PWR Holdings Limited (PWH) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Everyone in? My name is Roland Dane. I'm the Chairman of PWR Holdings Limited and of the Annual General Meeting today. Firstly, let me say that we acknowledge and pay respect to the traditional aboriginal people of these lands and waters and we also acknowledge all their descendants. Likewise, we acknowledge the many aboriginal people from other regions as well as Torres Strait and South Sea Islander people who now live in this local area that made an important contribution to the community. On behalf of our Board, welcome to PWR's 10th Annual General Meeting and what will be our last at Lahrs Road, a site that has served us well since 2007, but we've now clearly grown out of. We plan to have next year's AGM at our new factory at 28 Quarry Road, Stapylton. Kees will talk to you more about that in his presentation. Welcome, also, to everyone who could not join us in person but is watching via our webcast. A copy of the webcast recording will be available to all on our website after the meeting. As a quorum is present, I formally declare PWR's 2024 AGM open. The notice convening today's meeting was made available to shareholders on the 13th September 2024 and lodged with the ASX on that date. Consequently, I'll take the notice as read. As you may have noticed, we have some selected products on display here today. At PWR, we're very conscious of both our own IP as well as the confidentiality obligations in place with our customers for product development. We request that you do not take photographs or videos of these products. In addition to those participating in the meeting today, we have received proxies from 171 shareholders representing approximately 52% of the issued capital. I'd now like to introduce my fellow directors. Firstly, Kees Weel, the founding shareholder and Managing Director of PWR. Kees is a globally recognized automotive cooling expert. His ability to lead constant change and ongoing growth continues to be critical to PWR's success. Jeff Forbes. Jeff has been a Director since the company listed in 2015 and has been Chairman of our Audit and Risk and Sustainability Committee since that time. Jeff has decided not to stand for reelection today. This will be his last AGM at PWR. I'll come back to that a little bit later. Kym Olsey. Kym joined the Board in February 2023. Kym is a widely respected aerospace and defense industry executive with extensive connections across the defense ecosystem in Australia and overseas, including connections with the defense force, government, private defense and aerospace related companies around the world. Amanda Holt joined the Board in September 2023. Amanda is an accomplished and respected senior executive and defense industry leader. Amanda has been SYPAQ's Chief Executive Officer since 2015 and brings aerospace, defense and cyber skill -- cybersecurity skills to the Board. Kristen Podagiel joined our Board in February 2024. Kristen has a distinguished legal background with senior executive level experience, including her role as CEO and Managing Partner of McCullough Robertson, a leading independent law firm. And lastly, our new recruit, Jason Conroy, joined the Board in May 2024, will take on the role of Chairman of PWR Audit, Risk and Sustainability Committee following Jeff's retirement. Jason's an experienced CFO and has a broad range of board and executive experience. And finally, can I also extend a warm welcome to Teresa Handicott, PWR's former Chairman, who has joined us here today. Hi, Teresa. We've also got some of our senior leaders here today, but the majority of our ELT working at other sites around the world, including the U.K. and the U.S., are not able to be with us today. I will ask those that are here, though, to stand up and introduce themselves. Jason Hicks, Hicksy? There you are, our General Manager of Production in Australia has been with PWR for over 20 years; Lisa Dalton, the real boss, who's been our Company Secretary since pre-listing; Martin McIver, our Chief Financial Officer, who's been with us for 3.5 years, has recently resigned to pursue other opportunities; Andrew Styman, who is our Head of Quality Assurance and has been with us for just over a year. I'd also like to extend a warm welcome to Erin Neville-Stanley, Audit Partner at KPMG; our company's auditors. I haven't seen those here. There you are. Sorry. Yes. Stephanie Daveson, partner at Clayton Utz, the company's lawyers; and Jessie Yerma and the team from Computershare, the company's share register facilitates us. Today's meeting will proceed as follows. Firstly, I'll provide my Chairman's address. Kees will then provide his address. Shareholders will then be able to ask questions about the company, my address or Kees' presentation. As we are webcasting the AGM today, we ask that you come up to the microphone to ask your question. It makes it easier for those online. If you're unable to come up, raise your hand and we'll bring a roving mic to you. We'll then undertake the formal business of the meeting. At which time, I'll take your questions regarding each of the proposed resolutions, we'll then take any final questions before we close the meeting. I'll now turn to my formal Chairman's address where I'll provide information on PWR's strategy and how it performed in the 2024 financial year. Kees will then review the financial performance and operational developments of PWR for the past year and will talk about our expectations and plans for the future, including our planned move to our new headquarters in Stapylton. As I mentioned, we'll take questions after Kees finishes his presentation. During 2024, the Board, in conjunction with management, refreshed the company's strategy to 2030 with particular focus on our 4 strategic objectives, whilst also ensuring integration with our material sustainability priorities. PWR aim to be the global leader in cooling technology, driven by a culture of engineering excellence. PWR's true value is realized through industry-leading products and services with highly differentiated features and benefits compared to any potential competitor offering. We are the sector's market leader in motorsports across the globe and have a clear strategic priority to leverage our reputation, know-how, manufacturing and technical capabilities into thermal management solutions for alternative markets, including the aerospace and defense industry. I have confidence in the leadership team to implement our strategy while managing the challenges that come with rapid growth, particularly in a year where we, not only invest ahead of the curve in our aerospace and defense capability and capacity, but also in a year where we will be moving our entire Australian operation from Ormeau to the new headquarters up the road at Stapylton. Innovation has and will continue to be at the heart of PWR's long-term success. In 2024, we maintained our continued investment in R&D to enhance our product offering, capitalizing on our manufacturing capability and engineering expertise. This ensures we are continually improving and adding to not only our product range, but also our engineering services to deliver the best solutions for our customers. PWR continues to push the boundaries and manufacturing technology and simulation capabilities. This year, we also spent considerable time and effort exploring automation opportunities. We strive for continued growth year-on-year that is profitable. To do this, we have an unwavering focus on quality and service to our customers, but also strive for efficiency. Our 100% year-on-year growth in aerospace and defense revenue is a testament to this. Being a good corporate citizen and seeking to ensure our manufacturing is sustainable and efficient is very important to PWR. As part of this policy, we are incorporating 1.8 megawatts of solar into our new headquarters and installing a water treatment plant to recycle 100% of the water that we will use on the site. We now have almost 600 people across 3 sites and have significantly reduced our staff turnover over the last 3 years. We are passionate about our employees' safety whilst also investing in them and supporting their ongoing growth and development through PWR's Academy supported by dedicated in-house training experts. Our workplace flexibility trial of a 9-day fortnight here in Australia has been extremely well received. You'll probably notice that we appear quiet today, and that's the reason why. The 2024 financial year was another strong year for PWR, adding to our performance trend. We delivered another record result with NPAT of $24.8 million, up 14% on the prior period. The PWR Group continued to deliver on its growth objective through implementation of its ongoing capital investment plus research and development programs while still producing a strong return on equity at 25%. For our shareholders, this translated into a shareholder return of 65% where we ranked at the 88th percentile over the financial years '22 through '24. Considering these results and the balance sheet position, the Board declared a fully franked final dividend of $0.092 per share, taking the full year dividend of $0.14 per share, an increase of 12% on last year's full year dividend. The Board has a long-standing succession plan in place. And developing that plan has seen the appointment of 2 new non-executive directors during the last 12 months. I extend a warm welcome to Kristen and Jason, who both bring their own unique set of skills, capabilities and experience, which will be invaluable in guiding the execution of PWR's 2030 plus strategy. Kristen is Chairman of PWR's Nomination Remuneration Committee, and Jason will take over as Chairman of our Audit Risk and Sustainability Committee from the end of today's meeting. Both Kristen and Jason are up for election by our shareholders today and the Board recommends their appointment. Today, long-standing Director and Chairman of our Audit, Risk and Sustainability Committee, Jeff Forbes retires from PWR. On behalf of the Board of Directors, I would like to express our appreciation for Jeff's significant contribution to PWR over the past 9 years. His immense experience and contribution to Board and the company has been invaluable, and he leaves behind a legacy of strong governance and risk management. Please, Jeff, come up here. I just got something to relax your paddle boarding in Nusa. We wish him all the best life after PWR on the said paddleboard. Thank you also to my Board colleagues who brought their individual experience and expertise to the table, which has resulted in excellent debate and collective decision making throughout the year. And finally, of course, thank you, as always, to our shareholders for your continued support of PWR. Thank you. Kees will now give you an overview of PWR's performance and future plans. Kees.

Thanks, Ron. Good afternoon and thank you for joining us today for PWR's AGM. I hope you all enjoyed your lunch out there today. My thanks goes out to [ my ] full-time chefs, Grant and [ Glenn ] for supplying us all a barbecue lunch, which has become a bit of a formality here as we all know. I'm really pleased to see that we're all able to get quite a few people through our manufacturing facility today, which has grown significantly since our listing in 2015. When we start, we only had 1 site, which is the main site we're sitting on today, 103 and 85 people. As we have grown, we have secured adjacent sites at 95 and next door, [ might afford a place ]. We have reached capacity here at Ormeau and next year's AGM, we'll be at our new facility at Stapylton, which we are extremely excited about. With a solid financial year behind us, I'm pleased to take you through both our financial and operational highlights of what has been achieved in 2024 financial year as provided an update on where we see our future opportunities. Our full year performance highlights. The 2024 performance highlights reflect the outstanding effort contributed by all staff during the year. Revenue was up across all markets and geographics. Revenue in aerospace and defense is up 100% to $21 million and now represents 15% of total sales across the group. We continue to invest in new equipment, factory space and head count to support growth. Investing now and collect later is our mantra. This takes careful decision-making and a strong resolve, but we're up for it. As Roland has mentioned, we're able to pay a full year dividend to our shareholders of $0.14 per share. As I mentioned at the full year, we are focusing on moving into our new headquarters at Stapylton this year and investing ahead of the curve in people and equipment, particularly in aerospace and defense. This is a big move and a lot of moving parts. We are only a couple of months into this financial year. And we're a large purchase order business. It is too early at this stage to give you an update on our revenue and profit expectations for the half of '25. Looking beyond '25, we are striving to improve efficiencies as we enter our new Australian factory, supported by our ongoing investment in the latest manufacturing equipment. Again, this is too early to quantify expected profitability over the coming years, but be assured, we are working hard to deliver long-term and sustained value for shareholders. Revenue by market sector. Motorsport still remains the largest market and important technology driver for PWR. Total motorsport revenue grew 8%, with the growth across several major motorsport categories. Automotive OEM grew 9% due to the continuation of existing programs and commencement of new programs. Aerospace and defense grew by 100% as we expand the number of customers and programs. As these programs progress into full production, we expect aerospace and defense to be an important contributor to the growth in '25 and beyond. Automotive aftermarket grew 9%. Demand in this market remains strong, and we are continuing to work on increasing production capacity and improving our market efforts, particularly in North America and Europe. Aerospace and defense opportunities. In 2020, the strategic decision was made to leverage our reputation and know-how in motorsport into thermal management solutions for aerospace and defense. Since that time, we have made great strides forward and continue to do so today. This year, we focused on growing aerospace and defense capacity and capability in the U.S. and Australia, investing in equipment and highly skilled and capable people. We see the U.S. manufacturing facility as a key contributor to future aerospace and defense business. We have made significant investment in accreditations, skill set and equipment to ensure vertically integrated the methodology and the ability to develop bespoke customer solutions was maintained. We have been gaining significant traction, as I've said before, 100% growth in aerospace and defense and focus remains on continued growth and innovation within A&D. Adding 52 dedicated A&D head count, 21 in '24 and our planned 31 for this year to enhance specific skills and expand support process. We were awarded a $980,000 Moon to Mars grant from the Australian government to advance MMX technology for applications within the space industry. We back ourselves to continue to build our reputation and growing in this sector. We see the global aerospace thermal management system market providing great opportunities for PWR. We are working with select A&D customers that are involved in significant number of aerospace and defense preproduction programs, including eVTOL, unmanned aerial vehicles, land vehicle cooling systems, laser cooling systems, communication and battery systems and also land-based mobile radar systems. Our electronic cooling applications and vacuum brazed cold plates are ideal to support the cooling needs of aerospace and defense industry. The business outlook. PWR is vertically integrated, manufacturing everything in-house. This is one of the major reasons we have been able to grow our revenue and push into new markets, including aerospace and defense. We're also able to control and lower the supply chain risk for our customers. All products manufactured in house means we can be more responsive to our customers' needs without having to rely on complex supply chains with long lead times. Our vertically integrated approach enables us to be flexible and operate end-to-end from design to manufacture to test. The number of potential size, aerospace and defense opportunities continue to grow across Australia, Europe and North America, supporting our view that aerospace and defense will be an important contributor to our future growth. The constant development in the world of professional motorsport continues to provide opportunities, especially around hybridization. The continued introduction of emerging and advanced technology into our manufacturing process ensures we remain at the forefront of manufacturing capability and complexity for both existing customers as well as potential new customers and industries. Our global footprint allows us to manufacture across multiple sites, and locations, reducing supply risk and also giving sovereign production capability where required for our customers. Therefore, we leverage know-how and expertise across all regions, including Europe and North America. Investing in people. Of course, it goes without saying that continued further growth for PWR comes down to our own staff here in Australia, North America and Europe. They will continue to drive product innovation and customer-focused solutions, both of which are central to our strategy and also our continued growth and success. PWR has now close to 600 team members globally. And with the continued growth, our ability to attract and retain top talent is another key pillar of our strategy. PWR is investing in growth, in growing our head count and is actively recruiting for several roles. The employment market has improved slightly but still remains tight for quality staff. We also invest heavily in the apprentices, work-experienced students, both school and university and graduate engineer programs. Most of our people demonstrate every day the PWR DNA, respect, passion and teamwork. Our new facility. To achieve our growth potential, it is imperative that we continue to plan well ahead, invest ahead of the curve in capable people, the latest technology and, of course, factory space for manufacturing. If you have been coming to our AGMs, you will notice we are pretty tight for a space here at Ormeau. We have started work on the fit-out of our new factory manufacturing headquarters at Stapylton, with plans to commence moving in, in the middle of next year. Hopefully, before that. Our new headquarters will provide capacity for growth in our head count and manufacturing capacity as well as provide better traffic access, manufacturing workflows and give us the opportunity to increase the use of automation where appropriate. As you will see in the video of the new factory shortly, we have also a large training academy for all our future in-house programs or in-house training programs. The Queensland government has supported our decision to expand our Australian manufacturing base through an investment of Queensland grant program. Under the grant, PWR will receive $8.78 million in support of a 10-year period, provided PWR meets investment and head count targets over the grant provided. I'd like to finish off with my presentation today with a fly through impression of our new headquarters, and I hope you enjoy it. [Presentation]

Boom. I get excited every time I see it. Excited for the efficiency gains and -- that we make over and increase our production capacity, excited for our people and our future. Just so I sign off, I'd just like to give a personal thanks to Jeff. I know that Roland said that before, but Jeff has been here since day 1 with myself and the team. So thank you, Jeff. That's personally for me. Thank you very much for joining our AGM today. I'll now hand back to Roland to take any questions you might have.

Thank you, Kees. We'll now be happy to take any questions from shareholders about the company, its management and future plans. I'd ask you if you can come up here and ask the questions from here, just so our webcast people can see it as well. David, you look as, say, you're primed and ready. Please.

Good afternoon. I'm David [ indiscernible ] from the Australian -- a volunteer with the Australian Shareholders' Association. Today, we hold proxies given to us from shareholders who know that we will vote according to our corporate governance policies and principles. My question -- my first question for you today is the graphs -- financial graphs look pretty impressive in the multi-years, given that you've got to move to a new headquarters. Next year, is that graph going to look very different? Is there going to be a financial hit from the move? And what are you doing to mitigate that?

Thanks, David. Well, the first thing we do is carry on working as hard as we can. The reality is that we've had a very impressive growth curve for years led by Kees and this team, et cetera. And what we're trying to do is make sure that graph is there in 2 and 3 and 4 and 5 years' time. That's actually what we're working towards. If we don't move, we won't be able to carry on growing that graph. We are absolutely flat chat, concentrated on making sure that we're delivering the value to shareholders down the track as well as we possibly can in the current year, of course. We work as hard as we can. But we've really got our eyes on the prize in 2, 3, 4, 5 years' time. Unless we show that we've got the capability in terms of production capability and capacity, et cetera, we will not achieve the growth that I think we deserve and I think the shareholders deserve for your support over the last 9 years, that is ready to be had if we stick to our guns and build this new factory and also update our facility in the United States, expand that and our one in the U.K. It's all part of playing the long game. Next question, Thank you.

I'm a member of [ TeamInvestment ]. We just got told this morning that if our individual shares were aggregated, we would now rank just in the top 20 -- just at the top 20.

Sorry, too many years standing around Motoracing Cup. Can you up the volume a little bit?

Okay. Yes. So I want to start right from the start. Okay. I'm a member of team of investors as well as being a shareholder. And this morning, we just got told that if our individual shares were aggregated, we would just make it into the top 20 shareholders. So there's quite a few of us, and there's only few here today. I've come up from Tasmania. But anyway, getting on to a couple of questions. In the annual report, you talked -- under the risk area, it talks about one of the activities to be achieved is to obtain accreditation for the defense industry, security programs for Australia and North America. Once achieved, what new opportunities will that provide?

The basic fact is you can't get involved in those sectors unless you achieve accreditation at certain levels. The team here and in the United States and now in the U.K. has done an incredible job over the last 3 years, in particular, but a little bit longer than that as well in the background, over achieving accreditation, not only by certification agencies, et cetera, but also by very high-level prime suppliers into governments. And to do that has meant investment in time, investment in equipment and also being able to demonstrate it in a way that they recognize and are prepared to tick those boxes. The short cut would have been to go and acquire a business or businesses. With that certification already in place, we chose to do it ourselves. We've achieved it far faster than we thought we would. And a lot of people outside thought we would. We're ticking those boxes. Without them, we can't go to the next level. With them, we will go to the next level. It's very hard to be specific in a world that's full of confidentiality and programs that, to be honest, we don't even know what the final program is. We might just know a little part of the program, but the opportunity is -- sky is the limit.

So what was mentioned in the risk section, that's not a new accreditation or...

Yes, it's ongoing. No, it's ongoing. I mean it's -- we're now -- we're doing renewals of approvals that we got a while ago. You've got to keep them current. And then you want to take the accreditations that we've got here in Australia, and you want to make sure that you've got them in the factory in the United States, which we've just done a massive piece of work on that in the last month. And then in the U.K., we'll be doing -- we're achieving now with ticking those first boxes there, and we'll carry on to make sure that we've got uniformity across all 3 sites.

Okay. And second question, the new property leases, [indiscernible] about the cars, the new leases for 15 years I believe.

Sorry?

The new lease, Stapylton leases for 15 years?

Me?

No.

Oh, here.

At the property, at Stapylton.

The property here, Kees, were 2007 or something?...

No, no. I'm talking about...

Oh, the lease on the new one.

Yes.

Yes. It's an initial 15 years with a 5-year option times 2.

Oh, okay. So very long term. Is there adjacent land if you needed to actually expand quicker than you're anticipating?

There's an adjacent building that's owned by the same landlord, who knows? But it's owned by the same investment company, and you never know. But I'm chewing very hard. Kees is chewing very hard. Yes. We've got a right of refusal, first right of refusal on that building. But let's deal with what we're dealing with in the next 3, 4, 5 years and swallow hard. Any more Tasmanians? I can see one there.

[ Brian Marsden ] I wondered if the 9-day fortnight, and I've got some experience with it, it was going to increase their costs?

It's an interesting question and one that we're in the process of trying to answer. So what we did was embark on a trial period for a quarter, and we've actually extended it for a full half so that we can properly measure through a number of different production cycles whether it's efficient or not. On the surface of it, it does appear to be efficient, that we're not losing production as a result of it, because people are still doing the same number of hours, but over 9 days rather than 10, so -- but we haven't answered that question yet. It's something that we're -- is ongoing here as it is in many other working environments in Australia and further afield.

Does it include penalty rates on the weekends?

Well, that's all a part of what we have to contend with. We're operating in 3 different very different environments. And we're trying to juggle our production efficiencies in all 3 places. So yes, we've got to be aware of the relevant awards in the relevant places. But as I say, we haven't made a call, and the management team will make a call probably at the end of this year as whether the 9-day fortnight is, not only is it working here, but has -- it's got scope in other places.

You might want to consider a subsidiary agreement then that perhaps continues way just across the 9 days.

Yes. Thank you. Any other questions?

Yes. I'm Quintin, shareholder. Just in regards to automation, as I walk through today was very helpful as a shareholder to understand what you guys do, and it's very staff-intensity. What type of automation can be included in the new site? And just a little bit about what your plans are for...

Lisa, am I allowed to ask an ELT member to come up and talk to that? Yes? Kees, do you want to do it or -- I think it's highly relevant, because, Jason don't say the wrong thing or you'll get us all into trouble. But I think it's highly relevant because Jason has been part of PWR's story for 20 years. He's grown through having to do every job in the place himself to running the production. And he's spent an awful lot of the last few months looking at automation. And I think he can probably give the shareholders a little bit of heads up on a particular piece of equipment that you've been looking at in Japan in the last few weeks.

Yes, certainly, Roland. So for us, obviously, automation is a big thing. That's part of our strategic plan. So as Roland said, I've just come back from Japan where we've purchased a sheet metal piece of equipment, which is actually automated. So it can run 24 hours a day. So I know a lot of you who have done a tour here today have been through our machine shop and seen that we have machines that run 24 hours a day unmanned. That's our goal with a lot of the other processes we do as well. So there is a lot of emphasis on that automation side of things. So that's probably -- there are a lot of things that we still cannot automate, but there is a lot that we are working on to do.

Thanks, Jason. Yes. Thank you. I mean we are all over it. We're working really hard on that side of it where we can. Any other questions? Okay. In that case, we'll move to the business of the meeting.

Before we put the resolution to shareholders, I want to go over some meeting procedures. All resolutions at today's meeting will be by way of poll. If you are a shareholder or a proxy holder, you should have received a blue admission card with the resolutions on the back of that card. When I open the voting, you'll be asked to cast your vote directly on the card. Your completed cards will be handed to Computershare representative at the conclusion of the meeting. Jessie Yerma from Computershare will be our returning officer and will tally the votes for each resolution. Results of all resolutions will be released to the market after the meeting. I also propose to take each resolution in sequence. It is listed in the notice of meeting. A reasonable opportunity will be given to shareholders to make comments and ask questions about each resolution before it's put to the meeting for vote. After receiving comments and questions and to putting the vote to a poll, the resolution together with the proxy votes for the resolution will be displayed on the screen. I do not intend to read out the resolutions or the proxy numbers unless specifically requested to do so by a shareholder. Before we move to the business set out in the notice of meeting, I would like to highlight the key management personnel, details of whose remuneration are included in the remuneration report and their closely related parties are not entitled to vote on the adoption of the resolution report or remuneration-related resolutions. However, a vote may be cast by a member of the management, key management personnel if the vote is cast as a proxy, the appointment is in writing and directs the proxy how to vote in respect to the resolution and the vote is not cast on behalf of a member of key management personnel or closely related party of a member of key management personnel. As confirmed in the notice of meeting, as Chairman of this meeting, I intend to vote on each resolution I'm entitled to, consistent with the recommendations of the Board which are in favor of all resolutions. Whereas Chairman, I've been appointed as a proxy that is undirected, I'll be voting undirected proxies in favor of resolutions consistent with the Board's recommendation. Besides the financial report, there are 4 items of business to deal with today. The first item of business is to consider, the 2024 financial reports, the director's report and the auditor's report. These reports are contained in the 2024 annual report. The Corporations Act requires that these reports be laid before the meeting. There is no requirement that shareholders vote on, approve or adopt the financial reports. However, shareholders will be afforded an opportunity to put questions regarding the financial reports or other matters relevant to the performance of the company. Shareholders are entitled to direct audit-related questions to the auditor, Erin Neville-Stanley from KPMG. I note that no written questions to the auditor were submitted before the meeting. Any questions on the financial report, please feel free to ask now. No? Ladies and gentlemen, as discussed -- as discussion and consideration of the financial reports has been completed, I'll move on to the formal resolutions to be considered by the meeting. The first formal resolution to be considered is the adoption of the remuneration report for the 2024 financial year. The remuneration report is part of the directors' report, which is contained in the 2024 annual report. The Corporations Act requires the numeration report to be submitted to the shareholders for consideration. The company's remuneration policy and practices are designed to attract, motivate and retain high-quality people. They're built around the principle of being competitive in the markets in which the company operates. The directors unanimously support the adoption of the report. The screen shows details of the proxies received on this resolution. The adoption of the remuneration report is now open for discussion. If you have a question or comment, please ask now.

I'll return and [ remember ] the shares of it. The EPS component of the LTI has a minimum of 4% annual growth. Is the rate, the yield -- sort of divesting starts with a 10% growth for the maximum award. 4% is a little more than inflation, so seems to be hardly much of a challenge. What was the reason such a low rate was chosen as the starting point?

Kristen, can I ask you a Chair of our Audit and Nom?

Can you hear? Can you hear me right? Sorry. I'll try and speak up. So obviously, we looked at the long-term incentive plan. We looked at those hurdles. You might remember if you've been a shareholder for a period of time that, that long-term incentive plan plus those hurdles, including that EPS that you -- compound EPS that you're talking about was put to the shareholders in 2022 and approved by the shareholders, I think it was 99-point-something percent so it has been looked at recently. We looked at it again this year. We acknowledge PWR's been performing really well. But we're also looking at just because we've achieved those results before, there's not a guarantee moving forward. And we're looking at a number of different factors, as we've talked about and that the objective around the need to continue to pursue our strategy, but also the significant effort to develop and move into our new headquarters, where so saw the fly-through before. That's a large project. Whilst we're still trying to, at the same time, meet PWR's long-term growth objectives. So considering all of that and the fact that we are doing those big pieces into investment into capacity and capability in this coming year, we thought that those hurdles were appropriate and they were supported by the Board.

David, does that answer for you?

[indiscernible]

Sorry?

Sorry, Roland. I was just after the reason, which Kristen's given.

Right. Thank you. Any other questions on this?

Ladies and gentlemen, as there's no further discussion on the remuneration report, please now cast your vote on the remuneration report by marking your vote card. [Voting]

Shareholders, Kristen Podagiel was appointed by the Board to fill a casual vacancy on the 1st of February this year and is standing for election by shareholders. Kristen chairs the PWR's Nomination and Remuneration Committee. Kristen's qualifications and experience are set out in the notice of meeting. The remaining directors unanimously recommend Kristen's election. Before I put this resolution to shareholders, I wanted to highlight that it is Kristen's intention to purchase PWR shares and she'll do so in compliance with our share trading policy. The screen shows details of the proxies received on this resolution. If you've got any questions or comments on the election of Kristen as a director, please feel free to ask them now.

David [indiscernible], Australian Shareholders Association. And I would like to thank Kristen for undertaking to increase the shareholdings as director shareholdings are monitored by the association to ensure that directors are in alignment with shareholders. I've got a question about the directors' skills matrix. You do have one, but it doesn't individually identify the skills and capabilities of each director. And as your Board increases in size, that will be increasingly useful for shareholders to understand the gaps in the Board and how the directors that are up for election will meet the gaps in the skills of the Board. So I'd just like to ask, will the Board consider identifying individual directors in the skills matrix in the future?

Thank you, David, and we'll certainly take that on Board and consider it.

Thank you. If there are no further questions, well, then I'd ask you to please cast your vote by marking your vote card on this resolution. [Voting]

And's gentlemen, Jason Conroy was appointed by the Board to fill a casual vacancy on the 1st of May this year and is standing for election by shareholders. Jason will assume the role of Chairman of PWR's Audit, Risk and Sustainability Committee following the retirement of, Jeff Forbes. Jason's qualifications and experience are set out in the notice of meeting. The remaining directors unanimously recommend Jason's election, and the screen shows details of the proxies received on this resolution. If you have any questions or comments on the election of Jason, please feel free to ask them now. All right. Thank you. As there's no further discussion on the appointment of Jason as a director, please now cast your vote by marking your voting card. [Voting]

Let's move on to the final item of business, which seeks shareholder approval to grant performance rights to Mr. Kees Weel under the performance rights plan. The performance conditions attaching to the rights are set out in the notice of meeting. The non-executive directors unanimously recommend approval of the issue of performance rights to Kees Weel, company's Managing Director. I do note, however, that some of the proxy advisers have recommended a vote against this resolution on the basis, the earnings per share performance hurdle appears too low relative to PWR's historic EPS performance as well as forward-looking broker consensus EPS. We acknowledge that PWR has performed extremely well compared to other companies as evidenced by the compound EPS over the last 7 years being 12.8%. The Board believes that this result is a testament to PWR's strategy and the efforts of the leadership team to successfully execute on that strategy. And just because PWR has achieved these results in the past does not mean that there is any guarantee you'll be able to focus -- you'll be able to continue to achieve them into the future and continued effort and focus by the leadership team is required. I confirm that the Board considered the appropriateness of the hurdles for this year's long-term incentive plan and took a number of things into account, including the objectives of the long-term incentive plan and the significant effort required to develop and move the headquarters to PWR's new manufacturing facility at Stapylton whilst continuing to meet PWR's long-term growth objectives. While PWR has delivered consistent growth year-on-year, the investment into capacity and capability in 2025 will impact the 3-year compound annual growth rate for EPS based on analyst consensus. If you have any questions or comments on the request for approval to issue the performance rights to Kees, please ask them now. No? Thank you. And ladies and gentlemen, as there is no further discussion on this item of business, please can you now cast your vote on the request to issue performance rights to Kees Weel by marking your voting card. [Voting]

Ladies and gentlemen, that concludes our discussion on the items of business. I'll pause a few seconds to give you time to complete your voting cards. I think you're all on top of that, and it remains for me to say thank you. Computershare, please collect the voting cards and close the polls. If you have any further questions or comments about the meeting, please ask them now. As there are no further questions, this draws to today's meeting to a close. Results of the polls held at today's meeting will be released to the ASX after the meeting. It only remains for me now, on behalf of the Board, to thank you for your attendance and your continuing interest and support of PWR. We look forward to holding our 2025 AGM at our new headquarters in Stapylton and welcoming to what will be a state of the art center of excellence. Travel safe on your journey home, and thank you very much. Thank you.