Smartgroup Corporation Ltd (SIQ) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2022 Annual General Meeting of Smartgroup Corporation Ltd. I am Michael Carapiet, Chair of the Smartgroup Board. I'd like to begin by acknowledging the traditional custodians of the land on which we meet today, the Gadigal people of the Eora Nation. I pay our respects to their Elders past, present and emerging and extend that respect to all Aboriginal and Torres Strait Islander people here today. I also acknowledge the traditional custodians of the other lands from which people are joining the meeting virtually today and their connections to land, sea and community. We pay our respects to their Elders past, present and emerging, and extend that respect to all Aboriginal and Torres Strait Islander people joining the meeting virtually today. It is now 11:00 a.m. the nominated time for the meeting. I've been advised by the Company Secretary that a quorum is present, and so I'm pleased to declare the meeting open. The notice of meeting was given to shareholders and lodged with the ASX on 6 April 2022. I propose to take the notice as read. Shareholders were also provided with a voting form and a virtual meeting online guide, providing instructions on how to ask questions and vote at this meeting through the online platform. I would remind shareholders of the arrangements for the questions and voting when we get to the formal business of the meeting. If you are attending today's meeting via the online platform and you lose connection to the meeting at any time, you can log back into the online platform by returning to the link log-in page and following the prompts. You will then receive an automated e-mail with a recovery link for you to click on. Click on this link to reconnect to the AGM. Alternatively, please call our share registry provider, Link Market Services on 1-300-554-474 for assistance. That number is also printed at the bottom of the virtual meeting online guide. Joining me in Sydney today are Gavin Bell, Non-Executive Director and Chair of the Human Resources and Remuneration Committee; Carolyn Colley, Non-Executive Director and Chair of the IT and Innovation Committee; John Prendiville, Non-Executive Director and Chair of the Audit and Risk Committees; Ian Watt, Non-Executive Director and Chair of the Environment, Social and Governance Committee; Non-Executive Director Andrew Bolam; Non-Executive Director Anne McDonald, who we welcomed to the Board in December 2021; Tim Looi, Managing Director and Chief Executive Officer; and Sophie MacIntosh, Company Secretary. Non-Executive Director, Deborah Homewood, is currently overseas and is joining us today via the online platform. Joe Sheeran, the audit partner from our auditor, PricewaterhouseCoopers, is also present here today and will be available to answer questions from shareholders at the appropriate time in the meeting. I will now make some brief comments about the company's performance in 2021 and so far in 2022. Before handing over to Tim to take you through these matters in more detail, I remind shareholders that our 2021 Annual Report is available at the Investors section of our website. In 2021, the ongoing impacts of the COVID-19 pandemic continued to create a challenging trading environment. Despite these trying times, the Board was pleased with the resilience, strong leadership and customer focus shown by our people, ensuring Smartgroup was able to continue to deliver high service levels and improved operating and financial performance through the year. Revenue of $221.8 million represented growth of 3% on the 2020 result. Operating earnings before interest, tax, depreciation and amortization increased by 8% to $103 million. Net profit after tax and amortization also grew by 7% to $69.5 million, with statutory net profit after tax up 42% to $58.8 million. The Board was pleased to announce a fully franked final ordinary dividend of $0.19 per share and a fully franked special dividend of $0.30 per share, taking total dividends for 2021 to $0.72 per share. Delays in the global vehicle supply chain affected the settlement timeframes for novated leasing vehicles, resulting in quite a large pipeline of future deliveries, which has continued into the early parts of 2022. At Smartgroup, we are conscious of our role as part of the broader community. Our strength as a business comes from the diversity, experience and skills of our team members. Smartgroup is one of the small number of Australian companies recognized as an Employer of Choice for Gender Equality by the Workplace Gender Equality Agency. Our workplace diversity is also reflected in our rating as an Inclusive Employer by Diversity Council Australia. Across our business, we're proud that we have equal representation of women and men at the executive senior management and team member levels. We have long recognized the importance of championing sustainable and ethical business practices, and to improving the communities in which we live and work. To support our efforts in these areas, the Board established an ESG Committee in 2021 to provide Smartgroup with even greater leadership and governance to help further drive and channel our initiatives in the area of corporate responsibility, ethical practices and sustainability. Smartgroup is well progressed on the adoption of a formal sustainability strategy, incorporating broad stakeholder engagement, carbon footprint mapping and sustainability targets. The Smartgroup Foundation also continued into its third year, supporting a record 22 charitable projects with nearly $250,000 in grants last year. I will now make some brief comments about the company's performance to date in 2022. Importantly, we are pleased with the start to 2022. In the 4 months to 30 April, Smartgroup has made sound progress recording revenue and EBITDA in line with expectations and in line with the prior comparable period. Global car supply challenges have continued, as I said earlier, with the excess pipeline for future vehicle settlements now at $14 million, increasing from the $12 million number as at the end of 2021. Tim will provide a more detailed update on 2022 performance later in the presentation. Finally, I wanted to touch on our journey today as a listed company. In 2021, Smartgroup moved from being a private entity to listing on the Australian Securities Exchange. Since listing, we are proud to have returned $388 million in dividends and $166 million of associated franking credits to our shareholders. This, combined with the expansion of the market cap from $160 million on listing to over $1 billion today, means long-term shareholders have been rewarded with both strong dividends as well as good capital appreciation. In conclusion, I would like to thank Tim, the entire management team and all of our employees for their hard work and strong focus throughout 2021. I would also like to thank our loyal clients, suppliers and shareholders for their ongoing support and to take this opportunity to thank my fellow nonexecutive directors for their continued commitment and guidance. I will now hand over to Tim.

Thank you, Michael. Good morning, everyone. I will first introduce Smartgroup, and then I'll talk through our 2021 financial results. I'll give some details on the success we're achieving with Smart Future, our strategy for growth that we announced around 12 months ago. And lastly, I'll comment on how the business is tracking. And before I talk about the Smartgroup business model, I would like to start by introducing my executive team, as explained in this slide. We have a very capable executive leadership team. They worked cohesively, tirelessly to ensure the company continues to deliver on its strategy and achieve a positive outcome for all stakeholders, including our clients, employees, and of course, our shareholders. In 2022, we welcomed 2 new members of the executive. Alfonzo Venturi in the role of Chief Technology Officer; and Tania Cumming in the role of Chief Customer Officer, further bolstering our capability at the executive level. So Smartgroup is one of Australia's leading employee management businesses. We're approximately 700 team members managing more than 380,000 customers and about 90,000 cars, both novated and fleet. So our investment proposition to shareholders is underpinned by our capital-light business model. It is through this model that we're able to generate strong free cash flows and pay fully franked dividends. The strength of our business comes from our relationship with our clients. All clients are on multiyear contracts and our top clients have been with us, in some cases, for more than 15 years. At Smartgroup, we provide and we simplify a range of employee management services for Australian employers. Our services range from salary packaging, all the way through to workforce optimization. And we contract through employers, typically on an exclusive basis to provide benefits to their employees. We're a national organization, and we service some of Australia's largest employers, such as government departments through to smaller not-for-profits and as for corporates. One of our strengths is our long-term relationships we have with employee clients across a range of sectors. The majority of our clients operate in attractive segments. 43% of our customer base comprise of not-for-profits, so think of national, state, local-based aged care, disability care and charitable organizations. Public and private hospitals account for around 23% of our clients and government and education around 30%. So all of these segments have had good employment growth with long-tenured employees. So over the last 24 months, we've made substantive progress in improving our business to navigate challenges and we progressed important integrations. First, on the regulatory front, we have successfully implemented changes to the add-on insurance process to satisfy and comply with new sales and design and distribution obligations. Second, we've managed the COVID period reasonably well, taking the opportunity to engage with clients, customers and team members remotely and to manage our cost base appropriately. Third, we managed to step down in margin compression from pricing changes from our add-ons insurance supplier. The impact of the step down is now fully reflected in last year's financial results. And despite that reduction in revenue and margins, we have managed to maintain EBITDA at strong levels. Fourth, we have now completed about 80% of the integration of the various salary packaging business acquisitions. This has brought about more consistency in servicing as well as enabling customers to access a broader benefit suite. And lastly, we welcome new senior managers to enhance our capability and complement the deep salary packaging experience of our current team. I will now offer some comments to recap on our performance in 2021. Turning to the next slide, we are very pleased with our 2021 results, which reflect the continued momentum of our business. So throughout another year of disruption, Smartgroup and our team members remain flexible to deliver exceptional client and customer experiences and strong business outcomes. And through this period, we have been successful in our renewal of key client contracts as well as generating improvements from within our existing business. Packages, vehicle orders, settlements, as well as customer and team member engagement have all been improved. The highlights are as follows: revenues for the full year $221.8 million; EBITDA of $103 million; NPATA, $69.5 million. All revenue, EBITDA, NPATA were up from the prior year by 3%, 8%, 7%, respectively. We renewed and extended all top 20 client contracts, including our largest and second largest clients. We've had strong growth in packages of 17,000 and leasing settlements grew by 4%. And thirdly, our Smart Future program, which was announced in Q2 last year, began to deliver strong targeted benefits. Improvements to our digital leasing tools resulted in double-digit growth in leads for new cars from the web calculators, as well as an 80% improvement in customer engagement with the tools. And finally, our capital-light business model continues to generate a strong level of free cash flows. After-tax cash flows are in excess of NPATA, and we have very low net debt. Now I'd like to give you an update on our Smart Future program that we announced this time last year. So over the last several years, we've acquired more than 10 private salary packaging and fleet businesses. So these acquisitions have helped us build out a large client base that extends all the way into not-for-profits, into private schools, into corporates. So our business is a B2B2C business and we have about 3,700 employer clients. So our role in this is to provide benefits to their employees, in most cases, on an exclusive basis. And we are uniquely placed to deliver education, awareness and our services. And we estimate that within our existing client base, we have a reach of up to 1.5 million employees. We also estimate that these 1.5 million employees own about 1.2 million cars. And our largest clients are in education, they're in health, they're in disability and aged care as well as government. Employment in these sectors is stable and growing, and their employees typically drive to work. And so within this addressable market, we have 380,000 customers. We manage 65,000 novated leases. We think there's room for good levels of organic growth over the medium term. So this time last year, we announced Smart Future, our program to drive organic growth, solidify our position as a trusted partner for Australian employers to deliver benefits for their employees, and we intend to do this through a focus on 3 pillars. The first is customer experience. Now we have long recognized great service, it's a key requirement to increase participation rates of our products and services. Now the delivery of great customer experience will increase client and customer advocacy and promote referrals, as well as cross sales. We have made improvements to the customer interaction channels with positive results flowing through into higher levels of engagement and correspondingly, higher uptake of services. The second is digital investment. Now we have 3,700 clients and about 380,000 customers. Investing in digital capabilities is an imperative. So we're spending money on digital tools and improving our capabilities. We're enhancing and supporting our customer experience, as well as lowering the cost to serve through improved self-service channels. And lastly, simplification. So after acquiring multiple packaging and fleet businesses over several years, our team members have been focused on integrating -- the integration of these businesses. We are progressively moving from multiple salary packaging brands and platforms to a target state of 3. To date, approximately 149,000 salary packaging cards as well as 78% of clients and 74% of customers have been transitioned. So this has brought about more consistency in servicing, as well as enabling customers to access broader benefits. Our goal is to provide a great customer experience, enabled by technology, delivered by engaged team members to continue to be the trusted partner for our clients and, in turn, will grow and build scale within our business. So we have, in the last 12 months, invested in our technology foundations as well as commencing our work on streamlining operations. So we have recommenced work to refresh our websites as well as our client and customer portals. Our rollout of a standardized customer relationship management platform across the group will be prioritized. A new digital experience platform was implemented and over the next 12 months, we'll be looking to relaunch websites and portals as well as introduce new digital customer engagement tools. So this slide just shows one example -- a first example of the outcomes that we've seen in novated leasing from Smart Future. We designed new customer journeys, we've rolled out experienced training, and we've simplified incentive structures for our novated leasing team. The outcome in improvement in lead conversions across -- the outcome has been improvements in lead conversions across most channels. We saw lead conversion improve by 4 percentage points from 2019 to now 29%. And this strong conversion rate has been maintained into Q1 2022. Now turning to next slide, our leasing calculator is a strong digital channel to educate customers and to generate leads. A redesign and a launch of the new calculator in Q1 last year has seen -- has already seen strong outcomes. Calculator visitations as represented by the blue dashed line has increased since launch, and the customer leads, as represented by the red line, has grown faster than visitations. Our customer engagement, as measured by time spent on the calculator and represented by the dots on the graph, has improved. So customers are now spending around 7 to 8 minutes compared to 4 minutes previously. And this improvement, I'm pleased to say, has been sustained into Q1 2022. So these are just 2 examples of strong outcomes that we've seen at the very early stages of Smart Future. I'll now talk about the 2 digital assets we'll be launching in the next several months to further improve customer experience. Now the Smart Salary website has been redesigned to be simpler, to promote customer education and to further digitize interactions. It really has strong functionalities and with a new look and feel and a focus on delivering a better customer experience, it's going to drive better customer engagement. In this slide, we'll also be launching our vehicle sales platform in 2022. This functionality will enable customers to digitally interact with us 24 hours a day, 7 days a week. The interaction are across the whole of the vehicle sales journey, from the creation of a quote to applying for finance to the end of the lease as well. This initiative is aimed at educating, simplifying and digitizing customer interactions. It will also assist our vehicles team to spend more quality time with customers to improve the novated leasing journey. We're excited by these 2 launches, and we'll report back on the outcomes. Now I'd like to give you an update on our business and its progress so far in 2022. So for the first 4 months in April, we're seeing continued strong leasing leads. Now leasing leads compared to the prior year, up by 6%. Leads for new leases were up strongly in the first 3 months with double-digit growth versus PCP. April was softer or softer than PCP due to the timing of public holidays impacting business days. The vehicle supply market continues to be tight, and it's impacting novated leasing settlements. Settlements up slightly on the prior year, and our excess pipeline for new vehicle deliveries continued to grow from $12 million in December 2021 to $14 million at the end of April. With the tight supply market, the strong leads that we're seeing for the 4 months of April, unlikely to be crystallized into settlements until the second half of 2022. Our salary packaging customers continue to grow, with packages up by 5,000 since December. We have successfully transitioned from St. George, our primary funder to Angle Finance. Now with that transition, we'll receive a prepayment for fees that would normally be earned over the life of the novated leasing book. We have also launched an API to automate financing with a second financing partner, enabling us to diversify our funding sources. And despite the continued tight car supply market, revenue and EBITDA are in line with expectations and with the prior comparative period. Our balance sheet remains conservative. We have a net debt of $47 million, and the business is performing well. That said, because of the car supply challenges, many of the vehicles orders we have taken of late are yet to be delivered at which time they'll be recognized as earnings. On that basis, the current financial results are not a true representation of our earnings. When the vehicle supply chain improves, we expect to see our value proposition on car buying expand, more customers taking in new vehicles rather than refinancing and of course, the $14 million of excess pipeline revenue being recognized as earnings. Meanwhile, we're making good progress on our strategic pillars of customer experience, digital simplification. I'd like to extend my thanks to our Chair, our directors and all our team members for your hard work and dedication and to our clients and customers and, of course, our shareholders for your ongoing support. So on behalf of Smartgroup, we're excited about the long-term outlook for our business and the opportunities arising over the next 12 months. I'll now hand back to Michael for the formal part of this meeting. Thank you.

Thank you, Tim. Ladies and gentlemen, we will now move to the formal part of the meeting. I will start by explaining the arrangements for asking questions and voting on the formal items of business. This is just got to take a little bit longer because of the nature of the meeting being a hybrid meeting. There are 3 ways that shareholders can raise questions at this meeting: from the floor of the venue, via the online platform or via telephone. Dear shareholders and proxyholders who are present at the venue here today, I will invite questions from the floor in the usual way. Only shareholders and proxyholders holding yellow voting cards or blue nonvoting cards will be entitled to ask questions from the floor. Visitors holding red visitor attendance cards are not entitled to speak at this meeting. [Operator Instructions] All online questions will go through to our company's Secretary, Sophie MacIntosh, as moderator for the meeting. Sophie will identify the person asking the question and read out the question. I will then either answer the question or pass it to the most appropriate person to answer. We will deal with questions that have been received before the meeting in the same way. [Operator Instructions] Shareholders wishing to access the meeting will need to use their unique pin provided to them by Link Market Services in accordance with the instructions set out in the Notice of Meeting and the virtual meeting online guide. [Operator Instructions] For each item of business, we will take questions from the floor first, then telephone questions and then questions raised via the online platform. [Operator Instructions] We reserve the right to rule out questions that do not relate to the business of the meeting. We will also not answer questions that are same or substantially similar to questions that have already been answered. Otherwise, we will endeavor to answer as many of the questions asked as we can. In accordance with the company's constitution and as stated in the Notice of Meeting, as Chairman, I've determined that voting on each of the resolutions will be conducted by a poll rather than on a show of hands. In accordance with the company's constitution, the Board has determined that shareholders entitled to vote on a resolution of this meeting may exercise a direct vote on that resolution. The Board has approved rules governing direct voting, which are available on the Investors section of the company's website. Shareholders were given the opportunity to exercise a direct vote before the start of the meeting by lodging the voting form that accompanied the notice of meeting. Shareholders were also able to use the voting form to appoint a proxy to vote on their behalf at this meeting. As set out in the notice of meeting, I will vote all directed proxies in accordance with the directions provided by shareholders and I will vote all undirected proxies in favor of all resolutions. Shareholders, who are attending via the online platform and who have neither exercised a direct vote before this meeting nor appointed a proxy to vote on their behalf, may cast a direct vote during the meeting using the electronic voting card received when you registered via the online platform. Those shareholders may cast a direct vote at any time from now until 5 minutes after the close of the meeting. If you have any questions about casting your vote online, please refer to the virtual meeting online guide, which can be accessed from the download section at the bottom right-hand side of your screen, or call the help number 1-800-990-363, also shown on your screen. Shareholders and proxyholders who are attending the meeting in person today and who have not exercised a direct vote before this meeting should have received a yellow voting card on entry to the meeting. If you did not receive a yellow voting card, please see the representatives of Link Market Services who are located at the registration desk just outside this room. Shareholders and proxyholders holding yellow voting cards will be invited to cast their votes on all resolutions by completing the voting cards and placing them in voting boxes. Representatives of Link Market Services will circulate the voting boxes after all resolutions have been discussed and before the poll closes. Shareholders will be asked to consider the 10 resolutions set out in the Notice of Meeting dated 6 April 2022. As we have done for all prior AGMs, for each proposed resolution, I will introduce the resolution. There will be an opportunity for shareholders to ask questions on the resolution in line with the process that I had just described. I will then call for shareholders to vote on the resolution and display a slide showing the total direct votes and the proxy votes received on that resolution prior to the meeting. As I've previously explained, voting on each resolution will be by poll. The poll for each resolution is now open and will close 5 minutes after the end of the meeting. The results of the poll and all resolutions will be released on the ASX company announcements platform and made available on the company's website as soon as possible after the close of the meeting. The first item of formal business is to receive and consider the company's financial statements and reports for the financial year ended 31 December 2021, as set out in the 2021 Annual Report. This item of business does not require shareholders to vote on a resolution or to formally adopt the reports. Shareholders or their proxies may comment or ask questions about the financial statements and reports or about the management of the company. Shareholders may also ask questions of the company's auditor, PricewaterhouseCoopers, in relation to the conduct of the audit, the preparation and contact of the audit report, accounting policies adopted by the company and the independence of the auditor in carrying out the audit.

I will now address any questions relating to this item of business or any general business questions. Are there any questions from the floor? Please.

[ Stuart Craig ]. I would like to ask Tim, if the government increases the remuneration to the aged care sector, will this help our company? That should, like get more money? Do we benefit from more leases or more things happening in that way?

Thank you for that question. For sure, right, aged care, disability care is a big component of our business. In fact, we are the leading provider of salary packaging services for that sector. So what we -- if salaries were to increase in aged care, I think 2 things will happen, right? The first one is that we would see a lot more employment in that sector, which is good for us because typically, we would be -- we would have a participation rate of anywhere between 60% to 70%, 75%, maybe sometimes even 80% of people participate in salary packaging. Secondly, even if pay goes up, when you salary package, you can still save a lot of money. So I would expect to see people earning more money, still continuing to save money, so they'll buy more services from us. So if that were to happen, that will be good for us.

[ Brian Ellison ], shareholder. Thanks for your presentation, Tim. One thing that I did notice was that our perspective, our leads are moving ahead of our sign-ups. So I guess part of that is explained by the fact that we had supply problems. But to fully understand it, I wonder if you'd just like to tell me exactly what a lead is? Is it somebody that's inquired with us or someone that's waiting for fulfillment? Or is it maybe just some names that we can follow up?

Thanks, Brian. It's good to see you again this year, right, and every other year. So a couple of things, right. What we're trying to do as a business is to get people to understand, in this case, what you're talking about, what a novated leasing is. So when we register someone as a lead, while it means there's a positive engagement from their side, whether they're calling to us and wanting more information and be contacted, whether they've asked for a quote right for a car. That is a lead, right? So what we want to do as a business is to gather as many leases as possible and to take the customers through a good customer experience, a journey where we can save them money and procure a car for them. So what you're seeing is that we're capturing more leads. And as our customer experience process or our customer experience gets better, we would see customers getting better educated, engaging more with us and ultimately buying a service from us. That lead process could take anywhere from a couple of weeks to a couple of months. So the more leads we get, we are focused on the conversion rate at the end for vehicle orders. And we're seeing that improve by 4% over the last couple of years.

Thanks, Tim. I'm glad I'm still here, too.

If there are no more questions from the floor, I will now address any telephone questions relating to this item of our business or general business. Are there any telephone questions?

There are no questions from shareholders participating.

Okay. I'll now take questions via the online platform on this item of business or general business.

There's no items on the online platform, no questions at this time.

As there are no questions, we will now move to the next item of business. We'll now move to Resolution 1, which is the nonbinding and advisory vote on the company's remuneration report for the year ending 31 December 2021. The remuneration report is set out on Pages 53 to 67 of the 2021 Annual Report. After the resolution has been moved, there will be time for questions and comments. I now move that the remuneration report of the company for the year ended 31 December 2021 be adopted. I will now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution.

There no phone questions at this time.

As there are no telephone questions, thank you. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you. I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 1 online using electronic voting card and you have not already voted, please vote now. [Voting]

We'll now move to Resolution 2, which is for the election of Anne McDonald as a director on 25 November 2021 and was appointed by the Board as a Nonexecutive Director, with the appointment being effective from 14 December 2021. Under the company's constitution, Anne is required to retire at this meeting and being eligible, offers herself for election by shareholders. Information relevant to Anne's proposed election is set out in the Notice of Meeting, and I note that each of the other directors supports Anne's election. Anne will now say a few words.

Thanks very much, Michael, and good morning, ladies and gentlemen. I'm pleased to have the opportunity to say a few words to you this morning. I was honored to be invited to join the Board of the Smartgroup in December last year. A little bit of my background. My training is as a chartered accountant and my business experience over the last 35-plus years is in the areas of finance, accounting, risk management and governance. I was a partner of an international accounting firm, EY, for 20 years, where I had management and Board responsibilities as well as working with a wide range of local and international companies. I've now held nonexecutive director or chair roles for over 15 years in a range of companies in both ASX-listed, government, unlisted and the not-for-profit sector. I'm currently on the Board and chair the Audit and Risk Committees of St Vincent's Healthcare Australia, Transport Asset Holdings, and I am a Non-Executive Director of the Link Group. My previous ASX-listed Boards were the GPT Group, Spark Infrastructure and Specialty Fashion Group. So using my experience on a range of other public company boards and my core skill sets, I believe I can effectively contribute to the governance of Smartgroup. Along with all my fellow directors, I recognize the responsibilities of serving as a Nonexecutive Director, onerous and important and I will be ensuring that I am governing for the long-term best interest of you, the owners and also the stakeholders of our business if I'm reelected -- elected today. It would be a privilege to serve as a Director of Smartgroup. And I thank you for the opportunity to say a few words and hope to meet some of you in person after the meeting. Thank you.

Thank you, Anne. I have pleasure in moving that Anne McDonald, who was appointed as a Director under [ Article 10.7a ] of the company's constitution and being eligible, offers herself for election, be elected as a Director of the company. I will now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions?

There are no questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you. I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 2 online using electronic voting card and you have not already voted, please vote now. [Voting]

We will now move to Resolution 3, which is for the reelection of Gavin Bell as a director. Gavin is required to retire this meeting in accordance with the company's constitution and being eligible, offers himself for reelection. Information relevant to Gavin's proposed reelection is set out in the Notice of Meeting. And I note that each of the other directors supports Gavin's reelection. Gavin will now say a few words.

Thank you, Michael, and good morning, everyone. I'm very pleased to be here today standing for reelection. I first joined the Smartgroup Board in 2014 when the company listed on the stock exchange. I have a background in law and management. And immediately, before I became a Director of Smartgroup, I was the CEO of Global law firm Herbert Smith Freehills. In addition to my role here at Smartgroup, I'm also a Director of IVE Group and of QANTM Intellectual Property, both of which are listed on the ASX. In addition to being on the Board, I'm also Chair of the Human Resources and Remuneration Committee and a member of the Audit and Risk and the ESG Committee. I believe the various roles I've held, my experience in those roles in my career have equipped me with the necessary skills and experience to be a Director of Smartgroup. I thank you for your support and look forward to continuing to work with the rest of the Board and the executive for the benefit of shareholders.

Thank you, Gavin. I have pleasure in moving that Mr. Gavin Bell, who retires in accordance with the company's constitution and being eligible, offers himself for reelection, be reelected as a Director of the company. I will now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you, Sophie. As there are no questions, I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 3 online using electronic voting card and you have not already voted, please vote now. [Voting]

I'll now move to Resolution 4, which is the reelection of Ms. Carolyn Colley as a director. Carolyn is required to retire this meeting in accordance with the company's constitution and being eligible, offers herself for reelection. Information relevant to Carolyn's proposed reelection is set out in the notice of meeting. And I note that each of the other directors supports Carolyn's reelection. Carolyn will now say a few words.

Thank you, Michael, and good morning, ladies and gentlemen. I joined the Board of Smartgroup in May 2019, and I'm pleased to stand for reelection today. I've got 30 years experience across financial services, product development, innovation and technology. And the organizations I was previously an executive of Macquarie Bank, St. George Bank and BT Financial Group. Most recently, my executive role was as the Co-Founder and COO of artificial intelligence workplace planning platform, Faethm. I also now hold a number of other boards, ASX-listed member organizations and not-for-profit organizations. In addition to being a member of the Board of Smartgroup, I'm also the Chair of the Technology and Innovation Committee and a member of the Human Resources Committee. I'm very pleased to stand today to continue to serve as a Director of Smartgroup. Thank you.

Thank you, Carolyn. I have pleasure in moving that Ms. Carolyn Colley, who retires in accordance with the company's constitution and being eligible, offers herself for reelection, be reelected as a Director of the company. I will now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this presentation.

Thank you, Sophie. I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 4 online using your electronic voting card and you have not already voted, please vote now. [Voting]

We'll now move to Resolution 5, which is the reelection of Dr. Ian Watt as a Director. Ian is required to retire at this meeting in accordance with the company's constitution and being eligible, offers himself for reelection. Information relevant to Ian's proposed reelection is set out in the Notice of Meeting, and I note that each of the other directors supports Ian's reelection. Ian will now say a few words.

Thank you, Michael, and good morning, ladies and gentlemen. I joined the Board of Smartgroup in 2015. I'm also currently Chair of the recently created Environment, Sustainability and Governance Committee and a member of the Audit and Risk and Information Technology and Innovation Committees. I am very pleased to be standing for reelection today. I'm an economist by training and occasional practice. I retired from the Australian public service at the end of 2014 after 30 years, the last 14 of which I served as Secretary of 4 different Commonwealth departments: Communications, Finance, Defence, and the Department of the Prime Minister and Cabinet. In my last role, I worked with 3 prime ministers, Gillard, Abbott and Rudd. I'm also Chairman of International Center for Democratic Partnerships, a Director of Citibank Proprietary Limited, [ SEDAR ] and the Grattan Institute and an adviser to Flagstaff Partners. I've also held the roles of Nonexecutive Chair of BAE Systems Australia and Council member of the Australian National Maritime Museum. In mid-2021, I completed an independent review of the Tasmanian Public Service. The first in at least 30 years, perhaps a good deal longer, we couldn't find one. The Tasmanian government accepted all the recommendations. I consider that I have more than adequate time to devote to Smartgroup in my role as Board member and Committee Chair and member, and I greatly look forward to continuing to do so. Thank you.

Thank you, Ian. I have pleasure in moving that Dr. Ian Watt, who retires in accordance with the company's constitution and being eligible, offers himself for reelection, be reelected as a director of the company. I will now address any questions relating to this resolution. Are there any questions from the floor? If there are no questions from the floor, I'll now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you, Sophie. I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 5 online using electronic voting card and you have not already voted, please vote now. [Voting]

I'll now move to Resolution 6, which is for the approval to issue shares to Tim Looi, the company's Managing Director and CEO on the company's loan funded share plan. Detailed information about the proposed issue of shares, including a summary of the terms of the loan funded share plan is set out in the explanatory notes to the notice of meeting as required by the ASX listing rules. In summary, if shareholders approve Resolution 6, then the company will issue to Tim, 402,577 ordinary shares, which will vest at the end of the 3-year vesting period ending on 31 December 2024, subject to the satisfaction of the performance hurdles and other vesting conditions described in the explanatory notes to the notice of meeting. The performance hurdles are based on total shareholder return and earnings per share over the 3-year vesting period, with vesting of 75% of the shares tested against the earnings per share hurdle and the remaining 25% tested against the total shareholder return hurdle. Any shares that do not vest at the end of the vesting period will be forfeited. If shareholders approve Resolution 6, then the company will also loan Tim an amount equal to the total issue price of all shares to be issued to him, with the issue price taken to be the 20-day volume weighted average price of shares created on the ASX up until today. Tim cannot sell any of the shares that vest at the end of the vesting period until any outstanding balance of that loan is repaid. The Board believes the performance hurdles strongly align Tim's ability to derive any value from the loan-funded shares with Smartgroup's financial performance and the interests of Smartgroup shareholders. I now move Resolution 6 as set out in the Notice of Meeting. I'll now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you, Sophie. I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 6 online using your electronic voting card and you have not already voted, please vote now. [Voting]

We'll now move to Resolution 7, which is to seek certain approvals in relation to the company's new short-term incentive plan, including approval pursuant to Paragraph B of Exception 13 in ASX Listing Rule 7.2 for the issue of securities under the plan. The short-term incentive plan was first approved by the Board on 22nd March 2022, and has not previously been approved by shareholders. The short-term incentive plan replaces the existing short-term incentive arrangements available to executives, which currently only allow for cash incentive payments. It is an employee incentive scheme, under which the Board may offer eligible employees awards, including options, performance rights and share appreciation rights. The purpose of the short-term incentive plan is to assist in the reward, retention and motivation of eligible employees to link the reward of eligible employees to shareholder value creation and to better align the interests of eligible employees with shareholders by providing an opportunity to eligible employees to receive equity interest in the company. Detailed information about the plan, including a summary of the terms of the plan, is set out in the explanatory notes to the notice of meeting as required by the ASX listing rules. If Resolution 7 is approved, securities issued under the plan during the 3-year period following the AGM will be treated as having been issued under an exception to ASX Listing Rule 7.1 and will not count towards the company's 15% limit on issuing equity securities without shareholder approval under ASX Listing Rule 7.1. I now move Resolution 7 as set out in the notice of meeting. I'll now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you. As there are no questions, I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 7 online using electronic voting card and you have not already voted, please vote now. [Voting]

We'll now move to Resolution 8, which is the approval to issue performance rights to Tim Looi, the company's Managing Director and CEO, under the company's short-term incentive plan that you just approved. Detailed information about the performance -- about the proposed issue of performance rights includes a summary of the terms of the short-term incentive plan, is set out in the explanatory notes to the notice of meeting as required by the ASX listing rules. In summary, if shareholders approve Resolution 8, then the company will issue to Tim performance rights having a value of $225,000, comprising 50% of his potential short-term incentive entitlements and his remuneration arrangements, subject to Tim meeting key performance indicators set by the Board as part of Tim's short-term incentive arrangements. The achievement of these performance hurdles will be assessed by the Board at the end of the year. The details of the KPIs and the assessed achievement of each will then be reported in the company's remuneration report. No other performance hurdles or exercise conditions apply to the performance rights. I now move Resolution 8 as set out in the notice of meeting. I will now address any questions relating to this resolution. Are there any questions from the floor? As there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this resolution.

Thank you, Sophie. As there are no questions, I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution are shown on this slide. If you wish to vote on Resolution 8 online using electronic voting card and you have not already voted, please vote now. [Voting]

We now move to Resolution 9, which is for the approval to amend the company's constitution. This resolution is proposed as a special resolution, which means that in order to be passed, at least 75% of the votes cast by shareholders voting in person or by proxy must be in favor of the resolution. The company's existing constitution was adopted in February 2014 and has not been amended since that time. As there have been a number of developments in law, corporate governance principles, terminology, and general corporate and commercial practices for ASX-listed companies since the adoption of the existing constitution, the company is proposing to make a relatively small number of minor changes to the existing constitution and to give effect to those changes through the adoption of an amended version of the existing constitution. An overview of the material differences between the existing constitution and the new constitution is set out in the notice of meeting. Copies of the existing constitution and the new constitution are available on the company's website. I now move Resolution 9 as set out in the notice of meeting. I'll now address any questions relating to this resolution. Are there any questions on the floor? As there are no questions from the floor, I will now address telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on this resolution via the online platform.

There are no questions on this reservation.

Thank you, Sophie. As there are no questions, I will now put this resolution to the meeting. The direct votes and proxy votes received for this resolution as shown on this slide. If you wish to vote on Resolution 9 online using your electronic voting card and you have not already voted, please vote now. [Voting]

We now move to Resolution 10, which is for the approval of an increase in the maximum aggregate amount payable to nonexecutive directors as remuneration by $150,000 from a total of $1.3 million per annum to $1.45 million per annum. The reasons why this increase is proposed as set out in the notice of meeting. I now move Resolution 10 as set out in the Notice of Meeting. I will now address any questions relating to this resolution. Are there any questions from the floor? If there are no questions from the floor, I will now address any telephone questions relating to this resolution. Are there any telephone questions from shareholders on this resolution?

There are no telephone questions at this time.

Thank you, operator. I will now take questions submitted on the resolution via the online platform.

There are no questions on this resolution.

Thank you, Sophie. As there are no questions, I will now put the resolution to the meeting. The direct votes and proxy votes received for this resolution is shown on this slide. If you wish to vote on Resolution 10 online using your electronic voting card and you have not already voted, please vote now. [Voting]

That ends the formal part of the Annual General Meeting. I now declare the meeting closed. As I said earlier, the poll will remain open for a further 5 minutes and shareholders who have not already voted may lodge their online votes during that time. But all shareholders and proxy holders who are present here at the venue and wish to vote on the resolutions proposed today, please now complete your yellow voting cards and then place them in the voting boxes being circulated by representatives of Link Market Services. The results of the meeting will be announced on the ASX company announcements platform and will be available on the company's website as soon as possible after the close of this meeting. Thank you for participating in our hybrid meeting today, and we look forward to your continued support in the coming year. Shareholders here at the venue are invited to join the Board for light refreshments outside the room in the foyer. Thank you all very much.