Perenti Limited (PRN) Earnings Call Transcript & Summary

Good morning, everyone. My name is Diane Smith-Gander, and I'm the Chair of Perenti. It is now 11 a.m. Perth time, and I welcome all shareholders to the company's 2024 Annual General Meeting, both here in person and online through the virtual meeting platform provided by our share registry Link Market Services Limited. If we experience any technical issues today, a short recess or adjournment may be required, depending on the number of shareholders affected. If this occurs, I will advise you accordingly. As we have a quorum present, and I'm looking for the Company Secretary to nod her head, I now declare the Annual General Meeting open. I acknowledge the traditional owners of the various lands from which we meet today, including the Whadjuk people of the Nunga Nation. We also acknowledge any Aboriginal and Torres Strait Islander people participating in this meeting. I pay my respects to elders past, present and emerging and recognize and celebrate the diversity of Aboriginal peoples and their ongoing cultures and connections to the lands and waters of Australia. I'm joined at the meeting by Mark Norwell, our Managing Director and CEO; Alex Atkins, an Independent Non-Executive Director; Andrea Hall, an Independent Non-Executive Director and Chair of the Audit and Risk Committee; Tim Longstaff, an Independent Non-Executive Director and Chair of the People and Remuneration Committee; Craig Laslett, an Independent Non-Executive Director, and Andrea Sutton, an Independent Non-Executive Director and Chair of the Safety and Sustainability Committee. I'm also joined by our Group Executive Committee members, Michael Ellis, our Chief Financial Officer; Gabrielle Iwanow, President of Contract Mining; Ben Davis, our incoming President of Drilling Services; Raj Ratneser, the President of Mining Services; Paul Muller, our Chief Corporate Services Officer; Cameron Bailey, our Chief Strategy Officer; Peter Bryant, our outgoing Chief Financial Officer; and Sy van Dyk, our outgoing President of Drilling Services. Sarah Coleman, President idoba, is unable to be here today and sends her apologies. Adam Thompson, a partner of PricewaterhouseCoopers, the company's auditor, is also present. I ask that all shareholders attending the meeting in person ensure 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 only those persons with a yellow or blue admission card will be allowed to ask questions or make comments on the company at the meeting. For those shareholders attending the meeting online, please follow the virtual meeting online guide via the link on your screen to register for a voting card and cast your votes online and ask questions or make comments on the company. You will only be able to ask questions or make comments once you have registered to vote. I invite shareholders attending online to send through any questions as soon as possible after you register rather than waiting until each resolution is read. The Notice of Meeting was released to the ASX on the 30th of August 2024 and made available to all shareholders. If there is no objection, the Notice of Meeting will be taken as read. Okay. Seeing no objection, let's move on. 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'll 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 poll. Instructions regarding the poll will be given prior to commencement of the poll. The results of the poll will be tallied and announced via the ASX platform as soon as the results are available. After the poll is closed, shareholders have an opportunity to ask questions about or make comments on the company and the management of the company. Shareholders attending virtually can ask questions via the online facility either in writing or orally through the web phone facility. So let me move to my chair's address. The Perenti of today is stronger, better performing, more resilient and has a brighter future than at any time in your company's 37-year history. Our performance is delivered by the 10,500 employees who make up Perenti, working often in remote and challenging locations across Australia, Africa, North America and more recently in Europe. I thank them for the work that they do every day. Perenti's commitment must be to work tirelessly to ensure that every one of our people goes home from work safe and well every day. This is how we will achieve our objective of no adverse life-changing events. Sadly, we did not meet that standard again this year. In February, one of our colleagues, Siswantoro, lost his life while undertaking a routine maintenance task at the Mana Mine in West Africa. There have been an unacceptable number of fatalities in our business because, of course, any fatality is a tragedy. Our Managing Director and CEO, Mark Norwell, will talk in more detail describing how we will improve workplace safety. I will note now that your company has introduced several important improvement initiatives through the delivery of divisional safety transformation plans. We're also driving bottom-up initiatives such as our check mate program that engages operator and maintenance teams to review high-risk tasks relevant to their area and then confirms the presence of the controls that will prevent any life-changing events. Safety remains the absolute priority of the Board, the Group Executive Committee and everyone in the business. Your company is led by a Board and Group Executive Committee with a clear strategy, aimed at safely delivering on our purpose of creating enduring value and certainty for our clients, our people, the communities in which our businesses operate and ultimately, for our shareholders. This strategy can only be achieved if we are selective and disciplined about the growth opportunities for Perenti. We are, therefore, committed to be disciplined in the way we manage shareholders' capital. In financial and operational terms, 2024 was exceptional, with Perenti delivering record underlying earnings from record revenue. This allowed your Board to reinstate dividends with a $0.02 interim dividend and a $0.04 dividend at the full year. During the year, Perenti acquired DDH1 and successfully integrated the specialist drilling contractor into our business, including integrating the Ausdrill brand. The creation of a new Drilling Service Division positions Perenti as one of the world's leading drilling businesses and provides an excellent opportunity for future growth, even if the cycle is presently at a low ebb. 2 years ago, important financial goals were set in relation to increased free cash flow generation and reduced leverage. These goals have been exceeded, simultaneous with year-on-year growth in EBITA. This positions Perenti to generate further value for shareholders from a stronger balance sheet, allowing a share buyback program to continue in parallel with dividend reinstatement. Just over 3% of the shares on issue were acquired via buyback in the last financial year and EPS positive initiative. Perenti is now delivering consistent year-on-year operational and financial performance. This is an example of how the business creates enduring value and certainty. I'm pleased to be able to present the strong financial results Perenti achieved this year to you. I am equally excited about the opportunities ahead, pointing to the delivery of another year of financial growth. In the last 6 years, the group has seen extraordinary growth, doubling our workforce, more than doubling our earnings, significantly expanding our capabilities and diversifying into jurisdictions which can provide further growth opportunities. Operating across many commodities and the mining value chain positions Perenti uniquely to influence the sustainability outcomes of the mining industry, which is so vital to decarbonization and addressing global warming. We are using our influence to work with like-minded clients and partners, bringing technical and practical understanding of the potential for electrification to reduce the carbon footprint of mining. This year, our collaboration with our client, IGO and global technology leader, ABB, resulted in the release landmark white paper, showing that converting an existing mine to a Battery Electric Vehicle operation was feasible with available equipment, offering lower environmental impact and health benefits for underground workers. Like many mining services businesses, Perenti does have a predominantly male workforce, but there are clear targets for increasing the representation of women in the Perenti workforce, and Perenti is changing the way employees are recruited, trained and retained. Every employee in Perenti in Australia or globally should have an equitable opportunity to reach their full potential. So with this in mind, Perenti's training, coaching and leadership programs, support building a safe, diverse and inclusive workplace. Employees are surveyed regularly to understand their progression and to identify areas for improvement. Now you will hear later in the meeting more detail regarding important remuneration changes, but I do, however, want to make a few comments now. At last year's AGM, the Board received clear feedback from shareholders that executive remuneration outcomes were out of step with safety performance. Your Board deeply considered that feedback. Today, shareholders will consider the changes to our remuneration policy. These changes are aimed at more directly driving performance across all aspects of our company, but most particularly safety. Perenti's remuneration structure must, at the same time, continue to provide the incentives that attract and retain the best people, who are the cornerstone of our success and also key to a safe workplace environment. I thank my fellow directors for their professionalism and support, particularly since March, when I assumed the role of Chair after joining the Board in October 2023 following the DDH1 acquisition. My fellow Director from DDH1, Andrea Sutton, also joined the Board at that time. She brings with her invaluable mining industry experience, particularly in operations and workplace health and safety. There was a notable departure from the Board this year. The Board thanks Rob Cole for his considerable service to the Board. Rob chaired the Board for 3 of his 6 years' service as a director and was instrumental in Perenti's growth to becoming the global mining services business it is today. In 2024, we made some important changes to our governance structure and Board committees. Non-Executive Director, Tim Longstaff became the Chair of the People and Remuneration Committee while Andrea Sutton became the Chair of the Safety and Sustainability Committee, and I thank them for taking on these important roles. The Board is well progressed with further renewal and is seeking to appoint a Director with deep industry experience, particularly in our offshore jurisdictions that have growth potential. The Board and I also thank Mark and the Group Executive Committee for their commitment to Perenti. This team continues to lead the business in delivering strong performance in a way that is always consistent with Perenti's principles. Perenti has never been in a better position to grow sustainably and perform consistently. With a clear strategy, we have a diverse business that is resilient, a growth pipeline with significant opportunities and a workforce that delivers value to our clients. So thank you, everyone, for your attendance today. I'm now going to hand over to Mark, who will address you and then I'll return to conduct the business of the meeting.

Thank you, Diane. Good morning, everyone, and welcome to our 2024 Annual General Meeting. I, too, would like to acknowledge the traditional owners of the land on which we meet, the Whadjuk people and pay my respects to their elders, past, present and emerging. In 2024, our 10,500 people delivered another year of strong financial results. Our record underlying EBITA of $314 million was generated from our highest ever revenue of $3.3 billion. And importantly, this result was underpinned by significant cash generation. By meeting our strategic objectives of efficiently managing our capital, integrating DDH1 and continuing strong operational performance, we generated free cash flow of $184 million and reduced our leverage to 0.7x. As Diane outlined, our focus on delivering free cash flow has allowed us to reinstate dividends for the first time since 2021 and at the same time, continue our share buyback. Our consistent free cash flow generation also allows sufficient funding to support future growth and continued strengthening of our balance sheet. Whilst our financial results are pleasing, it is our people who are front and center of everything we do. And in February, we were devastated with one of our colleagues, Siswantoro, was fatally injured while undertaking a maintenance activity at the Mana Mine in Burkina Faso. The loss of Siswantoro has obviously had a devastating impact on his family and friends and has also been felt deeply by his work colleagues. Everyone at Perenti feels the loss and the responsibility when a fatality occurs in our workplace. As leaders, our job is to support our people through these difficult times. But importantly, we must ensure we leave no stone unturned to achieve our safety goal of no adverse life-changing events. Through the Safety Transformation Taskforce we established in 2023, we have implemented a multilayered approach to continuously assess, challenge and ultimately improve our safety performance. This includes a focus on leadership, systems, assurance activities, working with our clients and continuing to build a culture of safety and respect. We appointed world-leading safety experts to the Taskforce to provide us with fresh ideas and different perspectives. We have followed best practice in further increasing our focus on critical risks and controls with work continuing across all operating divisions of our organization. The work of the Taskforce has transitioned to our operating divisions for implementation, as it is imperative we deliver on the ground improvements to better support our people. Our Contract Mining, Drilling Services and Mining Services divisions have established working groups and developed safety transformation plans. The work of each division is under the leadership and accountability of the Divisional President with a focus on delivering improvements at the front line to ensure the safety of our people. Continuing the important focus on our people, I'm incredibly proud of everyone at Perenti and the way they go about their business to deliver on our purpose to create enduring value and certainty and by living our principles. Through our purpose and our principles, we have an incredibly strong culture, which is reflected in our focus to deliver for our people, the communities in which we operate and our clients, which ultimately delivers value for our shareholders. This year, our workforce grew to almost 11,000 people as we seamlessly integrated DDH1 into our new Drilling Services division. At Perenti, we have a proud history of training and developing our employees. That approach has the dual benefits of building our capability by assisting our people to reach their full potential and to create a loyal and committed workforce. Our focus on training and development, not only supports strong business performance, but has also assisted in recent years to navigate a difficult labor market. Strong leaders build a strong culture, which is why this year, we maintained our investment in our Leading at Perenti program for our executive leaders. In addition to Leading at Perenti, we introduced a new program managing, Managing at Perenti, for our mid- to senior level managers. Our focus on leadership development is imperative as we continue to develop our leadership pipeline and drive alignment around our strategic goals and imperatives. We are a global business that employs people from all over the world. We proudly maintained greater than 90% local employment across our operations globally. To support this level of local employment, we need a culture that embraces diversity and supports inclusion. The mining industry is a male-dominated industry, but we also understand that greater diversity and ensuring everyone feels safe, respected and valued at work is a critical part of our future success. These are the objectives we are working towards as we continue to build our leadership capability and culture through the training and development of our team. Perenti has always been a leader in attracting new entrants to the industry and equipping them with the skills and tools they need to thrive in our business. This year, more than 900 people participated in our apprenticeship and trainee programs, and we remain one of the largest private sector employers of apprentices and graduate mining engineers in Western Australia. This focus on developing our employees also extends to our international operations. During the year, I had the privilege to meet the President of Botswana, and in our discussions, the President was appreciative of the training and development we have provided to the local workforce through our dedicated training facility we built in 2019. Recognition by the President of Botswana demonstrates the meaningful and valued impact we've had on the African communities in which we operate since first entering Africa in 1991. Our people are integral to our performance and are focused on delivering for our clients. Strong client relationships are fundamental to our success, and this was demonstrated by our contract mining division securing more than $2 billion of contract renewals and new work during the year. The Contract Mining division is underpinned by a world-class underground mining capability and continue to perform strongly, with a healthy pipeline and more than $4.5 billion in work in hand at the start of FY '25. As orebody grades decrease and as orebodies get deeper, the outlook for underground mining is very positive. And with our underground mining scale and world-leading performance, we are extremely well placed to capitalize on the growth in underground mining. When we consider tendering for new contracts to add to our portfolio, we preferentially filter for quality long-term projects at the lower end of the cost curve and with clients that we have strong values alignments. Our focus is not to be the lowest cost, but to generate the most value for our clients, and it is this discipline that produces the reliable margins within Contract Mining. Our scale of $2 billion per annum and 95% success rate of extending underground mining projects means we aren't dependent on any one single project with our earnings more comparable to a long-term annuity style business. Our Drilling Services division was created from the combination of DDH1 and their 4 brands and our Ausdrill business. We now have a top 3 global drilling business, along with the enhanced capability that is well positioned to capitalize once drilling activity returns to normal. Our Mining Services division had a record year. Over the years, this division has been transformed as we have divested noncore assets and focus on operational improvements in our remaining businesses. Through idoba and initiatives within each division, we continue to focus on innovation and technology to capture value through optimizing our operations, delivering cost savings, reducing emissions and identifying better and safer ways of working, both in our business and in the operations of our clients. With the ever-increasing adoption of technology, it is prudent, in fact, a necessity to invest a modest amount in technology to maintain relevance and our competitive advantage that has served us so well over our almost 40-year history. With our focus on technology and innovation, I'd like to thank our clients for their commitment to collaboration as we find ways to deliver better outcomes for them and the mining industry. We focus on delivering solutions for our clients that deliver value. It is their confidence in us through the opportunities they provide that underpins the business. Diane highlighted this when mentioning the electrification study we conducted with ABB on behalf of our client, IGO, and the associated White Paper, which was released earlier this year. This truly is an example of Perenti and our businesses, namely idoba and Barminco at their best, where we walk in the shoes of our customers to understand their challenges and collaborate with our clients and business partners to find solutions. It showcases the strength of the relationships we have with our clients, reinforces our industry-leading capabilities across the mining value chain and demonstrates our belief that collaboration is critical to reduce carbon emissions. Beyond our focus on technology and delivering strong operational performance, we also further strengthened our financial position by successfully issuing a USD 350 million senior notes offering. The issuance was more than 6x oversubscribed with participation from leading global institutions, reinforcing the consistency of our margins and operational performance. The placement of this bond demonstrates the significant improvement to our balance sheet since we last placed a bond in 2020. During this period, which was significantly impacted by COVID-19 in the first 2 years, 2 credit agencies have upgraded Perenti by one notch to be almost investment grade, and the bond spread on the new bond issuance reduced from 6.2% to 2.8% in under 4 years. And yesterday, we announced a further credit upgrade by Moody's, taking us to one level below investment grade. Our balance sheet and our financial performance has never been stronger. And this outcome is because of our people and our leadership across the organization. As we continue to position for the future, our group Executive Committee has undergone important changes this year with further changes to be concluded within the next 3 months. We're very pleased that Gabrielle Iwanow joined our business as the President of Contract Mining earlier this year. Gabe is a leading mining executive with extensive experience at senior operational and executive levels in Australia and internationally. Peter Bryant, our Chief Financial Officer, who has been within the business for 12 years, officially handed over the position in early September and will be leaving the business in November. With Peter resigning, I was very pleased to appoint our Vice President of Finance for Contract Mining, Michael Ellis, as our CFO. Mike has been within the wider business for almost 11 years with significant experience in our Contract Mining division and across the business more broadly. The CFO transition has been seamless with Pete continuing to support Mike until he leaves later this year. Sy Van Dyk, who joined us from DDH1 and drove the establishment of our Drilling Services division will leave at the end of this year. Sy will ensure a smooth transition to the leadership of Ben Davis, who has most recently led the improved performance of our Mining Services division and several corporate functions. Raj Ratneser, who leads our electrification initiatives as well as serving as Chief Legal and Risk Officer and Joint Company Secretary, has assumed responsibility for mining services replacing Ben. And finally, Paul Muller, the former Head of Contract Mining, has been appointed into the new role of Chief Corporate Services Officer. This appointment consolidates several of our corporate functions and ensures we retain Paul's extensive mining experience and deep contracting knowledge to support the strength of the Group Executive. These leadership changes ensure we have the right people in the right roles, so we can make the most of our many opportunities in a dynamic environment and build on the positive performance of the group over the last year. I'd like to say thank you to Pete and Sy for their contributions and support and wish them all the best for the future. While we've had our success in 2024, our eyes are firmly on the future as we continue to focus on generating increased returns for our shareholders. Through our world-class underground capability, top 3 global drilling division and a balance sheet that has never been stronger, we are extremely well placed for the future. Through Barminco, African Underground Mining Services and Swick, we now generate almost 70% of our revenue from underground mining, which positions us extremely well for organic growth in a very attractive and growing market. The attractiveness of the underground mining segment is underpinned by 3 key themes. Firstly, underground mining is technical in nature requiring deep domain expertise, which provides a significant barrier to entry. Secondly, our scale as a global leader, ensures that expertise is continually refined by operating across a diverse range of commodities, regions and clients. And thirdly, the underground mining market is set to grow as the percentage of new and expanded mines that come online in the future is expected to have a bias to underground mines. And this trifecta of themes ensures we are extremely well placed to continue our growth in underground mining and therefore, delivering quality returns for our shareholders. With our focus on further margin improvement and disciplined capital management, along with a strong balance sheet, a highly capable team and momentum from our consistent performance, we are aiming to once again deliver results that meet or exceed our guidance for 2025. This performance will be underpinned by our focus on consistent generation of free cash flow, allowing us to continue to deliver positive returns for our shareholders. I'd like to thank and acknowledge Diane Smith-Gander following her appointment to the Chair of Perenti during the year. The energy, the professionalism and extensive experience that Diane brings the role is a great addition for our company and is extremely complementary to my experience. I would also like to thank Rob Cole and Mark Hine for their contribution to Perenti and their support to me personally during their time on the Board before stepping down during the year. I also thank the rest of the Board, the Group Executive Committee and all our 10,500 people for their support and contribution during the year. And finally, thank you to all our shareholders and to those attending today. Your ongoing support is very much appreciated as we continue to extract value for our strong foundations and very positive outlook. Thank you, and I'll now hand back to Diane.

Thanks very much, Mark. So as I mentioned earlier, voting on all resolutions is going to occur by a way of a poll. So 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 cast their vote for that resolution. But please limit your questions to the item of business being discussed. There will be time for general questions at the conclusion of the meeting. [Operator Instructions] And please note that voting prohibitions apply to resolutions 1, 4, 5 and 6 under the Corporations Act, and voting exclusions apply to resolution 4, 5 and 6 under the ASX Listing Rules. If you're in doubt as to whether a voting exclusion or voting prohibition applies to you, please refer to the Notice of Meeting or speak with Link at the registration desk outside and a representative of the share register Link will be conducting the poll as returning officer. But as Chair of the meeting, I will still retain the right to make all final decisions as to who may vote, the votes cast and the declaration of the results of the poll. I'd like now to call on [ Katherine Noon ] from Link to advise shareholders on the procedure for conducting a poll in the meeting and via the online platform.

Hello. Today, we will be conducting a poll on all resolutions. 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 to vote on a resolution. For those attending the meeting in person, you can cast your vote by filling out your yellow voting card. Please vote for, against or abstain on your voting card 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 back to the Chair.

Thank you, [ Katherine ]. I now declare the poll open, and we'll 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 dated the 19th of August 2024. No resolution is required, but I now invite shareholders to comment or ask questions on the financial reports and accounts of the company. Questions may also be asked to 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 the questions to me as the Chair. 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, please state your name before speaking and hold your yellow or blue admission card so that I can see that you are a shareholder or proxy holder. For those who are participating via our online platform, you'll be able to submit questions by registering as a shareholder or proxy holder and selecting the Ask a Question tab or by utilizing the web phone facility. I'll consider the questions that come in online after I've taken questions from the floor and from shareholders using the web phone facility. And out of fairness to everyone, can I ask that you limit your questions to one at a time? I'll only accept questions and comments on the resolution that's being considered. So are there any comments or questions from shareholders in the audience today on the accounts? Okay. I'm not seeing any. Do we have any questions from web phone participants on this item? There are no questions from shareholders participating by web phone. So are there any questions from shareholders watching online who have sent in their questions in writing? No. Okay. Thank you. So given that there are no questions, we'll 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 the 30th of June 2024, and it's included in the annual report on Pages 65 to 84. The Corporations Act also requires that companies put to shareholders a resolution that the remuneration report be adopted. Before formally putting resolution 1 to the meeting, I will first address our response to the strike against last year's remuneration report. Your Board has engaged widely with shareholders, proxy advisers and other stakeholders to understand their specific concerns with the company's remuneration framework and has taken steps to address the concerns raised. So Pages 65 and 69 and 70 of this year's remuneration report and the notice of the AGM outlined the steps that were taken to address those concerns. We believe we've also improved the level of transparency and disclosure in this year's remuneration report. The Board is committed to a proactive approach to engaging with shareholders and is confident that its addressed stakeholders' concerns with last year's remuneration report. The Board believes that the current remuneration arrangements are fair and reasonable and that the 2024 rem report demonstrates alignment of remuneration outcomes with the company's performance and delivery of value to our shareholders. So I now move that the remuneration report of the company for the financial year ended the 30th of June 2024 be adopted. Now under the Corporations Act, this vote is advisory only, and it doesn't bind the directors or the company, but we take our shareholder feedback very seriously, and we will continue to review our framework to ensure it remains appropriate. Voting exclusions apply to this resolution as described in the Notice of Meeting, and the proxy votes received in relation to this resolution are displayed on Slide 13, which is shown in the room behind me. 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 questions in respect of resolution 1 from shareholders in attendance today? Thank you. I think Bob Kelliher from the Australian Shareholders' Association. We will bring you -- could you just pass -- sorry. Apologies.

Yes. Just a question on the structure. I know it's quite often that the companies have short-term incentives and long-term incentives. Isn't that a model which is now being generally surpassed and really doesn't improve from just having one integrated incentives program for your employees?

Thank you. I know there are a number of companies that operate these hybrid schemes where they have just one incentive program, which will often be a very equity-heavy incentive program, but I think that is less common than more common across the ASX 200 and 300, so we have adopted a short-term variable reward and a long-term variable reward program. The variable reward program in the long-term sense has really only been operating since 2019, and that's a program which we think really does align the incentives of the employees and particularly the senior employees who are eligible to participate in that program with the outcomes that the shareholders are receiving. So every year, we look at the framework and the policy, and we take feedback from proxies, investors and more broadly. And we believe that we've got a very fit-for-purpose framework at the moment. Thank you for your question. We continue to look at it every year. Now I think perhaps we'll move to Mr. Kelliher from the ASA.

Bob Kelliher from the Australian Shareholders' Association. And thank you for having a meeting for the midday. We still have some question this -- about the remuneration report, short-term incentive, the annual short-term incentive, if it's paid in cash, it looks so much like annual salary. So you want to get away from that. You've got 2/3 in cash. We would say that best is -- better is 50-50 cash and equity, so it doesn't look like annual salary. So you look at that. 30% of the short-term incentive are the nonfinancial items, and the measurement is implementation of the safety plan, implementation of control systems, progress on gender balance. So different to the financial items, there's no real measurement or targets and transparency about how you get them, and so we assume you're going to get them anyway. And we still consider that despite the history of having workforce fatalities, you still should say that in the year, if there is a fatality in the year, no short-term incentive. This would demonstrate your unyielding intention to have no fatalities. So I think you should look at that. And we consider that other companies have done that. And of course, as long as you don't have any fatalities, there's no effect on you. Also on the long-term incentive, fairly minor things. But I know you've been told that everyone else has with your total shareholder return, they've told you everyone else has 50% award at the 50th percentile and 100% at the 75th percentile. Now a successful, growing, profitable company. Can't you -- instead of being just part of the pack, can't you do better than that? I would suggest something like 50% vest with about at the 60th percentile and 100% of the 80th percentile to show you're different from the pack and you're better than the pack. And on the ROE, the return on...

I'm letting you have a multiple [ banger ] here Bob. And we did say one question at a time.

Yes. The current ROE is about 6%, and you start at 6.6%. So it's hardly a challenging threshold to have.

Okay. Thank you very much. And before I get to the multiple parts of the question, I will say that I'd like to thank Bob for being Perenti's monitor at the Australian Shareholders' Association. It's a really important role that the monitors play to ensure that the members of the ASA are well informed and exercised their voice with the company. And I think it's an unpaid role, right? It's a voluntary thing. And so thank you very much for doing that. And also thank you for the engagement. We had a very interesting meeting before this with Bob to run through a number of these matters. And so we are very well aware of the ASA's position. So obviously, the Board reviews the remuneration framework every year, as I said before. And we come to what we believe is the right balance, and it's what we recommend. So obviously, what's in the rem report is I considered opinion. When it comes to safety and how we determine what the level of incentive remuneration should be in years where there is a fatality, we have to recognize that we're balancing between the need to show that accountability is taken by the company for poor outcomes but also the need to attract and retain, particularly retain skilled executives who are part of improving that safety system. And so that's why we have not moved to a system where we would remove all incentive pay in a fatality year. And we also recognize that the incentive scheme does go through the organization, not just at the senior executive and KMP level. We've also taken on board feedback around financial versus nonfinancial metrics in the short-term scheme. And this is something that I think has evolved over the years, where we're getting more nuance around these types of measures. We certainly are working to make our measures more measurable, more granular and different across the leadership team. And just on a couple of nights ago, we sat down as a group of directors with Mark and went through line by line, how those new measurements will be taken for the Group Executive Committee, and I'm sure they're going to enjoy the conversations that they'll be having with Mark over the next little while to bake those into their work plans. You also are challenging us on the deferral percentage. And there's a range of deferral percentages out in the market, and I think we are well within market, but we look at it every year, and I'll commit to you, we will have a look at it again, and we'll specifically come up with our view for next year's rem report. I think that handles the short-term pieces. Tim is giving me a nod. Yes, got those done. Okay. So in terms of turning to long-term measures, I think every company needs to look at the blend it has between TSR and return measures. TSR is a very favored measure with investors in particular because it gives them an opportunity to see the alignment between their own experience and the company's experience. And so again, it's something that we look at each time. And I will take on board your challenge around how we should shape the delivery. And I'm sure that Tim will address that in the upcoming rem report for our current performance period. So thank you for those questions. Do we have any further questions in the room? Okay. Not seeing any more questions. Do we have any questions from web phone participants on this item? Okay. So there are no questions from web phone. How about in writing? Okay. No. Thank you. All right. So given that there's no further discussion of this, I will invite you to vote on the resolution. [Voting]

But we will move to the next item of business because I think we can all tick a box fairly quickly. So as stated in the Notice of Meeting, certain directors are retiring at this AGM and being eligible, each offer themselves for reelection as directors at the meeting. Now all the directors' details are set out in the directors' report on Pages 65 to 84 of the annual report. Now the next resolution is proposing my reelection as a director. So for the purpose of conducting this business, I'm going to pass the chair to Andrea Hall.

Thank you, Diane. Details regarding Diane Smith-Gander AO, one of the 2 directors up for reelection this year, are displayed on Slide 15. Diane is an independent Non-Executive Director and Chair of the company. She is also a member of the Nomination Committee. Before I move that Diane be reelected, I will say a few words on behalf of the Board about her performance as a director as she is before you for the first time. Diane is a very highly valued by the Board. She was previously Chair of DDH1 and as noted in her address, joined Perenti following the acquisition of that company. Diane is an experienced non-executive director and chairs various companies and committees. She is Chair of Zip Co, HBF Health and the Committee for Economic Development of Australia. She is a past Director of contractor Broadspectrum, energy company, AGL and Wesfarmers. Her executive experience included time as a partner at McKinsey & Company in the United States. Diane was awarded an Officer of the Order of Australia, AO, for her distinguished service to business, women's engagement in executive roles, gender equality and the community in 2019. In short, the Board considers Diane to be a high-performing director who provides critical capability to the Board. The Board and the company would lose significant value if Diane were not reelected. We unanimously support her reelection. I move that Ms. Diane Smith-Gander AO, who retires in accordance with the 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 Diane Smith-Gander unanimously recommend that shareholders vote in favor of resolution 2. The proxies voted received in relation to the resolution are displayed on Slide 17. Open and usable proxies held by me as chair of the meeting will be voted in favor of the resolution. Are there any questions from shareholders in attendance today? No. Are there any questions from web phone participants on this item? No. I will now take questions from shareholders who have sent their questions in writing. Are there any of those? No. As there are no further questions, I now invite you to vote on this resolution. And I'll hand back the chair to Diane. [Voting]