Okay, I noticed the time, ladies and gentlemen. Good afternoon. My name is Michael Kay, and I'm the Chairman of City Chic Collective Limited. On behalf of the board, I welcome you to the 2025 Annual General Meeting, and I'm pleased to see our shareholders joining us here today. For those who have not been able to join us, the meeting is being recorded, and the audio webcast is available to listen to live and will be accessible after the meeting concludes by following the link on our investor relations website. I note there's a quorum present, and I declare the meeting open. I'd like to introduce the directors and other officers of the company. On my right, Phil Ryan, the company's Managing Director and Chief Executive Officer, and the independent non-executive directors, Natalie McClean on the end of the table, and Neil Thompson.
James Plummer, our Chief Financial Officer, is also with us today, as is Jacquie Shanahan, our Company Secretary. Also with us today is David Friend, representing the company's auditors, RSM, who will be prepared to answer any questions about the conduct of the audit, and also representatives of MUFG, our share registrar, who are acting as returning officer for the purposes of the meeting. Now, before moving to the formal business of the meeting, I'll take the opportunity to give you a brief overview of the year, and I'll then invite our CEO and Managing Director to provide more detail on our operational performance in FY25, an update on trade for the year to date, and plans for the future of the company. I'll now deliver my address.
Ladies and gentlemen, since our last AGM just 12 months ago, the external forces impacting retail demand have continued dramatically to ebb and flow. While there's been some interest rate relief here and in the U.S.A., this has been countermanded by sticky inflation that has embedded itself in material cost of living increases. Inevitably, this finds its way into discretionary purchases and retail demand generally. On top of this, we've had to deal with the on-again, off-again tariffs on goods imported into the U.S.A. Unsurprisingly, uncertainty of demand drives intense competition, with a number of retailers unable to survive. Shareholders may have seen the articles recently about the ultra-low-cost online brands like Temu and Shein, and their growth, despite some of the controversial aspects of their value chain, has added to the intense competition for demand.
Now, in anticipation of and in answer to these ongoing pressures, shareholders will recall we evolved our strategy and significantly restructured the business. I'll come back to this shortly, and Phil will provide further detail in his speech. I am pleased to say that these changes are now beginning to bear fruit, and your company is now in a materially improved financial and competitive position. Our financial performance in 2025 did improve significantly, delivering a AUD 14.8 million underlying EBITDA turnaround. That is moving from a loss of AUD 8.4 million in 2024 to a profit of AUD 6.4 million in 2025. In what has been a challenging retail environment, this reflects, I think, the disciplined execution of the strategy and the resilience of Phil and his team.
Group revenue grew by 2.3% year on year, driven by strong second-half momentum, particularly in the ANZ business, which delivered 15.2% revenue growth in the second half, with strong performances across both store and online. Our U.S.A. business underwent an operational transformation to a lower and more variable cost base, and as a result, it contributed profitably in FY25. This, notwithstanding the reduction in revenue driven by the sale of the Avenue business and stock reductions due to the tariff uncertainty. Phil will give further detail around trading in the current financial year, but let me say we plan to have no drawn debt as at 31 December and to be free cash flow positive for the 2026 year. As per recent trading update, as at 31 October, we had AUD 9.5 million in total cash and AUD 5 million undrawn from our banking facility.
Now, turning to the strategic update, two years ago, we did establish a clear set of strategic pillars to guide the execution of our strategy and our turnaround, and these remain the foundation of our progress. The first was amplifying our focus on HER, our valued customer. Increased investment in targeted marketing has delivered pleasing returns, particularly in ANZ, where we've grown our total customer base and improved the proportion of high-value customers. Our Net Promoter Score now stands at 71, which is a strong indicator that we are meeting or exceeding expectations and deepening customer engagement. The second was revitalizing our product assortment with a keen emphasis on higher value product. Customer feedback on our improved ranges has been consistently positive, and our sell-through performance has shown great improvement, up 18% on the prior comparable period. The third pillar was simplifying our business operations and driving down costs.
We've successfully delivered AUD 22.3 million in annualized cost reductions over the past two years and identified a further AUD 1 million in savings, which are targeted for this financial year. It is this clarity of what we believe will make us successful and our relentless commitment to executing it that has driven the progress we are now, not before time, seeing. Our recovery has been led by continuing to improve our product, more compelling ranges, and a laser focus on fabric quality and fit. We are encouraged by our customers' favorable response to our new collections. What is clear from our research is that our customer trusts City Chic to understand HER, and the customer wants us to succeed. We are the fashion destination for curve. It is all we do. We know how to deliver on what matters most to HER, which is fit, fashion, and fabrication.
We understand our customer is under economic pressure, but we also know she will buy fashionable, well-made apparel that fits her curves in all the right places. We believe the lower-cost producers and the broader apparel retailers do not have the focus to execute at this level. Some of the more recent key metrics tell the story, with gross trading margin up 350 basis points and average sell price up by 14%. Our customer numbers have grown to around 500,000, and we're deeply grateful for their continued loyalty. While we know there is still much more to do, the momentum is encouraging after a tough couple of years, and we are heading in the right direction. Looking ahead, as all of you will know, there are so many economic and geopolitical uncertainties in the world right now, it's difficult, if not impossible, to predict the future.
However, as shareholders can see, we have restructured the business as we said we would so that it can operate profitably in times of challenged demand. Importantly, our brand continues to enjoy the loyalty of passionate customers who are embracing the evolution of our product strategy. We also remain confident in the significant untapped potential in the United States market. As shareholders will recall, we deliberately scaled back our planned sales in the U.S.A. in response to the ongoing uncertainty surrounding tariffs. However, we are cautiously optimistic that the United States and China will reach a more stable and constructive arrangement, which will then enable us to increase our presence in America. Phil will talk more about that, but our planning is well progressed, and we are ready to move swiftly as the conditions allow. Finally, let me turn to the share price.
Given the improvements in the structure and the performance of the business, it's obviously very disappointing to see the share price remain at its current levels. Obviously, most of the retail sector has been under pressure, and most investors are underweight in the sector. Additionally, in speaking to shareholders and prospective shareholders, we are aware that on top of the sector uncertainty, there has been concern over our balance sheet and the ability of the business to generate sufficient cash to sustain itself and grow. I hope today that we will have at least gone some way in dispelling that perception. We look forward to a continuation of the improvement of our performance in FY26 and beyond, and getting back to what we used to do so well, namely the creation of value for shareholders through an unrelenting focus on delighting our customers.
It's now my great pleasure to introduce our CEO, Phil Ryan, to present his review of 2025 and his thoughts about the current financial year and future.
Thank you, Michael, and good afternoon, everyone. I'd like to add my welcome to you all to the 2025 Annual General Meeting. Our AUD 15 million EBITDA turnaround in FY25, going from a loss of AUD 8.5 million to a profit of AUD 6.5 million, is very pleasing and was driven by our relentless focus from all of our team on our strategy, and that is to deliver elevated product to a higher value customer and to realign our cost base. This year was a big step forward for City Chic. We have a platform for revenue recovery and sustainable gross margins through continuing to drive improvements in fit and quality of product and focusing on that high-value customer. As Michael already touched on, we are in unprecedented times for retailers. Low-cost online retailers, Shein and Temu, are rapidly expanding and capturing material market share.
To put this in perspective, Shein now offers over 10,000 plus-size products at exceptionally low prices, an offer that was not nearly as strong three years ago. I see this as an opportunity, an opportunity for us, sorry, to refocus on what's always set us apart. This means creating great products that fit her shape, make her feel confident, and reflect the fit and quality that City Chic is known for. It also means delivering a store experience that builds genuine loyalty to our brand. Consistent with our strategy, the product development process has been comprehensively overhauled in the last 12 months, and we've implemented greater rigor across our design and quality control. This initially resulted in slower than planned intake of ANZ's summer product that has impacted revenue as we take our factories on the journey with us.
As this product has arrived in stores and online, we're seeing strong sell-through, as Michael mentioned. It's all meeting or exceeding our key performance indicators. Our customer is voting for the elevated newness. I've just been to China myself to drive these changes in our supply chain. We are setting up new structures to manage our production lines and looking for factories that can deliver on our heightened expectations. I see this as a key part of my role in the next 12 to 24 months. In this challenging retail environment, with significant business change, we've managed to show strong momentum in our Australia and New Zealand business, with sales up 15.2% in the second half of FY2025 and 8.3% for the year. This momentum has continued into FY2026, with the first 18-week sales growing 10% on the prior corresponding period.
We also delivered in FY25 a 26% increase in website traffic in Australia and New Zealand, outlining the success of our strategic brand refresh and the way we are talking to customers. In what has been an unpredictable political and economic environment, the US business is profitable. This is due to the strategic actions that we have taken, which has delivered a lower and largely variable cost base that leverages our Australian operation to deliver the product to market. I've been pleasantly surprised by our customers' resilience, with sales continually exceeding our expectations as we strategically limited our inventory intake due to tariff volatility and risk. Sales of City Chic product was up 25% in FY25 in the US, outlining what I see as the opportunity in the market.
Our own website grew 17%, driven by material average sell price increases through both starting price increases and reductions in discounting, with City Chic partner sales growing 29%. As the U.S.A. is profitable, we are taking cautious optimism into the second half, and in the summer period, we will return to normal purchasing cycles. We are working with suppliers to mitigate the impact of current tariffs, and we anticipate a 5%-8% cost increase. We have seen retail prices raised by almost all competitors in the market from 20%-30%. To offset the cost increase, we will follow this trend. In FY25, our trading gross margin dollars were up 9.1%, driven by the higher average selling price, up 14.2%. Across the two key metrics, we have delivered improvements in all markets and in all channels.
have achieved our cost-out targets of 22.3% in FY25 and identified a further AUD 1 million in FY26. As I have previously stated, we will continue to right-size the business to align with wherever the revenue is. We are now focused on driving revenue through our strategic actions. We have stabilized the balance sheet with AUD 9.5 million in cash and AUD 5 million undrawn in our facility, and we have the liquidity the business requires. We have now met all banking covenants for FY26, and as of December 31, we will have no drawn debt. Our inventory controls and improved buying processes have delivered, with 12% less inventory at the end of FY25 while still driving sales growth. We are expecting to be cash flow positive in FY26, and we have the liquidity to execute our growth plans.
Our strategy has been consistent for two years now and is what's driven the turnaround in profitability. Put simply, the strategy is to focus on our high-value customer segment through elevating the product assortment while simplifying the business to drive down costs. We've executed on our plans and have seen strong results in all the key metrics, with momentum expected to continue in the product and customer pillars. I know we still have work to do, but we have a clear path to cash flow positive. In the customer pillar, we've driven the average sell price increases we are targeting, and pleasingly, over half the customers are now high value. From a product view, trading gross margin was up 350 basis points to 59.7%, making strong progress towards our goal of 62%. It takes time to make product changes.
With the new team now having a full season behind them, they are crystallizing the learnings, and we are seeing the results. Our core and repeat assortments are now delivering over 50% of our revenue. Our girl knows what fits her body and wants consistency and predictability in our range, and we are delivering on those shapes and fabrications she loves. Our customer base is growing at 502,000 people, 54% of which are high value. We are now focused on increasing that annual spend through greater frequency. To drive this in the second half of FY2026, we'll be implementing a new and aspirational loyalty program. I'll outline more about this at the February results. We only need to return annual spend to levels seen a few years ago to drive material revenue growth. She has stayed with us, and we'll spend up when she's feeling more confident.
In Australia and New Zealand, online revenue continues to be the largest and fastest recovering part of our business at 52% of our sales. The per-store revenue is our biggest opportunity, and with 8.4% comps in FY25, we have strong momentum. We're still delivering 22% of our revenue from the U.S., and due to our strategic actions and our obviously, it's now profitable with the low and variable cost base. If I look at this slide, retail has evolved. Each touchpoint needs to represent who the brand is and be clear to customers on what to expect. The product, the team, and the store environment need to deliver on what the brand promises. Stores need to be an experience to be open, refined, and easy to shop, with predictability in the lifestyles that are delivered to market.
This page shows our new concept store, and the customer response has been overwhelmingly positive. The lineups to some of the opening have been truly inspirational and shows me how much our customer is committed to our business. This concept contemporizes our store and aligns City Chic with best-in-class retailers. We've opened four so far this year: Wollongong, Mt Gravatt in Brisbane, and High Point and Knox in Melbourne. We've continued to receive positive reviews in our range improvements from our customers, and we are now, excuse me, we are now getting this kind of feedback regularly, and it's showing in the range sell-through. The most pleasing aspect of this is that we learn more and more what she wants, the learnings compound, and we increase revenue. The quote that best outlines the success of our strategy is from an influencer, Chloe Vick, the middle one on the right.
She said, "I'm wearing City Chic. They've had a massive rebrand, and whoever their designer is, I'm obsessed." She has been on the journey with us, and this represents a shift in the perception of our brand due to the execution of both our product and our customer strategies. This slide shows the continual evolution in our product and the extensions in our lifestyle mix. With over 300 styles launched monthly, we are covering so many lifestyles, and this is just a small cross-section of them. In stores, we present contemporary and feminine lifestyles with our trend, lingerie, denim with graphic tees, and our occasion dresses. In our new stores, we have predictable places where these sit so that the customer knows what to expect when she comes. Online gives our brand the opportunity to offer extended lifestyles to our customer.
One example you can see shown here is our wide fit footwear category that returned again in the second half of FY25 and has been exceeding our sales expectations. We've delivered on the AUD 22.3 million cost outs and have reshaped our business. The entire team have done an amazing job, and I'm very, very grateful. On the FY25 cost of doing business, there's a further AUD 700,000 in savings based on the annualisation of the AUD 2 million savings from FY25 and an additional AUD 1 million we've already achieved for the FY26 year. As I've previously stated, we'll continue to review and align our cost base to the revenue levels and take all required actions. Moving to the trading update and outlook, our focus is to deliver profitable and sustainable long-term growth. We will achieve this through the continued execution of our product and customer strategies.
The momentum in our ANZ business has strengthened over the past 10 weeks. FY26 year-to-date sales are up 10% in ANZ. This is up from the 8.9% in the first eight weeks. The product is resonating with our customers, and this consistent feedback is what gives me the confidence that this momentum will continue. The U.S.A. business continues to be profitable due to the variable cost base. As communicated, due to the political and economic uncertainty, we expect a reduction in the U.S.A. revenue in FY26 and accordingly have reduced the inventory investment. Our direct channels are down 9.8%, better than we expected. In winter, we've delivered fewer styles than we did last year. Without newness, our wholesale partner Amazon has decreased materially on the prior corresponding period. However, they are still purchasing with us, and then we put up for them.
The U.S.A. business provides the group with greater operating leverage, and we can profitably withstand the tariff-induced sales volatility and be ready for future growth. Our gross margin percentage remains in line with expectations, and we have achieved the further AUD 1 million in cost outs. Our focus is now on driving revenue recovery, especially in Australia and New Zealand. To achieve this, we have multiple building blocks that will get us there. The first block is comparative sales in Australia and New Zealand as our strategic actions around product and customer get more momentum. Increased customer frequency will be delivered through lifestyle and category improvements and new customers through focused advertising and re-engaging our lapse customers. The second block is new stores with six to eight expected in FY26, and we have already opened four of them in the first half.
We'll also annualize the six stores that opened in the second half of FY25, and we still see an opportunity for up to 120 stores in the Australia and New Zealand markets. The third block is very exciting and something our customers take into really, really well. We implemented store-to-door across our retail network. This allows in-store customers to purchase from our full online assortment directly through our point of sale. Our store teams are incentivized to drive it, and they ship it to the customer for free. In only a few months, it's driven the equivalent of around five stores' volume on a weekly basis. That is incremental to in-store sales with no additional cost. To me, this is a huge opportunity to drive growth as we make progress and train the team to execute and learn what works. The fourth block is our Australian partners.
We launched on the Maya Marketplace in August, and we expect this to drive similar sales to our current Australian and New Zealand partner, The Iconic, and The Iconic will annualize last year's growth. Finally, we are launching on the Belk Marketplace in the U.S., and we have secured the partnership and are targeting a Q3 launch. As these initiatives annualize, I know we can deliver compounding increases in revenue, and we will also be able to identify further building blocks as we gain momentum. It's just great to be back on the revenue-driving opportunities again. We've stabilized liquidity with $9.5 million in cash and $5 million undrawn in our facility that's in place till the end of December 2026, and the covenant has been made now for FY26, and as I said earlier, we'll have no drawn debt at the 31st of December 2025.
With the revenue-building blocks and cost-out initiatives, the business is on track to deliver positive operating cash flow in FY26. I'd like to thank the team for their work in driving the turnaround. It's been so good for us to have some wins and to see the success of the strategy. To the board, I'd like to say thank you for your ongoing support for the team in FY25 and to our customers. We're doing everything we can to make you feel our best in our product, both in-store and online, and making the products even better for you. Finally, to shareholders, I'd like to thank you for your support over what was a year of consolidation and strategic improvements. I'll now hand back to Michael.
Thank you, Phil.
Now, moving to the formalities, as the notice has been circulated to our shareholders, I propose to take the notice convening the meeting and the items of business as read. Shareholders will be given the opportunity to ask questions in relation to the business of the meeting during the course of the meeting and before any vote is conducted. At the end of the meeting, shareholders will also be given the opportunity to ask general questions about the business and the operations of City Chic that are not specifically related to the items of business. If you have questions that do not relate to an item of business, we ask that you save those questions until the question time at the end of the meeting.
Now, you've all been issued with attendance or voting cards, and when I call for questions, those with yellow or blue cards are able to ask questions. If you'd like to ask a question, please raise your yellow or blue card, wait for the attendant to bring a microphone, then please stand, state your name so we know who you are, and then you proceed to ask your question. If you happen to be holding a red attendance card, that means you are a visitor and not a shareholder, and as a result, you don't have the right to ask questions or make comments.
For shareholders and proxies, I will ask you to confine your questions to matters relevant to the particular resolution that is being considered, and I'll do my best to answer them or direct them to the auditor or a member of the board or executive team as appropriate. After questions, when there is a resolution to be put to the meeting for a vote, I direct that a poll will be held, and now I open the poll on each of the resolutions one through five. A representative from MUFG will act as returning officer and scrutineer for the poll. If you are here today both as a shareholder and a proxy, you will need to use separate voting cards in relation to your own shares and shares you are voting as a proxy.
The blue cards are non-voting cards which are issued to shareholders who've already voted by proxy and to joint holders who can speak or ask questions at the meeting. If you hold a yellow card, this is for voting as a shareholder or proxy holder, including as represented by a corporate representative, attorney, or proxy where the vote is at the proxy's discretion. Today, you will be asked to vote on the resolutions to consider, firstly, the adoption of the remuneration report. Secondly, my re-election, at which time I'll hand over the chair to Neil Thompson. Thirdly, the grant of performance rights to Phil Ryan. Fourthly, the renewal of the proportional takeover provisions. Finally, the appointment of RSM as auditors of the company. All the resolutions are ordinary resolutions except the renewal of the proportional takeover provisions, which is a special resolution.
The ordinary resolutions will be passed by simple majority of the members present and voting in person or by proxy. The special resolution will require the approval of 75% or more members present and voting in person or by proxy. For those of you holding yellow cards, to fill these out, you will find instructions, and all the resolutions are printed on the front of the voting cards. To vote, simply place a mark in one of the for, against, or abstain boxes for each resolution, and if you mark the abstain box, your votes will not be counted. If you need to leave for whatever reason before the end of the meeting, please make sure you put the completed voting form in the poll box at the registration desk by the door.
I encourage shareholders and their representatives to complete the yellow voting cards after each resolution has been discussed. At the conclusion of the meeting, please ensure that you have marked your cards for the respective resolutions, and a representative of MUFG will collect the voting cards after all resolutions have been discussed. If you need assistance at any time, please signal to one of the representatives of MUFG. Now, moving to the ordinary business of the meeting, item one is the annual report. The first item is to put before the meeting the annual report of the company and its controlled entities for the 2025 financial year, including the financial statements and reports of the directors and the auditor. These documents have been made available to shareholders, and they're also available via the ASX and the company's investor website. There is no vote required on this item of business.
I now invite any questions in relation to those reports, including any questions to the company's auditor relevant to the conduct of the audit, the preparation and conduct of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements, and the independence of the auditor in relation to the conduct of the audit. If you have a question relating to the resolution, please wait and ask your question when we consider that resolution. Are there any questions regarding the reports or for the auditor? As there are no questions, we will then move on to the second item of business, which is resolution one, the adoption of the remuneration report. That is included in the director's report and the annual report.
In accordance with the Corporations Act, the vote on this resolution is advisory only, and the outcome is not binding on the board. That, of course, is not to say the board does not take these sorts of resolutions very seriously indeed, and the board will consider the outcome of the vote and feedback from shareholders at this meeting when considering the company's remuneration policies and practices. In the remuneration report, we've endeavored to provide shareholders with detailed disclosure regarding the terms and rationale behind the company's remuneration framework. We believe that City Chic's approach provides good alignment between business objectives, shareholder value, and executive remuneration, which motivates and retains talented executives. As outlined in the remuneration report, shareholders will have noted that all of the non-executive directors' reduction in remuneration agreed in FY23 and continued in FY24 and again in 2025.
The CEO, Phil Ryan, also agreed to a reduction in his FY24 fixed remuneration, and this remained in place in FY25 and remains in place today. Are there any questions relating to this resolution? No questions. Thank you. Noting that each director has a personal interest in their own remuneration from the company as set out in the remuneration report, shareholders are asked to adopt the remuneration report and vote in favor of resolution one. The proxies received in relation to this resolution prior to the meeting are now shown on the screen. For proxies open at the Chairman's discretion, I intend to vote in favor of the resolution. We will now pause for a moment to give you the opportunity to complete your yellow voting card. Okay, moving then to resolution two, which is my re-election as director, proposed re-election.
I'll now hand over to Neil Thompson to take the chair.
Thank you, Michael. The next item on the agenda is resolution two, the re-election of Michael Kay, the company's Chairman, as an independent non-executive director of the company. Biographical information about Michael is available in the notice of meeting. Michael joined the company in October 2018 and subsequently assumed the position as Chair in November 2018. Michael is an independent non-executive director and a member of the People, Culture and Remuneration Committee and a member of the Audit and Risk Committee. Michael has significant listed company experience and brings a broad range of commercial experience to the board. Michael is currently a non-executive director of Guild Group Holdings Limited and was previously Chair and non-executive director of ASX-listed entities Lovisa Holdings, Omni Bridgeway, and Applydirect.
Michael was also the Chief Executive Officer and Managing Director of McMillan Shakespeare for six years and previously held a number of senior executive roles, including at AAMI, where he was the Chief Executive Officer. Michael has also spent 12 years in private legal practice specializing in commercial law. The re-election of Michael Kay is unanimously recommended by the board, with Michael abstaining. Michael's leadership and experience is a great asset to the company, and he has most recently led the company through more recently difficult times. Are there any questions relating to this resolution? There being no questions, thank you. I'll move to the proxies. The proxies received in relation to this resolution prior to the meeting are now shown on the screen. For proxies open at the Chair's discretion, I intend to vote in favor of the resolution.
We will now pause for a moment to give you an opportunity to complete your yellow voting cards for resolution two. Again, please retain your voting cards, which will be collected by representatives of MUFG once voting on all the resolutions has been completed. I will now hand back to Michael to chair the remainder of the meeting.
Thank you, Neil. That takes us to resolution three, which is the proposed issue of performance rights to the Managing Director and Chief Executive Officer Phil Ryan. As outlined in the notice of meeting, following a review of the company's performance over the last few years, and in particular since the approval by shareholders of the grant of the loan-funded shares to Phil in 2019 and performance rights in 2023, the board, on the recommendation of management, formed the view that it was not in the company or shareholder interests that those loan-funded shares or performance rights remain on foot. As recently announced to the market, all loan-funded shares and performance rights on issue have been effectively cancelled.
The board's approach in doing this is to draw a line in the sand on these past few challenging years to ensure no reward unaligned to shareholder interests is given for this affected period, but through this resolution to grant a new set of long-term incentives to motivate the performance into the future. In this context, the board believes it is in the best interest of the company and shareholders to grant Phil the proposed FY26 performance rights with an EBITDA performance condition measured over a three-year period.
It is worth mentioning, given a couple of questions that we have had from shareholders, that this is the same or very similar to what was passed and since been cancelled two years ago, although these hurdles are more difficult than the ones that were passed two years ago, and these hurdles will fail if the company is not cash flow positive, even at its lowest level. This was guided originally by PwC's recommendation, and the board did structure the targets around commonly accepted accounting metrics to align the incentive with shareholder interests in free cash flow generation and sustained value creation. The board evaluated these measures to ensure that in all scenarios, shareholder returns proportionally exceed any benefits to management. It is noted that if shareholders do not approve the grant of these performance rights, Phil will not hold any equity incentives.
The board believes that this grant creates an effective alignment between Phil and shareholders and the management team, and is appropriate incentive to encourage focus on generating free cash flow, enhancing profitability, and driving shareholder value over the longer term. Shareholders who've been around for a long time will know that an enormous amount of value was created by Phil and this team in the years between 2018 and 2023. The resolution seeks to obtain shareholder approval for the purposes of ASX listing rule 10.14 for the grant of performance rights under the equity incentive plan to Phil on the terms outlined in the notice of meeting. As outlined in the notice, the performance rights will only vest and Mr. Ryan will only receive shares upon vesting of all or some of the rights if the stated vesting conditions, being the performance and service conditions, are achieved.
The non-executive directors believe that the proposed grant of performance rights to Phil is appropriate and in the best interest of the company, and therefore recommend that shareholders vote in favor of the resolution. You will note there are some voting exclusions applicable to this as set out in the notice of meeting. Are there any questions relating to this resolution? Okay, if there's no questions, the proxies received in relation to the resolution prior to the meeting are now shown on the screen, and for proxies open at my discretion, I intend to vote in favor of the resolution. We'll now pause for a moment to give you an opportunity to vote. Okay, that then takes us to resolution four, the proposed renewal of proportional takeover provisions.
As noted in the notice of meeting, clause 14.6 of the company's constitution includes proportional takeover provisions which enable the company to refuse to register shares acquired under a proportional takeover bid unless shareholders approve the bid. Under the Corporations Act, proportional takeover provisions expire three years from adoption or renewal and may then be renewed. The company is seeking shareholder approval to renew these provisions under the relevant sections of the Corporations Act. Further information about the effect of the provisions and the potential advantages and disadvantages were included in the notice of meeting, which I'll take as read. Directors consider that the potential advantages of the proportional takeover provisions for shareholders outweigh the potential disadvantages, and in particular, shareholders as a whole are open to decide whether or not a proportional takeover bid should be permitted to proceed. The board recommends voting in favor of resolution four.
It's a special resolution, and it requires the approval of 75% of votes cast by shareholders. Are there any questions on this resolution? Okay, the proxies received in relation to this resolution prior to the meeting are now on the screen, and for proxies open at my discretion, I will vote them in favor of the resolution. We will now pause for a moment to give you an opportunity to complete your voting card for resolution four. Resolution five is the appointment of RSM as the auditor for the company. As detailed in the notice of meeting, the appointment of RSM was a result of a competitive tender process undertaken as part of a significant rationalization exercise in response to the reduction of the company's global footprint and the consequent resizing of the business.
The board recommends voting in favor of resolution five being the appointment of RSM as auditor of the company. Are there any questions relating to this resolution? Okay, the proxies received in relation to this resolution prior to the meeting are shown on the screen, and for proxies open at my discretion, I will vote them in favor of the resolution. We'll now pause for a moment to allow you to finalize your voting on that item. Okay, as this is the last of the resolutions to be considered at the meeting, once you've completed your card, please provide it to the representatives of MUFG, who I think will come around and collect the voting cards. All cards now handed in? Okay, I'll now declare the poll closed.
As the counting of the votes on the poll may take a little time, we will announce the results via the ASX platform as soon as possible after the meeting. Ladies and gentlemen, that concludes the formal business of the meeting, and on behalf of the board, I'd like to thank you for your support, and I now declare the meeting closed. We can now take any general questions about the company in plenary here, or if you prefer, there is coffee and biscuits and other bits and pieces outside. Any questions? No? Thank you again for your attendance and participating, and look forward to meeting you for a cup of coffee outside very presently. Thank you.