Qube Holdings Limited (QUB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to this Annual General Meeting of Qube Holdings Limited. And my name is Allan Davies, and I'm the Chairman of Qube Holdings. I'm pleased again that we are holding this meeting both in person and at our normal venue at PwC's offices here in Sydney, and it's also available online via Computershare's online meeting platform, Meet Now. For those attending in person, I remind that all phones should be switched to silent, please, and that filming of the proceedings is not permitted. The hybrid meeting format allows shareholders, proxyholders and guests to attend in person or online by watching a live webcast of the meeting. By other means, shareholders and proxy holders have the ability to ask written and oral questions and submit their votes. And the live webcast is available via a link on Qube's website. And a recording of the meeting will also be made available at Qube's website after the meeting. I'm advised by the company's secretary that a quorum of shareholders is present, and so I declare the meeting open. And the agenda for the meeting is now displayed on the screen. The notice of meeting was made available to shareholders electronically or where shareholders had requested a hard copy, the notice has been mailed to them. The notice of meeting, together with template voting, form and AGM notice and access flow were lodged on the ASX. They're also available on Computershare's investor vote page for Qube's AGM and on the annual meetings page of Qube's website, and I'll take the notice of meeting as read. And I'd like to begin by introducing the other directors, the Company Secretary and Qube's auditor. Joining me on the stage are Sam Kaplan, Deputy Chairman and a member of the Audit and Risk Management Committee; Paul Digney, Managing Director and a member of the Safety, Health and Sustainability Committee; Director, Alan Miles, Chair of the Safety, Health and Sustainability Committee; Director, Steve Mann, Chair of the Audit and Risk Management Committee; Director, Jackie McArthur, Chair of the Nomination and Remuneration Committee; and Director, Lindsay Ward, a member of the Safety, Health and Sustainability Committee; Director, Ross Burney, who unfortunately has contracted a contagious virus, is not joining us today in person, but he's joining us by audio link from Melbourne. So welcome, Ross. Also joining me on the stage is General Counsel, William Hara; and in the audience, Chief Financial Officer, Mark Wratten; Director, Corporate Affairs, Ben Pratt; also in the audience are John Digney, Director, Logistics and Infrastructure; Michael Susser, Director, Ports; and Todd Emmert Director, Bulk. In the audience reporting to the Managing Director, Emily Link, Director of People, Culture and Safety; and Shane Collins, Director, Strategy and Development. Also President of Belinda Flynn, who's General Manager of Safety, Health and Sustainability; and Paul Lewis, Group Investor Relations and Corporate Support. And of course, there are other Qube employees are also present. Finally, of the audience for her first Qube AGM as Qube Lead Audit Partner is Liz Stesel for Qube's Audit of PwC. On behalf of Board and management, I'd like to thank Liz and her team for their input and guidance over the last 12 months and also thank you to PWC for making this venue available again. As shareholders will know, Nicole Hollows has recently resigned as a Nonexecutive Director. Nicole's sat on the Audit and Risk Management Committee or the RMC, and the Safety, Health and Sustainability Committee or the SHSC. Qube is well underway and it's in recruitment process for additional Non-Executive Directors, and their appointments once made will be announced on the ASX in the usual course. Pending these appointments, Nonexecutive Director, Ross Burney, who has previously been a long-term member of the ARMC, will again join this committee. And nonexecutive Director, Jackie McArthur, who has been a member of the SHSC in the past will rejoin this committee. These committee appointments will take effect from tomorrow, and Ross and Jackie will continue in their positions as members of the Nomination and Remunerations Committee as well. Further committee changes will occur in the future. In the meantime, the chairs of the ARMC and the SHSC will continue their regular engagement and discussions on risk-related matters that fall within the remit of both committees. Before we move to the agenda items, there are several housekeeping matters I would like to mention regarding the online component of this hybrid meeting format. The first is in relation to asking questions. As explained in the notice of meeting and following the same format as last year, we will only have one Q&A session towards the end of the meeting to answer questions on all meeting items. Shareholders and proxy holders may ask questions on the 2023 Annual Report, the Managing Director's presentation and the resolutions to be voted upon. Questions will take place after the formal voting resolutions are shown and prior to the closing of the poll. In-person attendees holding a shareholder or proxy holder admission and voting form will be requested to approach the microphone in the central aisle at the start of the question time in order to ask their questions. Once its -- online attempts can submit written questions at any time to ask a written question, select the Q&A icon on the Computershare meeting platform, type your question into the test box at the bottom of the screen and press send. Online attendees will also be able to ask oral questions by dialing in. To ask an oral question, follow the instructions on the virtual meeting platform, callers will be placed in a queue to await the start of the Q&A session and will be called on by a phone operator to ask that question. When asking or typing your question, please note the item of business to which your question pertains. Also mentioned or include your name, whether you are a shareholder or proxy holder and affiliation within the organization. Shareholders had the option to vote directly or appoint a proxy prior to the AGM via previously provided voting forms or through the investor vote page on the Computershare website for Qube's AGM. For those attending in person, you must be holding a shareholder proxy holder admission voting card. You should indicate your vote by placing a mark whether you're voting for, against or abstain along each resolution is printed on the reverse side of the voting card. You may wait until close to the end of the meeting to complete your card as I will allow some time towards the end for you to do so. If you change your mind during the meeting, please cross out your previous vote and clearly indicate your final voting intention and initiate the change. If you're participating in line by Computershare's meeting platform and eligible to vote, you can do so on the 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 concluded by way of a poll on each item of business. The poll will be taken simultaneously on all resolutions, which will be displayed as part of consideration of the formal business of the meeting. I will shortly direct the opening of the voting system for all voting on all resolutions. Once the voting system is open, a vote icon will appear as shown on the slide. Selecting this icon will bring up a list of the resolutions and present you with voting options. To cast your vote, select 1 of the options. A tick will appear to confirm receipt of your vote and there is no need to hit a submit or enter button. Your vote is automatically recorded, and you will see a vote confirmation notification on your screen. Online participants 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. To change your vote, select click here to change your vote and press a different option to override. I will give you a warning before the poll is closed. I now declare voting in the poll open on all of the formal items of business and our direct opening of the voting system. The vote icon that appears on the screens of shareholders and proxy holders should soon show all of the resolutions and allow you to vote on them. And finally, it should be noted that technical difficulties can occur with a hybrid meeting, involving an online component. If any such difficulties arise through the course of the 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 or would consider a number of factors, including the number of shareholders affected and the extent to which participation in the meeting have been restricted. In such circumstances, I may determine that the meeting should continue and transact business, including proceeding with voting on the resolutions. If you experience difficulties during the AGM of a technical nature, please refer to the online meeting guide located on the shareholders -- on Computershare's investor vote page to Qube's AGM on Qube's website. You can also contact Computershare by telephone on 03-9415-4024, within Australia or if outside of Australia +61-3-9415-4024. So before moving to the formal items of business in the Notice of Meeting. I'd like to now say a few words as Chairman. And a copy of my remarks have been lodged on the ASX and will be posted also on Qube's website. Before we reflect on our performance in FY '23, I want to begin by acknowledging that in September of this year, a Qube employee sadly died in an accident incident at Qube's forestry harvesting operations in South Australia. While the circumstances that led to this fatal incident remain the subject of an investigation and at this stage, we are unable to provide any significant details, on behalf of the Board and management of Qube, again, I want to extend our deepest sympathies to the family, friends and colleagues of the man who died. We treat safety extremely seriously at Qube as an employer of over 9,000 people across all of our operations in Australia and elsewhere. And with a number of risks inherent in our business, we're determined to make sure that everyone who enters one of our sites leaves the site unharmed. Through the course of this month and next, our operations team in every part of the business will stop for safety to reflect on the importance of safe work for themselves, their colleagues and their friends and family. As we head into the busy pre-Christmas period and in the wake of the incident in South Australia, this is particularly timely and important. That incident occurred after a year in which Qube recorded a strong safety performance. This included a 16% reduction from the prior year in lost time injury frequency rate, which from down to 0.63 lost time injuries per million hours worked, which is a credible performance to all management and employees. This was a very pleasing outcome reflecting a significant effort across the business to strengthen worker engagement in this important area, which -- and Paul will talk about more of this -- about this in a minute. On the financial performance, turning now to that in FY '23, I'm pleased to say it was another very good year for Qube. The business continued to perform strongly during the year despite some challenging economic conditions, including high inflation, increasing interest rates and geopolitical uncertainty in spades. Underlying revenue grew by 16%, while underlying earnings or EBITA increased by 27%. The business also received or achieved the net profit after tax, NPATA outcome of about $240 million, which is an increase of just under 20% on the prior period. This was largely driven by a very strong contribution from the logistics and infrastructure business unit, which achieved higher volumes across agriculture, automotive and container-related logistics activities. Underlying revenue in the logistics and infrastructure business increased by 19% to $1.34 billion and underlying EBITDA and EBITA increased by 46% and 54%, respectively to $285 million and $224 million. This was an exceptional result. Revenues in the ports and bulk business also increased up 14.3% to $1.65 billion. However, underlying EBITDA increased by 0.7% to $255 million, and underlying EBITA decreased by 3% to $133.3 million, which was weaker than we anticipated. Patrick, [indiscernible] delivered underlying growth in revenue and EBITDA of around 6.9% and 9.2% to around $780 million for the revenue and $305 million for the EBITDA, which was a sound result given imported container volumes did weaken in the second half of 2023. On the dividend, as shareholders are aware, given the strength of the group's results, the Board determined to increase ordinary dividend by 28.6% to $0.081 per share fully franked. This means that over the 5-year period to 2023, Qube's total shareholder return was around 34%, which is a very positive outcome. Of course, the key drivers of our FY '23 performance and the strength of the business overall is Qube's commitment to its strategy of diversification across markets and geographies together with its operational capabilities. Together, these attributes give the business the agility and the capability to withstand downturns in 1 sector and help ensure that we are resilient against economic cycles, which will continue to be important against the backdrop of continuing high inflation. On to acquisitions. During FY '23, Qube continued to build on that strategy of diversifying across markets and geographies with 2 key acquisitions, the purchase of Kalari here in Australia and an initial 50% share in Pinnacle, which is in New Zealand, which subsequently we have announced is now 100% owned by Qube. Kalari is a leading logistics provider to the Australian mining and resources industry, specializing in on-road and off-road bulk haulage. The business services a range of Tier 1 customers with significant mining operations predominantly across Queensland and South Australia, and this acquisition enhanced Qube's existing resources and logistics offering. Since completing the acquisition in May this year, the Qube and Kalari leadership teams have undertaken a significant program of work to successfully integrate Kalari into Qube's systems and processes while continuing to deliver excellent customer service for Kalari's customers. In New Zealand, Pinnacle operates both port-based and stand-alone facilities, in 9 locations throughout New Zealand, under its wholly owned specialized group and MetroBox brands. Pinnacle provides predominantly Tier 1 customers with a range of services, including container storage and handling, refrigerated container maintenance and repair and container transport and warehousing. As I've already noted, Qube initially acquired 50% of this business and earlier this month purchased the second tranche to take full ownership of the business, building on our existing port logistics presence throughout New Zealand. Paul will talk some more about that in detail shortly. So investing for the future. Well, much of our growth in FY '23 was achieved organically, Qube continued to undertake substantial investment in the period, spending around $365 million on growth-related CapEx. This included the continued construction of the import-export IMEX and interstate rail terminals in the Moorebank Logistics Park. The 2 Moorebank terminals, rail terminals went fully operational and at scale, are expected to generate attractive financial returns for Qube and also be important in facilitating a modal shift from road to rail. We did have a dispute with the former head contractor for the interstate terminal during the period. And I'm now pleased to report that a new contractor is in place and we remain committed to meeting completion of that project in the first half of this financial year. We now have a short video, which we released with our results in August which I would like to play to provide shareholders with an update on how that site has developed, and how Qube's investments will help unlock the future of freight in New South Wales and Australia. [Presentation]

It's an impressive development. I did mention just a minute ago that the interstate rail terminal will be completed in the second half of FY -- or the first half of FY '24, I actually meant to say the first half of calendar 2024. But Moorebank is certainly an impressive site at present. So just on the summary and outlook and to conclude my formal remarks. Well, inflationary pressures remain, and there's been lots of talk from the reserve bank governor about this the last few days. There is some uncertainty as to the economic outlook through a combination of our diversified operations, balance sheet strength, experience management and operational team and a network of strategic infrastructure and extensive operating assets. Qube is well placed to continue prospering in financial year '24. Paul will talk about -- more about performance in the first quarter of this year shortly. Suffice to say, Qube's underlying earnings are expected to continue to benefit from higher volumes across most commodities and markets while the business is well placed to continue to achieve organic growth from existing as well as newly acquired businesses. I'd like to thank my Board colleagues for their commitment and collegiality through FY '23 as well as Qube's exceptional management team and 9,000 strong workforce for their hard work and dedication to making Qube thrive. And finally, thank you to the shareholders for your ongoing support of Qube and the vital role we play in delivering for our customers in this country. Thank you. I'd like now to hand over to Paul for a presentation on the performance of the Qube Group and a copy of Paul's presentation has also been locked with my remarks on the ASX, and it will be also posted on Qube's website.

Thank you, Allan, and good morning to everyone. As Allan just mentioned, 2023 was a fantastic result for Qube and for our shareholders. But I'm really pleased to say that, that momentum has kicked into '24, and we're running at the same run rate at this point in time. Where I'd like to start today would be to recognize the performance and the contribution of our team, 9,000 strong team that Allan just mentioned, their hard work and their expertise helped us deliver that great result in 2023. Through 2023, I think last year, I spoke about our Thrive program. We continue to roll that out. It sets out a vision and our purpose. It sets us all on the same path inside of Thrive but also describes our values -- our core values, which is up on the screen at the moment. So integrity, reliability and inclusion. This year, for the first time, we're having an awards night called our Qubies. And I'm proud to sort of host that night and be able to call out the nominations on the night and award the winners. And the winners are the ones that typify excellence in these values around integrity, reliability, inclusion. So I'll [indiscernible] that's next week, and so we're going to have a pretty fun night sort of acknowledging, our new role models, our key role models in the business that have been nominated by their peers, which is very important. So a big thank you to the team for this -- for the last year and this year and the great culture that we've created over the many years. Next slide. Safety performance. The health and safety and well-being of our people is a top -- of course, is a top priority for us. But unfortunately, and tragically, as Allan mentioned, one of our colleagues, Darren Norman, in South Australia was fatally injured early this financial year, which impacts all of us. This was a terrible event and as deeply sad and everyone, thank you, and our thoughts remain with our -- with his friends and his family and the people at Qube. We continue to investigate the incident. So we can potentially learn from it and come up with new ideas, in the event that this ever happening again in our workplace. As Allan mentioned, we want people to turn up to work safe and leave work and go home to their family safe. That's our most important thing. Also in 2023, we continue to invest and implement safety innovations as we've always done and new ideas across our business around safety and health. We continue to strengthen our safety management systems and awareness programs and a particular focus on critical safety risk. As Allan has mentioned around the stats on the screen, our TRIFR didn't exceed our target. We fell a little bit short. But that result is below benchmark in our industry, and it is still a good result by our team. But we are confident we're going to reduce that over the course of the next year as we implement new businesses to the same standards as Qube and roll out a better performance this year. But also LTIFR is a very good result, and it's a very good low result for our business, and we're very proud of that result. Next slide, please. Full year '23 highlights. Allan has just spoken in detail about the performance. I won't go through that again. Just a couple of things I'd like to call out. Diversification continues to prior Qube with a really core strength against the backdrop of such things as inflation, labor shortages and interest rates. Our strong underlying performance growth last year reflects the quality and the diversity of Qube. Last year, we continued to make substantial investments, as Allan pointed out, in infrastructure, property, equipment and our people. And we maintained a focus on unlocking productivity gains, leveraging our scale and infrastructure to drive margin growth, which we achieved and we continue to achieve so far this year. Pleasingly, our return on capital rose to 9.1%. So we're nearing our 10% target. Once we hit 10% target, we'll reset. And the pleasing part about that return on capital is that we still got a lot of capital employed in Moorebank. And it's not making money, it's actually losing money. So when that kicks in, we're in a much better position again. Next slide, please. '23 performance across our key markets. This slide here on the screen really highlights the value of the portfolio diversification across our key markets. It shows in 2023, as positive outcomes across our containers and our agriculture business, and it helped to offset weaker margins across our forestry business. And at the same time, we had labor shortages in the resources sector. and the forestry sector. And we had similar offsets where we had positive uplifts in our performance and elsewhere, which was able to offset that. In any given year, or in any given period, there will be some ups and downs across the performance across our key markets. However, the common theme with our diversification strategy has been over the years, when some markets down, other market is more than offset, and we continue to grow. It's been a premium formula for Qube and the strategy is solid and stable, as you can pick up with the traffic lights on this -- on this slide. Next slide, please. Update for this year. So the first 4 months. As I mentioned before, it's very pleasing the momentum from last year has kicked into this year. Earnings growth is ahead across all of our business units and our associated businesses. In the first 4 months, we have experienced solid volumes in all or even above expectations in most of our activities. Margin improvements, as I mentioned before, reflected the benefits of scale, the efficiencies that we've been able to drive, the impact of rate adjustments that we made last year. We have seen higher automotive volumes this year more than expected, which has offset weaker agri and flat forestry volumes in New Zealand. And we've also seen higher volumes in Patrick's, lot better than expected, although we expect that to moderate in the second half of the year back to a normalized volume. Next slide, please. I've got a video shortly just to talk through some of the investments we've made, but I'll just recap on this, as Allan just did before. In the first quarter, we've made a few investments. We made a few acquisitions, which is great. The first 1 on the screen here. And these acquisitions is as much as we've got a great network, and we're optimizing that network today, we're actually building on that network. And all these investments connect, complement the business we've got today into our network. So the first one there is 18 hectares agri terminal in Narrabri, handles and stores grain and as they've got a large packing capability. That will connect to our agri business as a whole new in New South Wales. It will also connect to our Newcastle Agri terminal for bulk grain, but it also connects -- as it's got an ability to pack a lot of containers through Moorebank and into Port Botany assets. So it's got multiple synergy, multiple connection points in that acquisition. So we're very happy with that investment. In New Zealand, we've just acquired the other 50% of Pinnacle. 9 locations, as mentioned before, in all the major ports in New Zealand, gives us a great footprint to build out our container logistics business in New Zealand to complement all of the forestry operations we have there, and as well as just also complementing New Zealand in the container market, in what we do in Australia and New Zealand, how we synergize the benefits and the complements the customer base we've got between Australia and New Zealand, there is a benefit there for us. And recently, last month, in Western Australia and Fremantle, we acquired a business called the Stevensons Logistics business, some facilities on [indiscernible], and which will complement the already existing business we have in Fremantle and Perth, bolsters up our business around the container logistics and around export customers, particularly in hay and agri exports. And the last one, which was -- which we acquired last year, which is in Todd's business, the bulk business was the Kalari acquisition, which also complemented Todd's business in the bulk of the mining sector, strengthened up probably our East Coast and our South Australian businesses and also gave us probably to strengthen up our inbound logistics because we were more predominantly outbound in our portfolio. So that was -- I've now -- I've got a nice little video that we've put together with some drone footages from recent times, so they can give some context of the facilities. If it doesn't show all the facilities of these acquisitions and investments, that will give you a good breadth of what we've just acquired. Can you play the video? [Presentation]

Turning to decarbonization in our performance so far in our journey ahead as Qube. 2023 was a fairly good year from a from a KPI from a stats point of view. But to be honest, it's still -- this is all about low-hanging fruit for us at this point in time. We've got a bigger journey ahead. So we did reduce our absolute emissions by 3%, which is a great outcome. And we also have reduced our carbon intensity emissions by 30% from our baseline 2018. In saying that, there's a big journey ahead for us in our sector. We're in a hard-to-abate sector. I do see a clear road map ahead for some of the easier stuff going forward over the next 5 to 10 years, which has more to do with our premises and our light vehicles and our light equipment. There's a clear road map that we can probably get to an absolute number of close to 0 in that period of time. But the bigger part of our missions is moving heavy freight with heavy vehicles. And that's more challenging for us, but we are enduring to be a leader in that space, and we are doing some stuff that's probably beyond some of our peers. What we've done so far in that space is really we've moved most of our equipment to Euro 5 and Euro 6 technology. So we're now nearing 90%, and we're trying to achieve 95% by 2027. We'll meet that target before 2027, the way we're going. And that's helped us get to where we are today. That's been the biggest in our 30% of dropping the intensity is really around that, is really quality of fuel burned and better technologies around how we deal with our fossil fuels. There's no silver lining around greener energies yet in that space. The other thing we've been doing as a business because we're not just a road operator, we're a rail operator wherever we can as possible, we've looked to convert road to rail with modal shifts. Sometimes you can't do -- you can't do that for every piece of freight we handle, but where we can. We've done that to reduce our footprint. And the third thing we've done, and we've invested in a period of time and effort and some resourcing is really around doing trials and doing some investigations around greener fuels, working with some customers, working with some other providers. I've got a short video in a minute, but I will just talk to this video because again, it doesn't have any voice over. So such an example at the moment is in Todd's business -- in the bulk business. We've had a partnership with BHP and Janus Electric to trial what we believe is the first -- world's first electric triple road train. And we've been successful so far. Just recently, we've been successful. We've been able to operate it. And that's step one, I guess. And we're going to do 2 further trials with other customers, one in the Pilbara, one in the Bunbury to trial hotter conditions and different terrains. We know at the moment, this configuration can haul up to 140 tonnes. We're looking to try and increase that to 170 tonnes. So we know it works. But the next step for us is really to make it efficient and affordable so we can be competitive with it, and which is -- there's a couple of things there. We've got to be able to source reliable and affordable renewable power in remote areas. We're going to enhance the range of the battery and the battery life. The easier part about this is we've worked out that we can swap the batteries over. It only takes 5 minutes, but we need the battery to last longer and the battery needs to be way less because we would -- it impacts on payload. So I've got a short video here. And as I said again, it's a step in the right direction. There's still a fair way to go with how we reduce these things. But we're investing money with customers on different things and it may not be just electric either. In time, it's hydro -- hydrogen, it's powered by diesels. [Presentation]

You probably saw in the video -- went pretty quick, actually. But where the battery got swapped out. It's quite a large battery, right? And I -- when I looked at that video, I think about when we all got mobile phones and are so big and clunky and now that be. And that's the journey with that. That battery needs to shrink and it needs to get better range, better life in your battery. So there's a way to go, but we're moving in the right direction. All right. Last slide. Just to finish, to summarize. While we've had a positive start to 2024, we are acutely aware there's a number of headwinds, and there always has been in our business. But also, we know what's required to actually navigate our way through that. as we've done in the past. So we feel comfortable that we can actually navigate through most of the headwinds going forward. Our outlook for 2024 remains unchanged from August, that Qube will deliver underlying earnings growth in 2024, albeit below the strong growth rate that was achieved in 2023, which was quite a high growth rate. We remain committed to our strategy, which is on this page, and we are determined to continue to create value for our shareholders. Our vision and our strategy on the -- which is shown on the screen is unchanged. I would like to remind our shareholders and to continue to provide you comfort that our business model and our strategy as on this slide, is very resilient, diverse, robust, which helps us deliver growth each year, even in challenging economic environments. I thank you for all your support, and I look forward to taking questions later in the day. Thank you.

Thanks, Paul. It's certainly -- there's a lot happening in Qube and everyone is keeping themselves pretty busy. I'd now like to turn to the really interesting stuff, the formal proceedings, which involve consideration of the FY '23 financial statements and reports and voting on the resolutions as set out in the notice of meeting. The first item of business is to receive and consider the company's financial report, the directors' report and the auditor's report for the financial year ended 30 June '23. And these are contained in the annual report, which was lodged with the ASX made available to shareholders and is available on Qube's website. As is common practice with most companies, the reports will be tabled but won't be the subject of a resolution as it is not required by the Corporations Act. I'll invite shareholders and proxy holders to ask questions on the management of the company and -- or the annual report. Questions may also be asked of the auditor relating to the conduct of the audit and the preparation and content of the 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 I will then request our auditor, Liz Stesel and remember of management to respond to the question as applicable. As I mentioned, questions will be answered during question time towards the end of the meeting. Moving on to voting. We'll now move to the resolutions to be put to the meeting as set out in the notice of meeting. Detailed information on each of the resolutions is contained in the explanatory memorandum attached to the notice. Qube's constitution allows the Chairman to demand a poll, which, as I mentioned, I've done for each resolution. As advised in the notice as Chairman of the meeting, I will also vote all undirected available proxies for each resolution. The votes for these resolutions, together with the votes cast at this meeting will be added to the final result, which will be lodged with the ASX. I'll now put each resolution on the notice of meeting before shareholders and move that each resolution be adopted, and I will now introduce each resolution in turn. Firstly, Resolution 1 is to be -- is to consider the reelection of Jackie McArthur as a Director. Jackie retires by rotation under the company's constitution and is eligible for reelection. Information on Jackie's professional experience is contained in the annual report and the explanatory memorandum in relation to this resolution. The directors other than Jackie, given her interest in the resolution, unanimously recommend you vote in favor of this resolution, and I now invite Jackie to speak to the resolution.

Thank you, Allan. It's been a privilege to serve on the Board of Qube for the last 3 years. And as the chair of nominations and remuneration, I can say that I've worked hard alongside my colleagues and management to continue to align remuneration outcomes with the interest of shareholders. And if you read my bio in the notice of meeting, you'll see I've got quite a lot of supply chain experience. And to put it all in simple language for more than 20 years or after I started work as an engineer and then moved into distribution centers and worked my way up from there. For more than 20 years, I ran large complex supply chains, moving everything from french fries to computer chips to bulk grain, a whole range of FMCG items both within markets like Australia, China, Indonesia, Middle East, Africa, mostly in markets and very often moving across international borders. So I have a knowledge of -- a deep knowledge of but a very deep respect for what intermodal and import export chains can do globally, and I hope, with your support to continue to bring value to the Qube board.

Thank you. Thank you, Jackie. I now refer you to the screen showing the pre-AGM direct and proxy voting results. The percentage figures shown in this and other voting results in slides are rounded to 2 decimal points. And for those attending in person, please indicate your vote for Resolution 1 on your voting card or if you are participating online, please cast your vote through the voting system. The next item of business is Resolution 2, to approve the adoption of the FY '23 remuneration report. The remuneration report is included in the annual report and information on this resolution is contained in the explanatory memorandum, which also includes a message from Jackie as Chair of the Nom and Rem Committee. The Corporation Act requires that listed companies put a nonbinding vote to shareholders to voice their opinion on the remuneration report. Key management personnel, including directors and their closely related parties are excluded from voting on the remuneration report unless as directed proxies for shareholders eligible to vote. The directors consider that the remuneration policies adopted by the company are appropriately structured to provide rewards that are linked to performance of both the company and the individual. The directors encourage all shareholders to cast their vote and unanimously recommend shareholders vote in favor of this recommendation. I refer you to the screen showing the pre-AGM direct and proxy voting results. Please indicate how you wish to vote on your voting card through the online voting system. Resolution 3. The approval of the award of performance rights under the LTI plan to the Managing Director. The next item of business is Resolution 3, and a summary of the plan, which commenced in FY '23 is included in the explanatory memorandum in relation to this resolution. This plan is designed to allow the interest of the Managing Director and other senior execs with the interest of shareholders while providing them the opportunity to receive Qube shares subject to fully satisfying the performance and service conditions of the award. The directors other than Paul Digney, given his interest in this resolution, unanimously recommend you vote in favor of the resolution. And I refer to the screen showing the pre-AGM direct and proxy voting results. Please indicate how you wish to vote on your voting card or through the online voting system. Right, the next resolution is resolution 4 to approve the grant of STI rights to the Managing Director Paul Digney, as the deferred component of his FY '23 award under Qube short-term incentive plan. A summary of the plan is included in the explanatory memorandum in relation to this resolution. Under the plan, half of the FY '23 award is deferred for 12 months in the form of rights to acquire Qube shares. The allocation of value was based on the 10-day trading volume, weighted average price of Qube shares following the announcement of Qube's FY '23 financial results in August this year. The deferred STI rights will have a 1 year vesting period ending in October 2024. The directors other than Paul, given his interest in the resolution, unanimously recommend you vote in favor of this resolution. And I'll refer you to the screen showing the pre-AGM direct and proxy voting results. Please indicate how you wish to vote on your voting card or through the online voting system. Resolution 5. This resolution seeks shareholder approval to increase the maximum aggregate remuneration payable to nonexecutive directors to $2.5 million per year. The existing limit of $2 million was last approved by shareholders at the 2021 AGM and has not changed since the 2021 financial year. Since then, the organization has continued to grow, increasing in complexity and requiring more extensive board involvement. Furthermore, to maintain competitive cognizant of inflation and salary increases, a 2.5% increase in directors fees was implemented in July -- in July 2022 for the FY '23 year. And as a consequence, there is now limited headroom to sustain further salary increases and to allow for flexibility in new director appointments as part of Qube's Director succession plans. For these reasons, the shareholders are requested to approve this increase in the Nonexecutive Director fee pool. As the nonexecutive directors have an interest in the outcome of the resolution, the directors declined to make a voting recommendation in relation to this resolution. I refer you to the screen showing the pre-AGM direct and proxy voting results. Please indicate how you wish to vote on your voting card or through the online voting system. The next item of business is Resolution 6. which is to approve the grant of financial assistance by Kalari Proprietary Limited in connection with its acquisition by Qube in May 2023. Kalari is a leading logistics provider to the Australian mining and resources industry and has bolstered Qube's existing service offerings in the resources and logistics sector. The acquisition was funded by borrowings under a Qube group loan facility. This facility is supported by Qube Group Guarantee and it's the intention to now join Kalari to this guarantee. Entry into -- of the supporting guarantee could be considered the giving of financial assistance by Kalari in the acquisition of its own shares, requiring shareholder approval under the Corporations Act. So as noted in the explanatory memorandum, the new Qube shareholder of Kalari must and has provided its approval, as Kalari is now a subsidiary company of Qube Holdings, a listed holding company, Qube shareholders must also give their approval. The purpose of this resolution is to seek that approval and the reasons for giving the financial assistance are set out in the explanatory memorandum. The directors unanimously recommend that shareholders vote in favor of this resolution. I refer you to the screen showing the pre-AGM direct and proxy voting results. Please indicate how you wish to vote on your voting card or through the online voting system. Resolution 7. The proportional takeover provisions of Qube's constitution must be renewed every 3 years in accordance with the Corporations Act. These provisions were last renewed at the 2020 AGM and will cease to have effect unless they are renewed at this meeting. The company is, therefore, seeking shareholder approval to renew these provisions. These provisions provide that if offers are made under a proportional takeover bid, the registration of a transfer based on the acceptance of an offer made under that bid is prohibited unless and until a resolution to approve the bid is passed in accordance with the constitution. Thus, a proportional or partial takeover will not be permitted unless shareholders agree. The wording of the proposed provisions is unchanged from the wording approved by shareholders in previous years, and it's set out in Part [ 14 ] of the constitution, which has been extracted and is attached to the notice of meeting as Annexure B. The constitution in its entirety is available on Qube's website if you wish to read it. A detailed explanation of the proportional takeover provisions their effects and the reasons to reinsert them are set out in the explanatory memorandum. The directors unanimously recommend you vote in favor of this resolution. I'll refer you to the screen showing the pre-AGM direct and proxy voting results, please indicate how you wish to vote on your voting card or through the online voting system.

Okay, that's all of the resolutions. I'll now proceed to the Q&A session. And as previously mentioned, when asking your question, please note or state your name, whether you're a shareholder or which shareholder you represent, what proxy and any affiliation you may have with a relevant organization. I reserve the right not to permit a person to ask a question who has not provided this information and to limit the number of questions any person may ask. If due to time constraints, we're not able to answer all of the questions at this meeting, answers to all questions as moderated will be posted on Qube's website after the meeting. I'll commence by calling on shareholders or proxy holder questions from the floor, followed by shareholders or proxy holders who have called in, and finally, we'll take written submissions or written questions submitted ahead of the meeting via the online meeting platform. So I'd now like to call on questions from the floor. And if you would like to ask a question, please line up at the microphone placed in the center of the room. Only a validated shareholder or proxy holder may ask questions and so you must be holding a proxy card or voting card with you, and I'll determine the appropriate person to answer the question. Questions, please?

Peter Gregory is my name. I'm here as an individual shareholder and also as a -- as part of the Australian Shareholders Association. That association represents individual shareholders. And I'd like to thank Qube for their openness and cooperativeness in the interaction we've had with you during this financial year. Today, I'm voting on behalf of 108 shareholders totaling about 2.5 million shares, and we're voting all of those in favor of the resolutions. I have a couple of questions. Firstly, if I can start with 1 to do with diversity. We note that [ Sue Palma ] resigned from the Board in November 20 after 3 years on the Board, and Nicole Hollows has just resigned after -- this month after 3 years. I wonder if you could share with us any learnings that come from the resignation of these 2 directors after a fairly short period of time? And also, if you could describe, particularly with regard to timing, action that's in place to get new directors on to the Board?

Thanks, Peter. I'll deal with that question myself. Just answering the second part of the question first, we are -- as I mentioned in my address, we are undertaking a process presently to recruit new directors and shareholders will receive through the ASX notification when that process has been completed. So that's -- that answers that part of the question. In relation to Nicole, look, there's those -- I think the reasons for their resignation are personal and I'm certainly not intending to take that any further in discussion in a situation like this. But by all means, query them personally about their circumstances. In relation to learnings from that, I think it just -- it goes to the quality of the recruiting process. And we just have to make sure that we -- when we recruit people that we do so with a view to finding people who are happy and capable of being here for the longer term. So then there's a little bit to that because once there's several terms been undertaken, it's time for them to move on. So it's a [ following ] balance, but really the issue, I think, is in the quality of the selection process.

Okay. Thank you. Qube has an excellent description of its work in reducing emissions in its sustainability report, and we congratulate you and thank you for that report. Just to go to some of the numbers, you report a 3% reduction in Scope 1 emissions and a 3.6% in Scope 2. You have a fantastic emissions reduction score of 18%, which is good. But it appears to be inconsistent with those Scope 1 and 2 numbers. Could you perhaps explain that? .

I'll just ask Paul to respond to that, Peter.

Yes. So Peter, the numbers you're referring to is there's 2 different methods of bit of feedback there. The 3% is absolute. So it's an absolute reduction. The 30% on that slide is a carbon intensity reduction, which is us as a growth business. We're growing all the time, growing our business. We've got more revenue. So we measure that through revenue at this point in time. So it's -- we've set a baseline in 2018 to obviously reduce our carbon intensity because we're in a hard to abate. So it's a way of trying to measure us at this point in time. With the new mandatory requirements coming out around -- we may change those metrics in the next couple of years to -- but we've got -- as an organization to really reduce our absolute number as we grow our business. We've got to do more than actually find ways better with technology to burn fossil fuels better and have cleaner diesel throughout our equipment. We've got -- we got to electrify our fleets. And so that's the challenge for us at the moment. But we are looking in a way at different ways to look at different metrics going forward. So the difference between that is really one is an absolute number and one is an intensity number.

So the absolute number as you say, it's got to be reduced, but the intensity number is actually a more accurate year-to-year number as to what's being achieved?

Well, in a growth company, we think it's a good way of measuring the business at this point in time because we're growing our revenue as you -- we're a growth company, which is obviously as shareholders, you like to see that. But while we do that, we also -- there's potential that we're growing our emissions at the same time. So if we're not growing at the same rate, we're doing a good job. So we're not growing at the same rate as what we would have done 5 years ago. The last 5 years, we've reduced that by 30% when we grow our revenue. And that's really what that KPI shows us.

Thank you. We see as part of Qube's strategy to make its emissions reduction a competitive advantage. Can you share how that delivers value to customers and whether that translates into monetary value for Qube, for example, in terms of higher pricing?

Yes. I think that at this point in time, I just showed that video with BHP and we're doing a few other trials with some other customers is that we're probably in a phase, and we believe we're -- compared to where some of our competitors were, we're leading because we're probably investing a little bit more around trials is that we're trying to work with our customers first around finding that solution and then doing it in a partnership approach. There may come a time when pricing may be different between a greener solution and an old fashion fossil fuel solution. But we're not in a position at this point in time to just go out there and try and monetize that or make -- change it. We're probably in a phase at the moment trying to work with some key customers that probably like us and probably sizable customers. They've got probably as much pressure as we have as listed companies and try to work through trials and how their network might work. And from that, it will have to be commercial at the end of the day. So if we can find something in 5 or 10 years time or 2 or 3 years time, that's competitive with the fossil fuel type of technology. That's a great outcome for us and our competitors, it's going to cost a little bit more than that, will be a product of what we come up with.

And 1 final question. We know that Qube, like many other Australian companies is experiencing labor and skill shortages. In your annual report, you described your objective to be become an employer of choice. Could you please talk about the unique characteristics of Qube that make that achievable and also innovative strategies you're putting in place to enhance your attractiveness?

Yes, Peter. So -- the Thrive program is a program that's always existed in our culture as a company. Just recently, we wanted to articulate it more and roll it out. So we've got a one Qube approach around our culture. So Thrive is about -- it is about an employer of choice. It's about not just having a good job and getting well paid and having good conditions, it's about belonging. It's about having a social -- enjoying work, coming to work, and it's not just a job. It's actually a place you want to be. So everything we roll out in the Thrive program is about that and it's developing people and are belonging. And we believe in Qube that we create an environment which is basically like a bit of a family. Everyone looks after each other, someone's in need. And so we believe that takes us a long way. The other things are, pay well, good facilities, good trucks, good equipment at the top end, having a really clean operational sites, having a good brand, being very professional. That takes us a long way, but Thrive is a big part of it.

Good morning or good afternoon. My name is [indiscernible], and I'm a shareholder, and it's mainly a curiosity question. It was the electric train, and with BHP. And I wondered where it was and in [indiscernible] state, and I had a vision of [indiscernible]. But whereabout -- does it go a long distance?

It's located running between one of the mines we service and Port Augusta in that -- it's in South Australia. Correct.

It's not on the Qube.

No, no, no. It's not in New South Wales. It's in South Australia.

That's -- Port Augusta. I had a vision of it. It looks good. Yes.

It's very interesting technology.

How long will it be?

Roughly, it's 42 meters. That is 3 trailers.

You think of the road trains with the cattle and everything.

Thanks for the question. Are there any other questions from the floor? Okay, Ben, do we have questions from telephone or video. Telephone, no. What about -- let's go back to my script. Questions submitted by the online meeting platform. And Ben, my -- Ben will read the question out, but -- and lengthy questions may be summarized. A number on the same topic may be collated or amalgamated and presented as one question. So over to you, Ben.

Yes. Thanks, Chairman. We have 8 questions at the moment, 3 from Philip Lard and 5 from Stephen Maine. I'll start with Philip Lard's questions. The first question is, how is Moorebank Intermodal terminal progressing. And TEUs move to date via the IMEX terminal.

Paul?

Yes, the number of TEUs is about 100,000 -- the run rate has been 100,000 per annum. As the video and as Allan mentioned, it's progressing well from a construction point of view. We feel that probably mid-calendar year next year, that we get a better road map to go forward. We won't have any issues around construction or automation, or rail duplication between Port Botany and Moorebank will be completed. So we've been in a really good position to heavily market the IMEX volumes. We haven't been in that position to date because of construction and other constraints. And we didn't want to flood it with any volume to congest it. So come probably next financial year will be -- we'll be probably lifting that run rate at a good rate. And at the same time, our partner on the site now, LOGOS, is starting to build out their warehouse footprint. The construction of warehousing new tenants is developing pretty faster than they ever had. So we're going to be in a good space come probably 12 months. .

Ben, the next question?

Yes. The next question from Mr. Lard is how is the new locomotive acquisition program going?

Paul?

Yes. We -- I believe we finalized -- we got the last 2 [ UGL ] LOGOS this year. You may have seen on a website or I think one of those were -- was painted in our -- in our indigenous art work for our app. The 12 -- the order of 12 from progress. Off the top of my head, they've been a little bit delayed. I think some are mid next year or early to mid next year. I think half of them and then the rest of the fleet is very late in the year. So we'll have those 12 by the end of the calendar year next year.

Next question, Ben?

Is Qube with other rail operators aiming to get the ARTC to put more of its earnings into long overdue track updates and less in dividends in shareholding ministers?

We welcome any investment in rail. Obviously, has been a rail operator like any other rail operator. Yes, more investment the better if it's to do with track or track maintenance or connection to terminals. Where appropriate, we've put submissions to government, not just the ARTC in different forms, not unlike any other rail operator. So we'll continue to push more investment in rail.

I think just to round out that answer as well in this last week, Catherine Kings cut and slashed various infrastructure projects across the country. And typically, rail has tended to survive. So we believe that our interest in the beverage terminal, north of Melbourne is still intact and that terminal is expected to be developed over time. So I think rail's probably of all of the infrastructure projects is in a pretty good position. And I think Philip should feel comfortable that due attention is being given to the importance of rail for the future.

So Mr. Maine's first question is did to any of the 5 main proxy advisers recommend to vote against any of today's resolutions? If so, what reasons do they give? Have there been any material protest votes? Also in 2024, will you disclose the proxy position of ASX -- sorry, to the ASX, along with the formal addresses to offer more timely disclosure to the market? He notes that other corporates currently do this.

Thanks for that question. Firstly, yes, there were -- there was 1 proxy adviser and 1 industry association, which sought to recommend to vote against one of the resolutions. The reasons for that remain with the report. It's also interesting to note that in recommending against the resolution, the proxy adviser also suggested to clients that they could vote for, for particular reasons. So it was a qualified -- a qualified opinion. And we don't intend to release the proxy reports if Mr. Maine wishes to subscribe to the respective of proxy advisers across the country, then is at liberty to do so and pay for the reports himself. We get that report from the proxies in confidence, and we treat it as such. So that's -- what was the last part of the question, [indiscernible] to '24?

The last question was will you disclose the proxy position to the ASX along with the formal addresses in 2024 to offer more timely disclosure?

No.

Thank you. The next question Mr. Maine notes that Jackie gave an excellent answer at last year's AGM detailing the thorough and competitive recruitment process for the new Direct [indiscernible] Award. Assuming there are no protest votes like last year, she's led the Rem Committee well after the 52% protest vote in 2020. As the only female director on the Board, could Jackie and the Chair detail what pressure is being brought to bear by the likes of [ Axis ] over the lack of female directors on the Board? Is Jackie pushing for change?

I can report, which has been made public that various separate innovation funds, right to chairs and CEOs and suggest that the more -- the more diverse the board, the better. That's continued to happen in FY '23 and calendar 2023. And I expect it will continue next year. we've given an undertaking by mid-2025 to adopt a 40-40-20 position in relation to gender diversity on our Board, and we're on track to get there.

The next question, Mr. Maine notes that Qube has a history of doing nonrenounceable capital raisings, which are fully subscribed after taking into account the ability for retail shareholders to apply for additional shares. He notes that we've achieved remarkable participation rates from a clearly very loyal retail shareholder base, but notes the best practice with capital raising is to use these so-called [ patrio ], which fairly compensates nonparticipants that treats all shareholders equally. He wonders if next time we do a capital raising, will you seriously consider joining others in the Patrio Club?

To be frank, Ben, I'm not familiar with that detail. But what we have typically done with capital raising is to treat shareholders fairly inequitably and we'll continue to do so.

Chairman, the next question I think you have addressed, but why did Nicole Hollows resigned from the board as opposed to the end of her 3-year term? He -- Mr. Maine says that the announcement provided no reasons. And when independent directors resign, shareholders should be informed, says Mr. Maine. Please explain what happened?

We notified shareholders through the ASX as it is required and I've already covered on the reasons for that.

Mr. Maine's final question is to note -- to thank you for offering shareholders a hybrid AGM, and he wonders whether we'll do it again next year. He also believes it's not good practice to handle questions as 1 job bot as opposed to following the agenda. He says you've got an agenda with 7 items of business. So please respect shareholders by following in next year and dealing with questions sequentially. And he notes that today's format was like 7 batsmen heading out at the crease at once.

I'd just like to respond to that by saying we thank him for his views, but we'll most likely have a hybrid next year, and it will be done in the same format as this year. Thank you. Are there any other questions, Ben?

No, there are no other questions online, and there are no questions on the phone, Chairman.

Okay. Thank you. So that was the last questions and the final one. So the discussion on the items of business is now concluded. I'll shortly instruct the poll, and the voting system to be closed. And please ensure that you have cast your vote on all the resolutions on our pause to allow you time to finalize your votes. For those voting in person, once you have completed your voting card, please place it in the ballot boxes that are being circulated now and by Computershare representatives. If any shareholders in the room need more time to complete their voting card, please raise your hand. Some more over there. [Voting]

Okay. As the voting process is now complete, I declare the poll closed and instruct that the voting system also be closed. We direct that all voting cards are previously received, voting forms be retained for the 6 months and then destroyed. As voting has been completed and there are no other matter to be transacted at this meeting, I declare the meeting closed. And senior representative from Computershare has been appointed as returning officer. Following confirmation by Computershare, the final voting results will be announced on the ASX later today, and they will also be posted on Qube's website. And I'd like to thank you all for participation in the meeting and for attending and look forward to your continued support of Qube. Thank you very much.