Qube Holdings Limited (QUB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to this Annual General Meeting of Shareholders of Qube Holdings Limited. My name is Allan Davies, and I'm the Chairman of the Board of Directors of Qube Holdings. Unfortunately, given the uncertainty around holding in-person meetings due to the ongoing effects of the COVID-19 pandemic, this is, again, well similarly to last year, being held virtually via the Lumi online virtual meeting platform. This virtual format allows shareholders, proxy holders and guests to attend the meeting in a safe manner. This year, shareholders and proxy holders have the ability to ask both written and oral questions and submit votes online in real time. This format will allow participation by a larger and more diverse group of shareholders and guests. A recording of this live webcast will be made available on Qube's website after the meeting. It is Qube's intention that when the environment allows, Qube will shift to holding hybrid Annual General Meetings, allowing both online and in-person attendance. Before we turn to the proceedings of the meeting, given that its Remembrance Day, I propose the meeting observe a brief period of silence to remember those who made the supreme sacrifice for our country. Thank you, ladies and gentlemen. We will now proceed with the meeting. I'm advised by the company's secretary that a quorum of shareholders is present, and so I declare this Annual General Meeting open. The Notice of Meeting was made available to all shareholders electronically as permitted under the legislative changes to the Corporations Act instituted as a result of the pandemic. The Notice of Meeting, together with template voting form and AGM Access Notice were lodged on the ASX. They are also available on Computershare's InvestorVote page for Qube's AGM and on the Annual Meeting's page of Qube's website. I will take the Notice of Meeting as read. I would like to begin by introducing the other Directors, the Company Secretary and Qube's auditor. Given pandemic-related travel restrictions, Directors are participating today from different locations. Joining me in the boardroom at Qube's head office in Sydney and observing social distancing rules are: Paul Digney, Managing Director, and member of the Safety, Health and Sustainability Committee; Director, Steve Mann, member of the Safety Health and the Sustainability Committee and Audit and Risk Management Committee; and Director Jackie McArthur, Member of the Safety, Health and Sustainability Committee and the Nomination and Remuneration Committee. Sam Kaplan, Deputy Chairman and Chairman of the Audit and Risk Management Committee is joining remotely. Director Nicole Hollows, member the Audit and Risk Management Committee is joining from Brisbane. While Director Ross Burney, member of the Nomination and Remuneration Committee is joining from Melbourne. And Alan Miles, Chair of the Safety, Health and Sustainability Committee, is joining from Perth. Also joining me on the boardroom is Paul White, Director of Corporate Affairs; Paul Lewis, Chief Financial Officer; the Company Secretary and General Counsel, William Hara; and co-Company Secretary, Adam Jacobs. And joining remotely is Jane Reilly, lead audit partner for Qube's auditor, PwC Australia. Having introduced the Board, I would like to take this opportunity to advise that there will be a number of members with changes to the Board's committees. These changes have been approved by the Board and will take effect tomorrow. The changes are that firstly, I'll resign, and Jackie McArthur will be appointed as Chair of the Nomination and Remuneration Committee. I'll remain as a member of that committee. Sam Kaplan will resign, and Steve Mann will be appointed as Chair of the Audit and Risk Management Committee; and Jackie McArthur will resign from the Safety, Health and Sustainability Committee, and Nicole Hollows will take place on that committee. I'd like to thank Sam for his commitment, leadership and guidance of the Audit and Risk Management Committee for the last 9 years. I'd also like to congratulate both Jackie and Steve on their appointments as Chairs of their respective committees. Before we move to the agenda items, there are several housekeeping matters, which I'd like to mention in regard to the virtual meeting format. The first is in relation to asking of questions. Online and attendees can submit written questions at any time. To ask a written question, click the MESSAGING tab at the top of the Lumi platform. At the top of that tab, there is a section for you to type your question. Once you are finished typing, please hit the arrow symbol to send. Please note that while you can submit questions from here on, I will not address them until the relevant time of the meeting. Please note the item of business to which your question pertains. Please also include your name, location and affiliation with any organization. Lengthy questions may be summarized, a number of the same topic may be collated or amalgamated and presented as a single question. Questions will be read out by Paul White, Director of Corporate Affairs, acting as the moderator, and I will determine the appropriate person to answer them. For those shareholders who wish to ask oral questions, an audio questions facility is available during this meeting. To use this service, please pause the broadcast on the Lumi platform and then click on the link under asking audio questions. A new page will open where you will be prompted to enter your name and topic of your question before being connected. You will listen to the meeting on this page, while waiting to ask your question. If you have any issues using this system, please return to the Lumi platform. As noted in the Notice of Meeting and following the same format as last year, we will have only one Q&A session towards the end of the main to answer questions on all of these items. This includes questions on the Managing Director's presentation, the FY '21 Annual Report and the resolutions to be voted upon. We'll do that best to answer these questions in the order of items of business for this meeting. Questions time will take place after the formal voting resolutions are shown and prior to the closing of the voting poll. Finally, if due to time constraints we're not able to answer all of these questions at this meeting, answers to all questions as moderated will be posted on Qube's website after the meeting. Shareholders have the option to vote directly or appoint a proxy prior to the AGM via previously provided voting forms or through the InvestorVote page of Qube's AGM on the Computershare website. If you are eligible to vote at this meeting, you can vote through the Lumi platform during the AGM, even if you have previously cast your vote or appointed a proxy. Doing so will cancel your previously cast vote or proxy appointment. Voting will be conducted by way of a poll on each item of business. In order to provide shareholders and proxy holders with enough time to vote, I will shortly direct the opening of the voting system for voting on all resolutions. Once open, a polling icon that looks like bar graph will appear or shown on the slide. Selecting this icon will bring up a list of resolutions and present you with the voting options. To cast your vote, simply select one of the options. There is no need hit a submit or enter button as the vote is automatically recorded. You have the ability to change your vote up until the time I declare the voting closed, which will be at the end of the meeting. I will give you a warning before the poll is closed. I now declare voting open on all items of business, and the public icon should soon appear on your screen if you were a shareholder or proxy holder who was registered as such on the platform for this meeting. Finally, it should be noted that technical difficulties can occur with a virtual meeting. If such difficulties arise during the course of this AGM, as Chairman, I have the discretion as to whether and how the meeting should proceed, including whether it should be adjourned, and if so, for how long. In such circumstances, and in exercising my discretion, I will consider a number of factors, including the number of shareholders affected and the extent to which participation in the meeting has been restricted. In such circumstances, I may resume, that the meeting should continue and transact business, including proceeding with voting on the resolutions. If you experience technical difficulties during the AGM, please refer to the online Lumi meeting guide had on Computershare's investor vote page for Qube's AGM or Qube's website. You can also contact Computershare by telephone 1(300)-850505 in Australia or if calling you're from overseas, +613-9415-4000. Before proceeding to the formal items of the business on the Notice of Meeting, I would like to now say a few words as Chairman. A copy of my remarks has been lodged with the ASX and will be posted on Qube's website. As Chairman of Qube I’m pleased to say that the company has weathered the extraordinary challenges of COVID-19 safely, strongly and successfully. This time last year, we were all hoping the effects of the pandemic would pass with minimal loss of life and national economic damage. Unfortunately, the emergence of the Delta strain destroyed those hopes as the nation and the company came to grips with a more severe outbreak, leading to longer and harsher lockdowns. At Qube, I believe the company’s management, employees and contractors responded brilliantly to the challenges to deliver an outstanding result for the financial year in 2021. Qube responded to the global crisis with the health and safety of its people, customers and communities as the number one priority throughout the pandemic. Quickly adapting and introducing measures to try and stop the spread of the virus and positioning the business for the subsequent economic impacts required focused efforts with strong leadership, transparent governance controls and clear communications. And the pandemic added more proof, as if any more was needed, that the company’s diversified logistics strategy will underpin long term earnings growth. As a result, the company delivered record underlying earnings with NPATA up more than 31%. The Board was able to increase dividends by more than 15% to $0.06 per share, fully franked. The key drivers of the earnings growth were the Operating Division and Patrick, and the result also benefitted from a lower net interest expense. The Operating Division experienced high volumes across most parts of the business with container, forestry and bulk activities particularly strong, and the result also benefited from growth CapEx undertaken in the current period and prior period. Patrick benefitted from high market volumes and increased landside and ancillary charges, although was adversely impacted by industrial action during the period. In relation to health safety, Qube continued its strong focus on safety and zero harm, with a particular emphasis in FY '21 on increasing reporting, corrective action closures, incident closure rates and leadership inspections. The result was an improvement in lost time injuries. However, further focus needs to be placed on reducing the number of total injuries. In FY21, Qube improved its sustainability performance, including achieving the following Outcomes: firstly, consistent with the goal of Zero Harm, Qube’s zero fatality objective was achieved in FY '21 and, a further reduction in the lost time injury frequency rate, or LTIFR, from 0.9 to 0.8 per million hours worked. Net emissions were steady compared to FY '20 while underlying revenue increased, resulting in Qube’s carbon intensity, which is measured in tonnes of CO2 per million dollars of revenue, further decreasing by around 8.6%. Qube continued to implement its Modern Slavery governance framework and action plan that included developing a Supplier Code of Conduct and questionnaire, complemented by an internal Modern Slavery training package for managers, supervisors and procurement teams. Also KPMG was engaged to investigate the options available for achieving a Low Carbon Future. Following on from the findings from the KPMG report, Qube will investigate the options to understand and define the financial and operational implications. Understanding these impacts will enable Qube to adopt a longer-term carbon goal and a sustainable strategy to address a Low Carbon Future, ensuring that targets set will be achievable. We increased our focus on improving sustainability reporting systems, in particular, data collection and verification processes across the business. This supports reporting against our sustainable development goals. The Operating Division reported underlying net revenue growth of about 12.5% to $2 billion, and underlying earnings growth, or EBITA, of 29.5% to around $212 million. Qube remained highly diversified by customer, product, service and geography. In FY '21, the top 10 customers across the division represented approximately 19% of its total revenue, which included mining companies, energy companies, shipping lines, retailers and manufacturers. No single customer represented more than 2.5% of the total divisional revenue. The majority of the earnings growth in the Operating Division was attributable to the Logistics activities which benefited from a much larger contribution from grain-related activities comprising bulk and containerized haulage, grain storage and loading, benefitting from the Quattro acquisition in the prior year as well as a stronger grain harvest generally, and container volumes across Australia, including new contract wins. General stevedoring activities across a majority of Qube’s Australian and predominantly East coast port operations were strong with higher bulk and break-bulk, which included mainly steel and grain imports, compared to the previous year. The rebound of motor vehicles imports trending back to pre-COVID-19 levels in the second half of the year assisted the improvement in the general stevedoring operation compared to the prior year. In relation to Patrick, Patrick again delivered a strong contribution to the full year Qube result. Patrick continued to generate strong cash flow in the period, with total distributions to Qube in the period of $120 million compared to $20 million in FY '20. The underlying contribution from Qube’s 50% interest in Patrick was $41.3 million NPAT and $50.8 million NPATA, an increase of 58.8% and 47.2%, respectively, over the prior corresponding period. This contribution is inclusive of Qube’s share of interest income, which is about $14.9 million, post-tax, on the shareholder loans provided to Patrick. The FY21 results benefited from high market growth in lifts of around 8.8%, with Patrick’s volumes lifts increasing by around 3.3%. During the period, Patrick secured several new services and also extended a number of its existing contracts. Just turning to the Moorebank monetization process. I'll just provide a brief update. Through FY '21, Qube continued to progress the monetization process with the LOGOS Consortium. And on February 25, 2021, Qube entered into a non-binding commercial term sheet with LOGOS for the sale of 100% of Qube’s interest in the warehousing and property Components of the Moorebank project. In July 2021, the company announced binding terms for the sale had been agreed and completion was expected in the fourth quarter of calendar 2021. Commercial agreement on key transaction documents has now been reached between Qube and LOGOS. Transaction completion is subject to a number of conditions, including Moorebank Intermodal Company consent following Commonwealth and FIRB approvals. As at today’s date, we expect completion to occur prior to Christmas, in line with our original forecast. On completion, LOGOS will acquire 100% of Qube's freehold land in Moorebank; 100% of Warehouse Trust, which is the leasehold interest in Moorebank warehouses; and Qube's 34% interest in Land Trust, which is the leasehold interest in Moorebank land. Qube will retain ownership of the intermodal rail terminals. The transaction is expected to deliver Qube total consideration of around $1.67 billion before tax, transaction costs and other adjustments. Approximately $1.36 billion is payable on financial close, and around $312 million is deferred, subject to a number of completion adjustments. Now turning to the summary and outlook of Qube. On the basis that the Moorebank monetization process completes as expected, Qube will be in an even stronger financial and operating position to generate meaningful cash flow and earnings growth. Qube will emerge with a more predictable earnings profile from its strategic and highly diversified logistics operations. In FY '22, overall growth is expected in underlying revenue and earnings, reflecting a full period contribution from the FY '21 acquisitions, growth CapEx and new contracts, partial period contribution from the FY '22 growth CapEx, an initial contribution from the BlueScope contract from the second half of FY '22, along with organic growth across certain markets. And finally, on behalf of the Board, I would like to thank all employees for the part they have played in Qube’s performance in FY '21 and, in particular, to pay tribute to our former Managing Director, Maurice James, who stood down as Managing Director on 1st of July this year. Clearly Maurice’s success steering the business since its inception has led to Qube’s success over the last decade and, in turn, our shareholders' success. Paul Digney has taken over from Morris as Managing Director of Qube. On behalf of the Board, I would like to take the opportunity in this forum to again congratulate Paul on his appointment. I and the other Directors look forward to continuing to work closely with Paul and his management team. I will now hand over to Paul for a presentation on the performance of the Qube Group during FY '21. A copy of Paul's presentation has also been lodged with the ASX and will be posted on Qube's website. Paul?

Thank you, Alan, and good morning, everyone. To start my presentation today, I've got a short video that's a snapshot of Qube today, which captures the business, the strategy and the vision that we started 10 years ago, which was to build a fully integrated supply chain logistics business focused on the import and export supply chain and across Australia and New Zealand. In some ways, this is attributed also to Maurice in his 10 years at the helm of Qube. Please roll the video now, This is Qube. [Presentation]

Just staying on that topic for a couple of minutes. It's been a fantastic story and a truly -- brand has grown up in our industry and been well recognized after 10 years. That allows us now to the next 10 years to develop out that strategy and build it out even further. So our vision and our strategy remains unchanged. What we've seen, though, through the experience, this reconfirms our business model, our strategy is very robust. The challenges that we faced during COVID, our diversification protects us, our diversification in our strategy allows us to grow, and freight as an essential commodity to move. And as you move it well, like we had at Qube, we're more appreciated than we ever today with our customer base. So our strategy remains the same. Our vision remains the same. And as in that video, the -- we started as a focus on 3 areas or 3 markets: the containers, break bulk stevedoring and the automotive market. And we grew out into all those markets on this slide in the middle box today. And we now see a real healthy pipeline of growth opportunities through those current markets, fueled by organic growth, fueled by building more market share, gaining more business and more services downstream or upstream in our supply chain and growing into more geographies. But we also see the opportunity now with this foundation that we've built is around looking at adjacent markets like we have in the past. If it's import or export, if it's in the domestic market, which we haven't been, we haven't focused much in the past. We can have a look to those markets. And as the world starts to transition and change, and the energy market is doing that with our customers, we will look to transition with them and be at the forefront to help them with their supply chains. And we also, have been successful in the past, look at acquisitions. We'll look at acquisitions that are strategic to our business, bolt-on, and fit our strategy, and we don't see that changing too much over the coming 10 years. We'll continue to build out and at the same run rate, but we won't buy for buying's sake. We'll buy to fit our strategy, as we've done throughout the 10 years of our growth. If I move on to the COVID response for our team. I know Allan has touched on it, but it'd be remiss of me not to mention the efforts, the fantastic job done by our team to protect our workforce, to keep freight moving, to protect our customers and also protect our shareholders' interest. It's been a fantastic job. It's been led by a few individuals. Emily Link and Belinda Flynn had taken some great leadership in regards to building that response, but also our safety leads, our executive team and management and all staff have done a fantastic job over the past 18 months in keeping company safe and to keep it operating. And we'll continue to do that in 2022. As COVID will still be within our community, also be within our business, we'll continue to have the most appropriate and adequate controls in our workplace around COVID safe. And with the help of vaccinations, as we have now available for us, and a vaccinated workforce, our utmost priority at this stage is to protect our workforce, and we'll continue to do that and we'll make -- continue to have Qube COVID-free in 2022. Just moving to the next couple of slides on the presentation. I'll just touch on some areas of business that are our pillars helping us to be sustainable and allowing us to grow into the next decade our business. And the first one I'll touch on is our continued focus on safety and health. As I've just mentioned in regards to COVID and what Allan mentioned, it's been a huge focus for us over the last 18 months in regards to safety and health of our workplace. But in saying that, we've had some really great achievements and we've continued our focus around critical risks. And we continue to focus on our reviews and our controls, our training and awareness while COVID has been around us, and we've implemented some innovative safety solutions that have delivered outcomes, and our KPIs in regards to our LTIFR being under 1 at 0.08 -- or 0.8. And our critical risk -- our critical incident frequency rate, our CIFR, dropping as low as 0.3. That means we have very minimal serious injury near misses during the period. Had been a fantastic effort to our team to get to that point. Thereby, our stats are at the top end of the industry. As Allan also mentioned, our TRIFR, our total injury, we've got to focus on that. We've made some great inroads over the last 4 years to bring that into under 10 as a KPI. Over the last 4 years, we've bounced around between 9 and 8. And it's not with the lack of trying to actually eliminate those small injuries, those strains, those sprains, the climbing out of vehicles and trucks, we've got a lot of equipment we've got to move in and out of, and there's injuries that occur from moving in and out of. Our focus is to drive that KPI below 8 this year, and we'll do that by innovating approach by our safety team and our innovations team and delivering our projects with engineering solutions and automation solutions. And that will be the key to bringing that under 8 as we actually try and pull that number down. So a great effort by this team and a continued effort by the team around our safety and health amongst a few. The next area of update, I want to quickly update on, is around our environment and our people. And as Allan mentioned, again, last year, we had our best outcome in regards to reducing our carbon intensity by 8.6%. That was mainly due to our investment in equipment, around our tracking equipment, our handling equipment, investing into Euro 5 and Euro 6 technology, as we bought new equipment, as we replaced equipment. And also our investment in our fleet-monitoring centers, which is basically getting our fuel burn down -- lowering our fuel burn because of the type of equipment we're using and being able to monitor our use of our equipment. Moving forward, and as we see today, we are going through a TCFD assessment on climate change risks and the opportunities. From that assessment throughout this year, we will be able to be in a position -- hopefully, to be in a position that we can set realistic targets around reducing our carbon footprint to a low carbon footprint and a clear action plan. The challenge we have got at Qube is we've got to transition away from diesel and how we need to transition out of diesel. Diesel emissions is 90% of our emissions, and 70% of that is related to heavy vehicle use. So over the course of the next 12 months, we are looking at ways, looking at the technology advancement, looking at the availability of fuels and greener fuels that will come to the Australian market, and we'll assess what that road map looks like. That's our focus, throughout the next 12 months to be in a position. In regards to our people in diversity inclusion, our people culture at Qube is fantastic. We've got a great culture. We've built a culture over the last 10 years. And diversity and inclusion comes to be part of that. To have respect in the workplace every day is my motto, I think, when I talk to people. So moving forward, we want to be an employer of choice for all people. We want to be able to recruit from the biggest talent pool, and diversity and inclusion will take us a long way there. Some of the highlights from last year and ending to this year in that space was in Western Australia, it was difficult to get labor. The team in Western Australia ran a program starting all-female heavy driver training programs in WA, and they were very successful. Allowed us to have the best facility we've had so far to attract females to that environment. The challenge we've got in getting our female ratio up is not in our white collar workers, it's in the field, and field work as low as 5% today. And for us to get above to 15%, we've got to increase the participation in females in our workplace. And the program that our bulk team ran in WA announced on the third or fourth rotation now has attracted more females than we ever had to that part of the industry, and have been able to stay with the business, too. So credit to them in that regard. We also, within the period, we recognized or we celebrated quite a holiday for the first time. And it was very successful because it wasn't just over a day, it was over 2 weeks. In the Qube brand changes colors from the gunmetal gray to the yellow. We used the bright colors. We had long messages and stories. And it was well received with more so than I actually thought. It wasn't just received internally but externally with our customers and our stakeholders. So a really good program of inclusion and will be obviously an ongoing program, which we'll build over the course of the next couple of years. And we're also continuing to work in partnership with the Clontarf Foundation, which we've been doing for several years, which is supporting our indigenous men for work experience or work opportunities, and we continue to do that with great outcomes. If I move to the next slide and talk about another key pillar for us and a big part of our strategy is innovation. Innovation has taken us a long way so far in our first 10 years, it's what we like to say is part of our DNA. We've continued to roll out innovative projects that give customer-facing benefits, safety benefits. And the agenda now has even got bigger in our Safety Committees, in our subcommittees. So that agenda has gone into COVID-safe initiatives around technology and innovation is around learning and training applications. It's around cybersecurity as a partner's agenda now and also achieving a low carbon footprint as we look into the technologies becoming available in the world in regards to reducing our carbon footprint. But what I'd like to do now is pause. I've got another video. It's about the great story in New Zealand. Our New Zealand team and out ISO team have put together. It's been a 5-year project, innovation project, that's moved us away from traditional ways of operations. It's an investment in innovation that is focused on delivering a safer workplace and a more efficient supply chain. It sets us apart from our competitors. If you look at the slide on the screen at the moment, there's 3 pictures down the bottom. I think the first 2 pictures are relating to how a log traditionally we received at the wharf in New Zealand. And you have interaction -- work interaction where a person will have to stand on the back of the truck, measure the log, receive the log in, and that's how we traditionally do it. And then other picture on the left there is a picture of a person tallying the log out. So tallying log out basically low on the ground, scanning logs on the ground. And the last picture, unfortunately, is the wrong picture that I had previously -- you won't be able to see it, but is traditionally how our logs will be loaded on to a shift, they'll be loaded by 2 people on the ground, securing the load wire slings onto a hook. You'll find in this video that all that gets eliminated. The interaction between people, the freight, the mobile equipment and standing on top of the back of these trucks has been completely eliminated. It's a much more efficient process than it has been in the past, and the safety outcome is huge. I'll roll the video now, and you'll get appreciation what we've been able to achieve over the last 5 years in New Zealand has been a credit to New Zealand team to deliver on this. [Presentation]

Now move to Moorebank and an update on the monetization process. So just a quick update on the Moorebank monetization process. As Allan mentioned, we've reached commercial agreements with LOGOS. We're still waiting on agreement with the Commonwealth government and FIRB consent. We're hoping to have that secured by December, but that will be dependent on those approvals and those consents as we work through that with the Commonwealth and MIC. The financial transaction, as Allan mentioned, doesn't -- the parameters are unchanged. We've -- the monetization proceeds will be $1.7 billion -- around $1.67 billion before tax. At closure, at completion of financial flows, we will receive $1.36 billion and a deferred payment of $312 million. And again, as we said before, the monetization transaction enables Qube to realize sufficient funds to be used to debt reduction, growth opportunities and potential capital management initiatives. Now I'll move to the business update. It's been a pleasing start to the first quarter. We've been ahead of internal expectations. In regards to the Operating Division, underlying revenue and earnings are well ahead of expectations. In the logistics and infrastructure part of the business, we've exceeded external expectations on higher agri and steel volumes as well as transport and container-related activities. Also in the period or at the end of this period, the first quarter this year, we've made 2 acquisitions, one, the Newcastle Agri-Terminal, and the other being AST Logistics, a small logistics business in Sydney. In Ports & Bulk, our expectation -- our internal expectation has been in line with our previous outlook. The Ports business and the Bulk business over most activities in commodities have been in line or been slightly better than expected. That's been slightly offset by some impacts in New Zealand through a COVID lockdown for the industry, which they locked down for about 2 months and now getting back on stream. We also had some impact with some project delays in gas renewal projects, which we saw coming to the first quarter of this year, so they've been delayed throughout the year. And there's still the impact in Western Australia, especially in our bulk business, around labor shortages and the issues around cost in regards to extra training and the contractors we use in that area. In regards to the Property Division, again, a lot of time has been focused on monetization project. But -- yes, so on the monetization process. But outside of that, there's been some achievements. One of the achievements has been, we've achieved a state significant infrastructure approval, received for relocation of Moorebank Avenue precinct, which is -- which means that, that road goes around the precinct. It doesn't divide the precinct to an East and West, so it fully integrates the site. So that's a significant outcome for how freight moves within the precinct. Significant CapEx has continued to be spent on the site. We've been spending money on land prep works on the West. The Woolworths National Distribution Center is getting built, and is looking -- is getting erected and its spending a size about itself. Moorebank Avenue upgrade works to continue. All those 3 components of CapEx will be reimbursed to Qube on the completion of the LOGOS transaction, and we've also started early works in regards to Interstate. In relation to Patrick's, underlying revenue and earnings has been below, a little bit below expectations but has been ahead of last -- the prior year period. Those impacts have been mainly to do with vessel scheduling integrity and also the current industrial action impacts that we've been having. In regards to industrial action, an update -- a quick update on that is that this month, we -- Patrick's filed for an application with the Fair Work to terminate the existing agreement. We're negotiating that agreement for 2 years, have come to a point that we evolved this application with Fair Work. Also earlier this week, Patrick has also filed an application to terminate the -- filed an application to terminate the current industrial action. As of yesterday, the MUA has withdrawn their industrial action. They've asked us to withdraw this application. And so discussions are now occurring to get some resolution. So there's been a positive outcome over the last 24 hours in regards to the industrial action of Patrick. But we're still in discussions and whether that will play out over the course of the next couple of weeks. In regards to our performance and our outlook and our guidance. Qube is trading ahead of internal expectations for the first quarter of '22 and has a positive outlook for the remainder of the full year '22. Full year 2022, Qube currently expects stronger underlying earnings growth than previously forecasted from the Operations Division. That also inclusive of the 2 recent acquisitions. In regards to Patrick's, as I mentioned before, we believe -- our outlook is that the Patrick business will be stronger than last year, but a little bit below our expectations due to those underlying issues around industrial action and vessel bunching at this stage. CapEx we'll spend today is indicative -- will be somewhere between $500 million and $600 million. That includes the 2 acquisitions that we've completed on. It doesn't include any acquisitions under consideration at this point in time. It doesn't include any work that we're doing on Moorebank that we'll get reimbursed and obviously, it doesn't include -- the net number doesn't include any proceeds that we will get from the monetization process. So based on our year-to-date trading, the outlook for the remainder of full year '22, including the recent acquisitions, Qube expects to report a strong increase to underlying NPATA and also earnings per share pre-amortization compared to full year '21. This assumes no material adverse change to the current conditions in Qube's key markets. and also if there's any further deterioration due to COVID or industrial action. Thank you for your time, and I'll hand back to Allan.

Thank you, Paul. I will now turn to the formal proceedings, which involve consideration of the FY '21 financial statements and reports, and voting on the resolutions are set out in the Notice of Meeting. Firstly, the financial statements and reports. The first item of business is to receive and consider the company's financial report, the Director's report and the auditor's report for the financial year ended June 30, 2021. All these documents are contained in the annual report, which was lodged with the ASX, made available to shareholders and is available on Qube's website. As it is common practice with most companies, reports will be tabled but will not be the subject of a resolution as it is not required by the Corporations Act. I invite shareholders and proxy holders to ask questions on the management of the company or the annual report. Questions might also be asked of the auditor relating to the conduct of the audit, the preparation and conduct of auditor's report, accounting policies adopted by the company and the auditor's independence in carrying out the audit. All questions should be addressed to me, and then I will request the auditor, Jane Reilly, and/or a member of management to respond to the questions as applicable. As I have mentioned, questions will be answered during question time towards the end of the meeting. Just moving on to voting. Ladies and gentlemen, we will now move to the resolutions to be put to the meeting as set out in the Notice of Meeting. Detailed information on each resolution is contained in the explanatory memorandum attached to the Notice. Qube's constitution allows the Chairman to demand a poll, which, as mentioned, I have demanded on each resolution. As advised in the Notice, as Chairman of the meeting, I will vote all undirected available proxies for each resolution, except conditional resolutions set, which is the Board spill resolution. If this resolution will push, I will vote all undirected available proxies against this resolution. This resolution will only be put if 25% or more of the votes cast on resolution 3 are against adoption of the FY '21 remuneration report. This will constitute a second strike given that our first strike recorded against FY '20, remuneration report of last year's AGM. However if less than 25% of votes cast are against the FY '21 remuneration report, there will be no second strike and this resolution will not be put. Moving on to the vote results. Rather than stepping through each resolution individually, a list of the resolutions and the corresponding voted direct and proxy votes received for each are now being displayed on the screen. Apart from the conditional resolution 7, the votes for each resolutions together with the votes cast at this meeting will be added and the final results lodged with the ASX. I move that each resolution, apart from the conditional resolution 7, be adopted and we'll speak briefly to each. Firstly, resolution 1, which is the reelection of Sam Kaplan. The first resolution is to consider the reelection of Sam Kaplan as a Director. Sam retires by rotation under the company's constitution and is eligible for reelection. Information on Sam's professional experience is contained in the explanatory memorandum in relation to this resolution. The Directors, other than Sam, given his interest, unanimously recommend you vote in favor of this resolution. I now invite Sam to speak to the resolution. Over the you, Sam.

Thank you, Allan. I have extensive experience in the logistics industry. Have a history of being involved in successfully building strategic businesses, and I look forward, if elected, to contributing to the next phase of Qube's development and strategic growth. Thanks very much.

Thank you, Sam. Resolution #2 is for the reelection of Ross Burney. This resolution is to consider the reelection of Ross as a Director. Ross also retires by rotation on the company's constitution and is eligible for reelection. Information on Ross' professional experience is contained in the explanatory memorandum in relation to this resolution. The Directors, other than Ross, given his interest in it, unanimously recommend you vote in favor of this resolution. I'd now like to invite Ross to speak to this resolution.

It's a pleasure to stand again as a Director. I bring investment experience in corporate governance, corporate finance experience to the Board, which has been useful in the last few years from a subcommittee for the Moorebank disposal process. And excitingly, given the growth opportunities looking forward for Qube, I expect those investment skills will be required, and I look forward to providing them on behalf of shareholders. Thanks, Allan.

Thank you, Ross. The third resolution is the -- in relation to the remuneration report. And this part of our business is resolution 3, to adopt the FY '21 remuneration report. The remuneration report is included in the annual report. Information on this resolution is contained in the explanatory memorandum, which also includes a message from me as Chair of the Nom and Rem Committee. The Corporations Act requires that listed companies put a nonbinding vote to shareholders to voice their opinion on the remuneration report. As noted, Qube has received a first strike in relation to its FY '20 rem report at last year's AGM. As I noted in my Chairman's letter and introduction to this year's rem report, the Board and management considered seriously last year's outcome, the feedback received on the report and conducted a comprehensive review of Qube's remuneration framework during FY '21. The results of the review were reflected in Qube's FY '21 remuneration outcomes. More information on the changes to the rem framework is contained in the explanatory notes to this resolution. Key management personnel, including Directors and their closely related parties are excluded from voting in favor of the remuneration report unless as directed proxies for shareholders eligible to vote. The Directors encourage all shareholders to cast their vote and unanimously recommend shareholders vote in favor of this resolution. The fourth resolution is approval of the FY '22 award of SARs under the long-term incentive SAR plan to Paul Digney. This incentive plan has been in place since the 2017 financial year. The summary of the plan is included in the remuneration report and in the explanatory memorandum in relation to this resolution. The Directors other than Paul, given his interest, unanimously recommend you guys vote in favor of this resolution. The next resolution is resolution 5, approval of the issue of securities under the key long-term incentive, or SAR, plan. Under the listing rules, Qube may issue up to 15% of its share capital in any 12-month period without shareholder approval. An issue of securities under an employee incentive scheme will not be included in that 15% limit if within the 3 years prior, shareholders approved the issue of securities under the scheme. More information on this resolution is contained in the explanatory memorandum. If passed, resolution 5 will provide flexibility to the Board when considering any further necessary fund raising. The Directors other than, Paul, given his interest in it, unanimously recommend you vote in favor of this resolution. Resolution 6 is related to an increase in the Directors' fee pool. This resolution seeks approval to increase the maximum aggregate remuneration payable to Non-Executive Directors to $2 million per annum. Existing level of $1.4 million was last set and hasn't changed since the 2017 financial year. The proposed increase reflects the increased commitments required by the Board to support the company's continued growth in operations. It will also provide the necessary flexibility to operate the Board with varying numbers of Directors to effectively meet the oversight and governance requirements of the company from time to time as well as be able to keep, to attract and retain high-quality Directors. Detailed information on this resolution is contained in the explanatory memorandum. As the Non-Exec Directors have an interest in this outcome of this resolution, the Directors declined to make a voting recommendation in relation to this resolution. And finally, conditional resolution 7, the Board spill resolution. As I previously noted, Qube received a first strike on its FY '20 remuneration report at last year's AGM. A strike occurs if 25% or more of the votes are cast against adoption of an ASX-listed company's remuneration report. If the company received strikes on its remuneration report at 2 consecutive AGMs, the company must convene a further general meeting of shareholders. Now this is a Board's meeting in order to consider the composition of its Board of Directors. Accordingly, this is a conditional resolution and will only be put to this AGM if Qube was to receive a strike at this year's AGM. That's going to be seen from the voting on resolution 3. Less than 25% of all of the votes have been cast against the adoption of the remuneration report. Consequently, Qube has not received the strike and as a result, this resolution will not be put to this meeting. Having said that, I do note that the voting -- from the voting tally that if a resolution has been put, it would not have been passed. I'd now like to move to the Q&A part of the meeting. As previously mentioned, I'll respond in the first instance and determine who is best placed to answer the question. And I invite our moderator, Paul White, Director of Corporate Affairs, to read out some of those questions.

Mr. Chairman, there are no further questions.

All right. Let's wait 5 seconds for any questions to appear. And if there are none, we'll move forward. Right. There appear to be no questions being put through the Lumi platform. So that will conclude the Q&A session. And ladies and gentlemen, that concludes the discussion on the items of business. I will shortly the strike that the voting system be closed, please ensure that you have cast all your votes on all resolutions. And I'll just now pause to allow time, if needed, to finalize your votes. [Voting]

The voting process is now complete. I declare the poll closed and instruct the voting system also now be closed. As voting has been completed, and there are no other matters to be transacted at this meeting, I declare the meeting closed. The senior represented from Computershare has been appointed as a returning officer. Following confirmation by Computershare, final proxy and voting results will be announced on the ASX later today that will also be placed on Qube's website. And finally, I'd like to thank you once again for your attendance and look forward to your continued support of Qube. Thank you.