety and operational performance more broadly. Beyond the technology applied to our current business, we are developing a new technology service offering that we'll launch in calendar year 2021, so stay tuned. The final pillar is financial capacity. The importance of a strong balance sheet was reinforced in the 2020 financial year where Perenti's focus on capital discipline and liquidity management enabled the company to withstand the challenges presented by COVID-19. For example, in June 2020, as a precautionary initiative, we secured additional debt funding on improved credit and covenant terms, further enhancing our strong liquidity position. The additional funding was established to ensure Perenti is well positioned to withstand any ongoing economic challenges COVID-19 may present and provide the company with great flexibility to fund growth. I'm also pleased to advise that in line with our recent announcement to the ASX, we have successfully priced USD 450 million offering of bonds, which have a 5-year maturity, to institutional investors in United States, Europe, Asia and Australia. Upon financial settlement of the offer, which is subject to customary closing conditions, we intend to fund the early redemption of Barminco's outstanding USD 350 million bonds and to apply the net proceeds in partial repayment of amounts drawn, which are currently outstanding under our revolving credit facility. Looking ahead, our commitment is to build on the achievements delivered under our Group 2025 strategy by investing in our people and business capabilities to ensure the company delivers on its growth potential. We've already seen early success in FY '21 with our underground business securing $540 million in contract extensions for clients in Africa and Australia. These are early examples of securing contract extensions despite the ongoing economic uncertainty caused by COVID-19. Within our pipeline of $8.8 billion, there are a number of opportunities that, if secured, would see additional projects commence in the second half of FY '21 with the full value of those opportunities realized in FY '22 and beyond. This includes targeting further work in high-quality mining jurisdictions such as North America and Botswana as we seek to build upon our regional expansion achieved during FY '20. The targeted pipeline opportunities in North America alone are $1.8 billion. These growth initiatives will build on our already strong order book of $5.4 billion, of which $1.7 billion is secured for work in FY '21. In closing, I'd like to reiterate my thanks to the executive team and our people for their resilience and commitment in the face of the challenges presented in FY '20. I'd also like to extend my thanks to our clients and suppliers for their ongoing commitment. Finally, I'd like to express my immense gratitude to our shareholders. We appreciate your loyalty during a volatile period. And I reaffirm my commitment to deliver long-term growth and value for you, which is in line with our tagline of Expect More. Thank you, and I'll now hand back to the Chairman.

Thanks, Mark. As mentioned earlier, voting on all resolutions will occur by way of a poll. After each item of business has been introduced, there will be an opportunity for shareholders to ask questions of the Board in relation to that item of business, before shareholders fill out their poll voting papers for that resolution. Please limit your questions to the item of business being discussed. There will be time for general questions at the conclusion of the meeting. A representative of the company's share registrar, Link, will be conducting the poll as returning Officer. As chair of the meeting, I will retain the right to make all final decisions as to who may vote, the votes cast and the declaration of the result of the poll. I'll now call on Ryan White from Link to advise us on the procedure for conducting a poll in the meeting and via the online platform. Thanks, Ryan.

Thank you, Chairman. Today, we'll be conducting a poll on resolutions 1 to 6. The persons entitled to vote on this poll are all shareholders, representatives of shareholders and proxy holders. Only those who are entitled to vote at this meeting may cast a vote on the resolution. Please note that voting prohibitions apply to resolutions 1, 5 and 6 under the Corporations Act, and voting exclusions apply to resolution 5 and 6 under the ASX listing rules. If you are in doubt as to whether a voting exclusion or voting prohibition applies to you, please see Link or the company secretary now. For those attending the meeting in person, you can cast your vote by filling out your yellow voting paper. Please vote for, abstain or against on your voting paper for each of the resolutions. If you have any questions, please see a Link Market Services team member at the registration desk outside this room. For those shareholders participating in the meeting via the online platform, you can cast your vote using the electronic voting card that you received when you validated the registration. If you have any questions about casting your vote online, please refer to the virtual meeting online guide or call us on the numbers set out in the guide or on the screen in front of you. If you're in attendance today as a proxy holder and you hold open votes, these votes are yours to cast at your discretion, and you can do so by voting on each resolution accordingly. I will now hand you back to the Chair. Thank you.

Thanks, Ryan. I now declare the poll open, and we will move on to the formal business of the meeting. The first item of business is the financial report and accounts. Under the Corporations Act, the company is obliged to lay before this meeting the last audited financial statements and reports, which were circulated and which were dated 24 August 2020. No resolution is required, but I now invite shareholders to comment or ask questions on the reports or business of the company. Questions may also be asked of the auditors in relation to the conduct of the audit, the content of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit. For those attending the meeting in person, please address all questions to me, and if you wish to speak, please speak clearly into the microphone provided so that all shareholders can hear your comment or question. When I direct, can you please state your name before speaking and hold your yellow or blue admission card so that I can see you're a shareholder. [Operator Instructions] I will consider the questions submitted online after I've taken questions from the floor. Out of fairness to everyone present, I ask that you limit questions to one at a time and also restrict your questions and comments to the resolution being considered. I reserve the right as Chair to rule questions as not pertaining to the AGM or out of order. Are there any comments or questions? No? Adrian, have we received any questions online in relation to this item? No? Mr. Mellis?

My apologies, Chairman. Good morning, everybody. My name is Keith Mellis, and I'm a representative of the Australian Shareholders Association who hold a number of proxies for shareholders today. Mr. Chairman, I'd like to start first by applauding the Board's decision to hold a hybrid -- a AGM today, and the ASA would love to see this format continue into the future and thereby extend the opportunity for more shareholders to participate in this annual event. If I may, Mr. Chairman, I have 2 issues just on one document, and it's in respect of the year in review statement that's on Page 3 of the annual report. It's in respect of the -- the first question is in respect to the earnings and net profit under -- both underlying results, earnings before interest, tax and amortization of $212 million and the net PAT before amortization of $110 million, both underlying results, which don't take into account the charge for amortization of acquired customer contracts. My question, Mr. Chairman, and hopefully, it will help -- it would be helpful to shareholders to understand why the amortization of $38 million is not considered to be a normal expense when the underlying revenue, the corresponding revenue is obviously regarded as normal.

All right. You have the advantage on me at the moment. I don't have the report in front of me. I'm going to ask our Chief Financial Officer, Peter Bryant, to respond, if you will, Pete.

Yes. Thank you, Ian. Yes, good question. The amortization of the client intangibles is a noncash item. We've excluded it from our underlying results since the transaction to acquire Barminco. We do reconcile that back to our statutory result. But given it's a noncash expense attributable to an intangible, we think the best way to present the results is to exclude it. So we have excluded it, as I said, but we do reconcile it and very transparent on how we do that.

Mr. Chairman, if I may respond, the only issue I have there is, well, depreciation isn't a cash item, but that is a normal charge and has been allowed for. And the reason we're bringing this up is only because it's such a substantial amount, $38 million and $110 million. And I thought it would be helpful if shareholders can understand why it's not included in those figures. It would be correct to say the underlying revenue is included in the normal earnings and net profit.

The revenue generated from the contracts that were acquired at the time of the acquisition, yes, they are included in the earnings. Depreciation, I think, is slightly different as it relates to a cash outflow to purchase the assets that we then depreciate. And I think if we go back to how the intangible was created and look at the general entries at that stage, they really flowed through equity, not through the P&L, per se. It gets into some complex accounting that I am happy to sit and talk to you one on one after this, perhaps.

Thank you, Mr. Mellis.

The second issue is regarding the same highlights, and it's regarding the return on average capital employed, which is stated at 16.6%. My understanding that the capital employed formula is customized within house, we believe it would be helpful if on first seeing those highlights that shareholders understand what the formula is presenting. For example, I calculated that based on underlying profit, if we took the normal definition of return on average capital, the return would be more like 10% as opposed to 16.6%. I guess I would request that in future, when we present those sort of figures, like return, that, that formula is put there, attached to it so that shareholders can understand why it's quite different to the normal definition application.

Thank you. I think when -- it's fair to say that we met with you before this meeting, and this was an issue which we discussed during the course of that meeting. And my recollection is that we pointed out to you that the calculation is one which we have defined ourselves and that, that reference was made that, as I recall it, within the annual report. But I think the fact that you're continuing to raise it indicates to me that, perhaps, we need to do that more clearly. So we will take your comment on board, and we will address it as best we can in the forthcoming period. Any other questions? Adrian, in the course of that discussion, has anything come through online?

Okay. As there are no further questions, then we'll now move to the next item of business. Under the Corporations Act, listed companies are required to include, as part of their directors' report, a remuneration report, which includes specified information. The directors have prepared a remuneration report to 30 June 2020, and it is included in the annual report on Pages 52 to 65. The Act also requires companies to put to shareholders a resolution that the remuneration report be adopted. I, therefore, move that the remuneration report of the company for the financial year ended 30 June 2020 be adopted. Under the Corporations Act, the vote is advisory only and does not bind the directors or the company. Voting exclusions apply to this resolution as described in the notice of meeting. The proxy votes received in relation to this resolution are displayed on the screen. Any open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any comments or discussion? Mr. Mellis?

Thank you, Mr. Chairman. Mr. Chairman, the remuneration report includes the award of short-term incentives to 4 key management personnel and retention and sign-on benefits to 2 KMPs. A profit gateway has not been applied before the calculation of all STIs, which wasn't the stated policy in the annual report in 2019, which clearly referred to a financial gateway, which was introduced to ensure an acceptable level of company performance before the award of any STI. The 2020 STIs include material amounts relating to nonfinancial hurdles. The ASA response, Mr. Chairman, it doesn't support the payment of incentives generally not based on performance. It also does not support the payment of STIs where a financial gateway has not been applied to nonfinancial hurdles. And thirdly and lastly, the ASA does not consider the payment of an STI is in line with the performance experienced by shareholders with a negative return of 33%. For these reasons, the ASA will vote their proxies against resolution 1.

Thank you, Mr. Mellis. Are you making a statement or do you want me to respond to that more than I have done to you in our earlier meetings?

I'm making a statement to share -- with shareholders, Mr. Chairman.

Okay.

Perhaps this...

I'm actually happy to respond to it in the sense that if others have similar concerns, I'd like to perhaps share my thoughts on it with you. Clearly, with a short-term incentive scheme, and clearly, in these times, the easy way out for a Board is simply to apply it entirely according to the rules as you might perceive them. You say that there was a profit gateway. That is true, and that applied to 60% of the STI. We applied that profit gateway in relation to 50% of the STI, and none of that was awarded. However, we did exercise the discretion in relation to cash conversion where, as I said in my address earlier, the 96% that was achieved by the team was outstanding and, we thought, largely important in times of need during COVID-19. The challenge for us as a Board was the fact, firstly, that we thought our people did a fantastic job in dealing with not just the Boungou incident but also COVID-19 as a crisis. Both of those incidents had the capacity to severely damage our business and to have a serious impact on the value of our shares. All of us shareholders face the risk of that substantial damage. We believe the way in which our management team responded to those crises was outstanding, as I said in my address, and that it deserved a reward. So our challenge was to find a way to address that. I should also mention that we operate in an environment at present due largely in -- to COVID-19 but also the success of us, as I stated, with our mining services and our mining operations that there is severe competition for our people. Now we've talked about, at different times, the pride which we have in that team. I'm very proud of the team that Mark has pulled together. And I believe, and our Board believes, that it's vitally important to shareholders that we keep that team in place in order to deliver up on the strategies which we are putting in place for the business leading through to 2025. So for that reason as well as wanting to reward the performance, we, as we've said in our address and as we've said in our releases, thought it appropriate to not apply that financial gateway in relation to cash conversion. And we, in fact, are removing that going forward into the 2021 year as a gateway. The last issue you touched on was the nonfinancial hurdles, which require us -- or Mark in the first place and then us as a Board to make judgments which are not measured in objective financial terms. And frankly, that's part of our job. That's what you pay us for. It's to make those judgments in order to do the right thing and retain a team at an expense which is bearable in order to deliver up ultimately better benefits for shareholders. So that's why we've done what we've done. I appreciate that people have exercised their right to show their displeasure in some respects. I had hoped that the fact that we gave those explanations might assist people to change that, and I'm gratified to say that I think it has reflected in that in the sense that 81.6% of our shareholders have agreed with us. So thank you for your comments. Any other comments on the issue? Have we received any comments online?

If there's no further discussion, I now request that you please complete your vote for resolution 1. I'm giving you a short time to do that, if that's what you wish to do now, but there'll be time as we go. [Voting]

As stated in the notice, certain directors will retire at the AGM and, being eligible, each offer themselves for reelection as directors. All directors' details are set out in the directors' report on Pages 45 to 68 of the annual report. The next resolution proposes my own reelection as a director, and for the purpose of this business, I will pass the chair to Rob Cole. Thanks, Rob.

Thanks, Ian. Details regarding Ian Cochrane, one of the 3 directors up for reelection this year, are displayed on the screen. Ian is an independent nonexecutive director and Chair of the company. He's also a member of the Audit and Risk Committee and People and Remuneration Committee. I move that Ian Cochrane, who retires by rotation under Article 60 of the company's constitution and, being eligible, offers himself for reelection, be reelected as a director of the company. The Board, other than Ian, unanimously recommends that shareholders vote in favor of resolution 2. The proxies received in relation to this resolution are displayed on the screen. Open and usable proxies held by the Chair of the meeting will be voted in favor of the resolution. Are there any comments or questions? If not, have we received any questions online? If there's no further discussion, I now request that you please complete your vote for resolution 2. [Voting]

And having done that, after a very short stint, I'll hand the chair back to Ian.

Thanks, Rob. We now come to the reelection of Alex Atkins. Details regarding Alex, the second director up for reelection this year, are displayed on the screen. Alex is a nonexecutive director and is a member of the People and Remuneration Committee. I now move that Alex Atkins, who retires by rotation in accordance with Article 60 of the company's constitution and, being eligible, offers herself for reelection, be reelected as a director of the company. The Board, other than Alex, unanimously recommends that shareholders vote in favor of resolution 3. The proxy votes received in relation to this resolution are display on the screen. Open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any comments or questions? No? Adrian? If there is no further discussion, I now request you please complete your vote on resolution 3. [Voting]

Andrea Hall. The details regarding Andrea, the third and final director up for reelection this year, are displayed on the screen. Andrea is a nonexecutive director and Chair of the Audit and Risk Committee. I now move that Andrea Hall, who retires in accordance with Article 59.2 of the company's constitution and, being eligible, offers herself for reelection, be reelected as a director of the company. The Board, other than Andrea, unanimously recommends that shareholders vote in favor of resolution 4. The proxy votes received in relation to this resolution are displayed on the screen. Open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any comments or questions? Adrian? No? If there's no further discussion, I now request that you please complete your vote for resolution 4. [Voting]

We'll now move on to special business. Under resolution 5, the company seeks shareholder approval for the proposed grant of performance rights under the company's incentive rights plan to the Managing Director of the company, Mark Norwell, or his nominee, as a long-term incentive for FY 2021. I now move that resolution 5 as follows and as set out in the notice of meeting be passed as an ordinary resolution, that for the purposes of ASX listing Rule 10.14 and for all other purposes, approval is given to issue 851,227 performance rights under the incentive rights plan to the Managing Director of the company, Mark Norwell, or his nominee, as a long-term incentive for the financial year ending 30 June, 2021, as described in the explanatory memorandum. The Board, other than Mark, who abstains, unanimously recommends that shareholders vote in favor of resolution 5. Voting exclusions apply to this resolution as described in the notice of meeting. The proxy votes received in relation to this resolution are displayed on the screen. Open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any comments or questions? Adrian? Nothing online. If there's no further discussion, I now request that you please complete your vote for resolution 5. [Voting]

Under resolution 6, the company seeks shareholder approval for the proposed grant of STI rights under the incentive rights plan to the Managing Director, Mark Norwell, or his nominee as a short-term incentive for FY 2020. I'll now move that resolution 6 as follows and as set out in the notice of meeting be passed as an ordinary resolution, that for the purposes of ASX listing Rule 10.14 and for all other purposes, approval is given to issue up to a maximum of 68,566 STI rights under the incentive rights plan to the Managing Director of the company, Mr. Mark Norwell, or his nominee, as part of Mr. Norwell's short-term incentive for the financial year ended 30 June, 2020, as described in the explanatory memorandum. The actual number of STI rights to be granted to Mark or his nominee has now been finalized and will be 68,566 STI rights. The Board, other than Mark, who abstains, unanimously recommends that shareholders vote in favor of resolution 6. Voting exclusions apply to this resolution as described in the notice of meeting. The proxy votes received in relation to this resolution are displayed on the screen. Open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any comments or questions on resolution 6? Mr. Mellis?

Who else, Mr. Chairman? A brief comment, if I may, and I won't repeat anything that I commented on under resolution 1. But regarding STIs, it follows therefore the ASA will vote its proxies against resolution 6 in that the performance rights are just a component of the STI that we didn't support.

I understand your position. Thanks, Mr. Mellis. Have we anyone else with questions or comments? Anything online? No?

If there's no further discussion on resolution 6, I now request you please complete your poll voting cards for resolution 6. As this is the last resolution, please ensure that you complete your vote now. If attending the meeting in person, please remain seated, and Link staff will collect the voting papers from you once you have completed voting. If you require more time to complete and lodge your voting paper, please raise your hand, and we will give you more time or will assist with any questions you may have. For those online, you will have 5 minutes after the poll has been closed to complete your votes. If you have any questions, please refer to the virtual meeting online guide or call Link on the numbers set out in the guide or on the screen in front of you. [Voting]

I take it nobody's hiding any yellow voting papers anyway. That wasn't a serious question. I assume they've all been collected. I'll now declare the poll closed. Online participants will have a 5-minute countdown appear on your screen to complete your votes. Wow. That's quite -- Mr. Mellis' idea with the hybrid, that's interesting. Do we see the countdown? We don't see that. These votes will now be counted by Link, and the results of the poll will be announced to ASX shortly. In the meantime, we will move on to other business. As I mentioned before my address, at an Annual General Meeting, shareholders are entitled to ask questions about or make comments on the management of the company. Before calling this meeting to a close, I'd like to provide shareholders with this opportunity to ask any questions you may not have been able to ask earlier. For our online shareholders, please follow the steps in the virtual meeting online guide to ask a question or make a comment. For shareholders attending in person, can you please state your name, and please confirm that you are a shareholder or proxy holder before speaking? Are there any questions or comments from shareholders in attendance today in person? No? Have we received any questions or comments online?

There are two questions, Mr. Chairman. The first is from [ Mr. Todd Cole ]. "I wish to ask about the diversification strategy of the business and specifically increasing the work in North America. Can you please elaborate on the current strategy?"

Diversification strategy in the sense of jurisdictional expansion, I take it, is what they're on about. Mark, it might be perhaps better for you at an operational level to describe that strategy.

Yes. Happy to, Ian. So I guess in terms of our 2025 strategy, and we have called this out, specifically around our strategic growth, and that is diversification into different geographies, and specifically, over the last 12 to 18 months, we've secured contracts in Canada and also Botswana, jurisdictions that we see as positive mining environments with a long-term potential. Specifically to the question that relates to North America, we secured the contract in Canada for Barminco, with the Hemlo project with Barrick. That commenced in July of this calendar year. And the objective for us, linked to our strategy, is to continue to grow our business in North America on the back of the Hemlo project. The pipeline for North America that we've called out is $1.8 billion. The size of the mining market in North America is far larger than that. So we've been quite selective in terms of that pipeline. And there's approximately 10 projects that fit into that $1.8 billion, approximately $200 million each, or there or thereabouts. So our plan is to continue to expand in North America on the back of Hemlo. By the end of this calendar year, we'd be looking to have people on the ground based in the U.S. to get on-ground experience and knowledge and tender projects in the U.S. moving forwards. So it is a clear, strategic priority of the business to expand into North America, and we see it as a very positive jurisdiction to deliver value to shareholders in the long term.

Thanks, Mark. The second question.

Second question, Mr. Chairman, is from [ Mr. Graham Sasi Ole ]. "I've heard that some other large mining companies are starting to utilize voice technology to enable worker safety and increase efficiency. As a shareholder, I'm curious to know whether Perenti is utilizing voice technology in the safety space to gain efficiencies."

Thanks. I think I can say, and I'll leave it to Mark or Ben, perhaps, to correct me, but at present, the answer is no, but we're monitoring very closely the progress which has been made in this area. I'm aware that meetings have already taken place between our people and people who provide that technology. And also, I should just reemphasize what Mark said in his address that safety is a major focus for us. And to the extent that this technology will assist us to deliver better results on that front, you can be sure that we'll be monitoring it and taking it on board if it's appropriate. Any other questions?

Mr. Chairman, we've received one question online from [ Mr. Bryan Bender ]. "Is it the Board's intention to maintain dividends?"

Yes. In a word, yes. There is -- just if I may anticipate an issue going forward at the level of franking credits, which we will need to address or be aware of because the last dividend -- or the dividend we will pay will exhaust our currently available franking credits. But yes, certainly, it would be our intention to do that, all things being equal. Anything else? No? All right. Well, thank you, everyone. Nothing else here. As mentioned earlier, the results of the poll will be available shortly and will be announced via the ASX platform. For those who have attended in person, thank you for your attendance and interest. To the shareholders and visitors participating online, we are pleased that our technology enabled your attendance today, and we also thank you for joining us remotely. We look forward to your continued support in the coming year. That ends the meeting, which I'll now declare closed. And for those of you here today, please join us for some light refreshments. Thank you very much.