Hello, ladies and gentlemen, the appointed time has arrived. I couldn't start early 'cause we have people online. So good afternoon. My name is Teresa Handicott, and I am the Chairman of PWR Holdings Limited, and of today's. Oh, look, I just said to Lisa, it says, "Good morning," and I'm gonna change it to afternoon, and then I forgot. I read the script. I'm the Chairman of today's Annual General Meeting. On behalf of the board, I warmly welcome you all to our AGM. It's great to see so many of our shareholders and our stakeholders here today at our state-of-the-art manufacturing facility. For those of you who were able to join us for lunch, I hope you enjoyed the food, but more importantly, the opportunity to interact with PWR folk and your fellow investors.
Also warmly welcome those who could not join us in person, but who will be watching us via our webcast. As you may have noticed, we've got products on display today, as we always do, but due to both our own IP and to confidentiality arrangements with our customers, we ask that you don't take photos or any videos of any product. In addition to those participating in the meeting today, we have received proxies from 166 shareholders, representing approximately 51% of the issued capital. As I said, the meeting is being webcast live, and a copy of this recording will be available on our website after the meeting. I'd now like to introduce my fellow directors. Firstly, the man that needs no introduction, Kees Weel, the founding shareholder and managing director of PWR. Kees is a globally recognized automotive cooling expert.
His ability to lead constant change and ongoing growth continues to be critical to PWR's success. Jeff Forbes. Jeff has been a director since the company listed and chairs the Audit, Risk and Sustainability Committee. Jeff is an experienced listed company director who contributes strong financial capability and extensive experience in global operations, and in the U.S. in particular. Roland Dane has been a director since 2017, and is an experienced business owner across a number of sectors, but in particular, and importantly for us, in the global motorsports industry. Kym Osley. Kym joined the board in February this year. He's a widely respected aerospace and defense industry executive with extensive connections across the defense ecosystem in Australia and overseas, including connections with the Defense Force, government, and private defense and aerospace-related companies around the world. Amanda Holt is our newest recruit, commencing in September this year.
Amanda is an accomplished and respected senior executive and defense industry leader. Amanda has been SYPAQ's Chief Executive Officer since 2015, and she brings aerospace, defense, and cybersecurity skills to our board. We also have many of our senior leaders here today, and I'm going to ask them, as usual, to stand up as I introduce them. First of all, Martin McIver, who's our Chief Financial Officer, who's now an integral part of the team. Matthew Bryson has been with PWR for over 20 years and leads the technical and commercial team. Andy Scott is our GM of Advanced Technology. He's a highly experienced engineer and leads the growth in our aerospace and defense business. Ben Nielsen is our Senior Project Engineer who works closely with Matt Bryson, and he's been with us for over 15 years.
Jason Hicks is our newly promoted General Manager of Production in Australia, and he's been with PWR for over 20 years. Lisa Dalton has been our Company Secretary since pre-listing. Everyone else had to stand up, Lisa. She's an experienced company secretary and governance expert and provides support to the board and to the business. Debbie Bodle joined us this year as our Group Financial Controller and has already made herself invaluable. Jake Howard joined PWR in January this year as our Human Resources Advisor, and he's a very experienced human resources manager, and he leads our global HR team. Tim Paum is GM of our Global Performance Aftermarkets business. He's unable to be with us today 'cause he's busy selling product at a trade show. I'll also introduce our leaders at PWR North America and PWR Europe, who can't be here today for travel reasons.
Mick is currently the Interim General Manager for PWR North America, and Wayne Rogers is our Executive General Manager for PWR Europe. Both of these gentlemen have been instrumental in setting up the new manufacturing facility in PWR Europe. Could you also welcome Erin Neville-Stanley, the Audit Partner at KPMG, who's the company's auditor? Also here is Stephanie Davis, a partner from Clayton Utz, our lawyers, and Jessie Verma, and other representatives from our share registry, Computershare. Today's meeting will proceed as follows: firstly, I'll make a short address summarizing some key points from the 2023 financial year, including progress on the implementation of PWR's strategy. Kees Weel will then review the financial performance and operational developments for PWR for the past year and talk about our expectations and plans for the future.
Shareholders will then be able to ask questions about the company, my address, or Kees's presentation. Because we're webcasting, that's why I'm going to ask you to come up to the microphone to ask your questions, please, so that they are recorded for those watching online. If you can't come up, though, please just raise your hand, and we'll bring a microphone to you. We'll then undertake the formal business of the meeting, each time I'll take your questions specifically regarding each of the resolutions, and we'll take any final questions at the close of the meeting. In my presentation today, I will provide information on the company's strategic objectives and how it performed in the 2023 financial year.
As today is my last day as Chairman and a Director of PWR, I'll also take the opportunity to more properly introduce you to your incoming Chairman, Roland Dane. Your board continues to spend considerable time on the group's strategy and its implementation. Growth, profitability, and excellence are the three pillars of PWR's strategy. We understand that the decisions that we make today not only affect the current financial year, but the medium and long-term prospects of the company. A few years ago, we made the decision to leverage our knowledge and capability in the motorsports industry to the aerospace and defense sector. And since that time, we have made truly great strides forward. We've achieved AS9100 certification to enable our growth in these industries and added to our capabilities by achieving Nadcap accreditations for both our chemical processing and heat treatment applications.
We've successfully grown our capability in the U.S. through the opening of our dedicated aerospace and defense machining facility. We've very deliberately built a pipeline of talent to develop that part of the business, ably headed up by Andrew Scott. More recently, we appointed aerospace and defense capability to the board with the appointment of both Kym Osley and Amanda Holt, both of whom will be standing for election at today's annual general meeting. We are pleased to achieve year-on-year revenue growth of 48% in the aerospace and defense sector in the financial year 2023. Andrew Scott and his global team have succeeded in positioning the PWR brand in the sector in a very short period of time, and they are to be congratulated.
Also, over the last financial year, we expanded our capability in Europe to enable us to manufacture some of our products closer to our European customers. We made the decision to do this in Rugby, in the U.K., and in February of this year, we opened our new manufacturing facility, where we have co-located the PWR team, the PWR team from the U.K., with the teams from both Docking Engineering and Bespoke Motorsport Radiators, the two businesses that we recently acquired. We're very proud of our new facility in Europe, and we'd like to share a video with you so you can see how far we've come. And you will not fail to recognize the PWR DNA at work in this facility. ... Kees told us yesterday that that was filmed by a drone with someone operating it from upstairs.
So that's just, a little bit of today's technology. Amazing! I think we probably could tell that when it flew through the machine, it's probably the only way that it could be done. Besides our ambitious growth plans, the other two pillars of our strategy, ensuring that our growth is profitable and ensuring excellence in everything we do, are equally important. During the year, we continued to invest in our people and their development with the establishment of a dedicated production function, which has, at its vision, to develop a PWR academy for job-related learning and development. We have 14 of our talented employees about to embark on a Certificate II in Engineering, which will be undertaken here at PWR's manufacturing site in collaboration with TAFE Queensland.
We also invested a record amount in of AUD 15 million in leading-edge technology and equipment to support our business, and AUD 2 million to acquire businesses in the United Kingdom to establish our European manufacturing base. In financial year 2023, our profitability pillar kept the team very focused, and PWR delivered a record NPAT result of AUD 21.8 million, up 4.4% on the prior period. The group retained a strong cash balance of, at 30 June 2023, of AUD 17.6 million, and remains debt-free, with access to its AUD 10 million multicurrency and AUD 7.5 million equipment finance facilities to support future operational requirements, if that be required.
Cash flows continued to be impacted by the decision in financial year 2022, to increase our inventories of raw materials in response to global supply chain challenges, including the impact in the war in Ukraine on global aluminum supplies. Now that these global supply challenges seem to be subsiding, we have commenced reducing raw material inventory holdings to historical levels, increasing the EBITDA to operating cash conversion ratio to 86%. It was 66% in the previous financial year. The group continued to deliver on its growth objective through implementation of its ongoing capital investment and research and development programs, while still producing a strong return on equity at 25%.
Considering these results and the balance sheet position, the board has declared a fully franked final dividend of AUD 0.089 per share, taking the full year dividend to AUD 0.125 per share, an increase of 4.2% on last year's full year dividend. For our shareholders, this translated into a total shareholder return over the 3-year period, up to June 2023, of 103%. PWR's relative total shareholder return against the companies in the ASX 300, excluding energy, ranked PWR at the 88th percentile of the benchmark group. An outstanding result for which Kees and the team are to be congratulated, and one which the entire company should feel very proud of. I certainly am.
As previously announced, I will not seek re-election today and will conclude my term as your Chairman and Director of PWR at the conclusion of today's AGM. It has been both a privilege and a pleasure to serve on the PWR Board for the past eight years, working with my Board colleagues and the management team to guide this impressive organization over this pivotal period. It's been an amazing and deeply satisfying journey, of which I am very proud to have been part of. Thank you to all of the people at PWR who have worked with passion and drive to deliver significant and transformative growth since PWR's listing on the ASX. Thanks to my Board colleagues, who have brought their individual experience and expertise that has resulted in strong collective contributions and collective decision-making. Particular thanks to Kees, who, along with the then Chairman, invited me on this journey....
To the indispensable Lisa Dalton for agreeing to join when I put her name forward for the role she has so highly ably performed. Kees, I think it's probably one of the best things I've done for PWR. Jeff, Jeff Forbes, who has been here since listing, and Roland, who joined soon after. We've worked together over a long period, striving to deliver the best results for shareholders. Having the robust conversations when we needed to, but always with a collaborative spirit, with a very clear objective of continuously moving this very special company towards achieving its potential. I thank Kees and all shareholders for your support and for the opportunity to serve you as a director since 2015, and as chairman since 2017.
I wish Kees, the board, and PWR the very best for what I believe to be a very bright future. Now, I would like to call on your new chairman, Roland Dane, to speak to you. Roland has the unanimous support of the board in this role. He has substantial board leadership, operational and financial experience, and he's been a board member here, as I said, since March 2017. I'll now ask Roland to come up and say a few words.
Thank you, Teresa. Those are very big shoes to fill. I'm delighted and very privileged to assume the role of chairman as we continue with an unwavering focus on growing this great company. I like to think of myself, because of my background, not as chairman, but hopefully as a head coach. As Teresa mentioned, I've been on the board for some years now, but by way of background, I've been in the motor racing industry all my life, as well as the broader automotive world. For 18 years, I was CEO of Triple Eight Race Engineering, based in Brisbane, the most successful team of Australian motorsport, and I continue my involvement there as a non-executive chairman. I've also served on the board of Supercars Australia for some 14 years.
So, on behalf of the board, our people here, I wish to sincerely thank Teresa for her chairmanship of PWR over the last six and a half years. She's played a pivotal role in the success since the listing in, of, on the ASX in 2015, and she leaves an amazing legacy of good governance and strong, stable growth. Personally, I've learned a hell of a lot from Teresa. Since the time we've overlapped on the board, she's been an amazing role model, and she truly embodies PWR's DNA of respect, passion, and teamwork. I think I speak for the whole board, particularly Jeff and Kees.
On our journey over the period where we've overlapped with Tessa, Tess has taught us so much about good governance in an ASX atmosphere and ASX setting, that honestly, we wouldn't be capable of doing the job that I hope we can without that education over the last few years. Thank you, Tess, and enjoy your new life. I'm sure you're gonna be gallivanting around the globe. Send us a postcard from time to time. I think Matthew, step up, please. I think it's only appropriate that you make a presentation to Teresa. Now I'll hand you over to the boss, Kees, to give you an overview of our performance and going forward. Kees?
Thank you. Thanks, Roland. Good afternoon, everybody. Let's hope the rain can stay away for maybe another half an hour or so. It'll be a great day. So, I hope you all enjoyed your lunch, and thanks to our chefs, Grant, Han, and Coco, for putting on another good feed. And let's see if we can top of that next year for something else. I'm really pleased to see that we're able to get quite a few shareholders here today through our plant and facility, and which has grown significantly since we listed in 2015.
With the solid performance behind us, I'm pleased to take you through both financial and operational highlights, what we've achieved over 2023, as well as provide an update on where we'd like to see the 2024 financial year taking us. Some of the performance highlights, 2023 reflects an outstanding effort contributed by all staff globally during the year. Revenue was up across all key markets and geographies. Of note is strong performance of revenue out of Europe, 18% up and Australia 17%, from OEM product and motorsport. The teams in Australia and Europe are to be congratulated for that achievement. Revenue in aerospace and defense was up 48% to AUD 10.5 million, and now represents approximately 9% of our total sales.
We continue to invest in new equipment, factory space, and headcount to support growth, investing now and collecting later. We established a U.K. manufacturing facility to increase global capacity and also to support further expansion into our European markets. We expect our budgeted CapEx program for 2024 to be funded from cash reserves, as we have done, and cash generated from operations. In addition, we have significantly undrawn finance facilities, should we need them. As mentioned by our Chairman, we paid a fully and final dividend of AUD 0.089 per share, making a total dividend of AUD 0.125 for the 2023-2024 financial year, an increase of 4.2% over the prior year.
We delivered 103% total shareholder return over the last three years, and as Tess said, this was an 88th percentile when compared to the ASX 300, excluding energy stocks. Revenue by market sector. Motorsport remains the largest market and important technology driver for PWR. Motorsport revenue grew 13%, with the growth across several major motorsport categories. Given our current penetration into major motorsport categories, we expect more moderate revenue growth for 2024 and beyond. Automotive OEM grew 19% to the continuation of existing programs and cancellation of new programs. Aerospace and Defense grew 48%. As we expand the number of customers and programs, as these programs progress into full production, we expect Aerospace and Defense to be an important contributor to the global growth in 2024 and beyond. Automotive aftermarket had 12% growth.
Demand in this market remains strong, and we are still continuing to work on the increase of production capability and capacity and improving our marketing efforts. The business outlook. PWR is a vertically integrated manufacturing company, which we do everything in-house. This is one of the major reasons we've been able to grow our revenue and to push into new markets, including aerospace and defense. We are able to control the lower end and supply chain risk for customers. The newly established European manufacturing facility in Rugby continues to expand. Starting from an empty factory at the end of January this year, the team has delivered a world-class facility, increasing our global manufacturing capacity and providing local engineering and manufacturing support for all our European customers. The number of potential sizable aerospace and defense opportunities continues to grow across Australia, Europe, and North America.
Supporting our view that aerospace and defense will be an important contributor to growth in 2024 and beyond. We continue to leverage our knowledge gained in motorsport sector to become a key supplier to large aerospace and defense organizations in the new and early stage of projects due to our technology and reduced lead times and our high quality of standards. The continuation and introduction of emerging and advanced technologies into our manufacturing process ensures we retain at the forefront of manufacturing capability and complexity for both existing customers as well as potential new customers and industries. Pipelines. We continue to deliver existing OEM programs, such as Valkyrie, AMG ONE, Rimac Nevera, Koenigsegg, et cetera. We're also in discussion with several other parties for new OEM programs. The OEM pipeline continues to expand, with discussion about size and timing of future programs is ongoing.
Pipelines in other areas. Other than OEM production pipelines, we continue to expand and develop with expanding aerospace and defense programs and the uptake of emerging technologies across a range of customer markets, in particular, motorsports and aerospace and defense. Investing in people. Of course, it goes without saying that we continue further growth, for PWR comes down to staff in Australia, U.S., and Europe. They will continue to drive production, innovation, and customer-focused solutions, both of which are central to our strategy and continued growth and success.... PWR has now over 500 team members globally, and with the continued growth, our ability to attract and retain top talent is another key pillar to our strategy. PWR is investing in growing its headcount, is actively recruiting for several roles, and the employment market has become slightly, but remains tight for quality staff.
We also invest heavily in apprentices, work experience students, both school and university graduate engineering programs. Most of our people demonstrate every day PWR NA, respect, passion, and teamwork. Retaining talent and people is vital for maintaining quality production, efficiency, and achieving our growth targets. This involves providing a clear and rewarding career path, ongoing development training, and a range of employment benefits. In Australia, we provide breakfast, morning tea, and lunch daily. Several years back, I proposed to the board of expanding our short-term incentive program to include supervisors and key staff. The broad STI program provides a direct link between our performance and personnel reward for their employees. For key employees, I should say. A significant number of staff here today at PWR are shareholders, allowing them to share in our ongoing success. Investing in capability and capacity.
To achieve our growth potential, it is imperative that we continue to plan well, well ahead, investing in the latest technology and of course, factory space for manufacturing. CapEx was higher in 2023 due to the timing of purchase orders and extended lead times for equipment ordered in the prior years. 2024 CapEx is to be expected to be similar to the historic average, excluding CapEx for specific new customer programs. This year, we expand our global capacity planning function to improve efficiency within the factory and to better utilize our global capacity. The new factory, which we announced this morning, that we've together with the Queensland Government signed a lease for a new factory of just over 20,000 square meters, which is approximately twice as...
A little bit over twice as big as what we have here, and that is really investing for the next 20 years. At last year's AGM, we told you about the vision to move to a brand-new manufacturing facility, and today it's happened. We've signed a 15-year lease with a 2x5-year extension and an option for around 21,000 sq ft facility at Stapleton, with plans to undertake a purpose design fit-out and moving in around about July 1, 2025. Planning for the new site will consider growth in our headcount numbers, traffic access, manufacturing flows, and opportunity to increase the use of automation where appropriate. The Queensland Government has supported our decision to expand Australian manufacturing base through an Invested in Queensland grant program.
Under the grant, PWR will receive AUD 8.78 million in support over a 10-year period, provided PWR meet investment and headcount targets over the grant period. The Invested in Queensland program has provided real incentive to stay on home soil and grow and provide over time, hundreds of new local jobs as a result. Our short-term vision is to set PWR up for the next 20 year of growth. I will say that, we had the minister here this morning, Cameron Rick, who was present to hand over that grant this morning. So, thank you to the state government and their willingness to support manufacturing and export in Australia. Always comes with a catch. Nothing is free.
You know, it's all about jobs, jobs in Queensland and particularly export. So, thank you. Before I hand back over to Tess, I'd like to give my personal thanks to Tess for making us what we are today. We spoke about this yesterday after our board meeting, had a bit of a laugh, how I talked Tess into one, coming on our board as a director, and then when the opportunity came up, could we persuade her to take on the chairmanship? Time flies. It seems like yesterday. But by hell, we've achieved a lot. It goes without saying that without Tess's guidance and I guess keeping us blokes in line, more so than anything, has done a fantastic job.
And, we really wish Tess well in the future. And as Roland said, she'll be doing some trips and gallivanting around and not quite sure whether she'll have time to send us a postcard. But, anyway, Tess, thank you very much for your leadership, and I'd like to now hand back to Tess to take your questions. Thank you very much.
Thanks, Kees. We'll now be happy to take questions from shareholders about the company, its management, future plans. So, I once again ask, if you can, to come up to the microphone. If you can't, we'll bring one to you. Who's going to kick off? Yeah.
Good afternoon, everyone. Only a fairly recent shareholder, but also a very keen one, and I'm also a member of Teaminvest. Just regarding the pipeline slide that was in the FY 23 results, and that one, covering the multi-year contracts, is there an inflation component in that, or do you allow for that in your pricing?
Sorry, an inflation component?
Yeah, do you allow annual or whatever reviews of the?
Kees, or do you want to take that one?
Just, uh-huh.
Give Martin a go.
He's the money man.
Thank you for your question. The contracts are structured in one of two ways. One is, if it is, say, a 2- or 3-year fixed contract, we build an inflation into our price calculations for that fixed price. Alternatively, there's a, there'll be a rise and fall mechanism to cater for changes in wage or changes in material costs. So it's certainly taken into consideration.
You coming up?
What are your plans just to mitigate increasing energy costs?
Do you want to talk to that, Kees?
Yes, with the new factory, part of the fit-out and moving into that, where we certainly the plans are to do a lot of solar. The current fabrication, I guess, on the structure of the roof, there is a roof loading on there that we can put 1.5 MW on there. So, we'll be certainly making use of all that.
Okay, and just my last question is, when you move into the new building, will there be a dedicated place for shareholder meetings?
Well, certainly will be the first year, so hopefully we don't fill it out the first year, so we'll be down the back. But no, it will be, we've got a fairly strong ability to fill that factory fairly rapidly. But we always want to make sure that we've got room for expansion, et cetera, for different programs.
When Kees took me through the place the first time, 8, well, a bit over 8 years ago, that building over there had a certain amount in it, but that front-facing section there, just past the driveway up to the roof, was almost empty. Had about 3 machines in it, and none of this existed. That didn't last very long. I think we had our first shareholder meeting on-site in that building, Kees, and since then, mezzanine layers have been built to create extra room. But certainly at the beginning, we do hope for some time you'll be able to be indoors, but adds to the excitement, doesn't it? I always think it's like a wedding in a marquee, that you just want to get everything done before it gets too bad.
Feel a bit sorry for the people online, to be able to hear over the flapping. Anyone else? Okay, if not... Sorry. Take your time. You're right.
Yeah. Just on the international, like, you've got a few more sites, et cetera, that becoming more of a global workforce and the cybersecurity implications and the investment into that, and I guess if you can just put some words surrounding how-
Yeah-
and the technical
Yeah
-implementation.
As you would expect, we've done considerable work, and we've been considerably, like, like the rest of Australia, very concerned about this, and we've been putting considerable investment into our into our systems, both in terms of upgrading them for our operations, but also with cybersecurity in mind to have all the necessary protections. And to be frank, this dovetails very well because we are now starting to work for defense. So, there's a business investment incentive, as well as a data protection incentive as well. So there's considerable work going on in that. Martin. Oh, he's already there! He has been leading that. I'll get him to say a few words, but also that Amanda has considerable experience in this area as well, sitting on a significant organization.
So we hope she always has the up-to-date information on this to be able to help guide us in this area. But it's critical for the obvious reasons, but it's also critical for our strategic reasons as well.
Just adding to Tessa's comments, because areas, because defense is a growing part of our business, there's very clear requirements and protections that we need in place to service that market, which also helps us have those protections for our, for our overall business globally. We're servicing and looking to serve and expand our service for defense in all locations, so it's bringing that that uniform approach to IT. Yes, it's a constant focus for us. It's an ever-changing requirement and ever-changing, I suppose, issue that we need to manage. It's very much at the forefront of board discussion and management discussion.
Thank you.
We're almost fortunate at this time that we're still small enough, and the only acquisitions we've done are very small ones. These challenges get harder when you're... The bigger you get and the more M&A, because you've got so much, so many systems to integrate. So it really is an ideal time for us to get on, get on top of this and, and stay on top of this, to the extent that you can in that terrifying world. Do we have any other questions before I move to the business of the meeting? If not, before I put the resolutions, I have to go through some fascinating meeting procedures, so please bear with me. All resolutions at today's meeting will be by way of poll.
If you're a shareholder or proxyholder, you should have received a blue admission card with the resolutions on the back of your card. When I open the voting, you'll be asked to cast your vote directly onto that card, and your completed cards will be handed to a Computershare representative at the conclusion of the meeting. Jesse Verma from Computershare will be our returning officer and will tally the votes for each resolution. Results of the resolutions will be released to the market at the close of the meeting. As the notice of meeting has been circulated and published in accordance with the requirements set out in our constitution, I'll take the notice of meeting as read. I also propose to take each resolution in the sequence it is listed in the notice of meeting.
A reasonable opportunity will be given to shareholders to make comments and ask questions about each resolution before it is put to the meeting. After receiving comments and questions, and before putting the vote to the poll, the resolution, together with the proxy votes for the resolution, are going to be displayed on the screen. It'll give you a fair idea. I do not intend to read out the resolutions or the proxy numbers unless someone requests me to do so. Before we move to the business set out in the notice of meeting, I'd like to highlight that key management personnel, details of whose remuneration are included in the remuneration report, as well as their closely related parties, are not entitled to vote on the adoption of the remuneration report or remuneration-related resolutions.
However, a vote cast by a member of the key management personnel, if it is cast as a proxy, the appointment's in writing, and it directs the proxy how to vote in respect to the resolution, and provided it's not cast on behalf of a member of key management personnel or a closely related party of a member of key management personnel. Probably would have been easier to say Kees and Martin rather than all of that. As I confirmed in the notice of meeting, as Chairman of the meeting, I intend to vote on each resolution that I'm entitled to, consistent with the recommendations of the board, which are in favor of all resolutions. Where, as Chairman, I have been appointed as a proxy that is undirected, I will be voting undirected proxies in favor of resolutions consistent with the board's recommendations.
Besides the financial report, there are four items of business to deal with today, but the first thing to consider is the financial reports, the directors' report, and the auditors' report, all of which are contained in the 2023 annual report. The Corporations Act requires that these reports be laid before this meeting, but there is no requirement for that shareholders vote on, approve, or adopt these reports. But of course, you will be afforded an opportunity to put questions regarding these reports or any other matter relevant to the performance of the company. Shareholders are also entitled to direct audit-related questions to the auditor, Erin Neville-Stanley from KPMG. No written questions to the auditor were submitted prior to the meetings. So if you have any questions on those reports, could you please ask them now?
Okay, if we've exhausted questions, I'll move to the formal resolutions to be considered at the meeting. The first portion of the remuneration report for the financial year 2023. It's part of the directors' report and is also contained in the 2023 annual report. The Corporations Act requires the remuneration report submitted to shareholders for your consideration. The company's remuneration policy and practices are designed to attract, motivate, and retain high-quality people. They are built around the competitive markets in which the company operates. The directors unanimously support the adoption of the report. The screen shows details of the proxies received on this resolution. The adoption of the remuneration report is now open for discussion. If you have any questions or comments on the remuneration report, could we please have those now?
Yeah. Mike Oliphant back again. Not too happy about having the bar as one of the things, because it includes the share price, which is not really able to be controlled by the board or executive, but I accept it to-
We like to think we have some impact.
Well, yeah, in the long term. Anyway, I accept it's sort of a fact of life across a lot of rem reports. The one that I'd like to speak a little bit about is the EPS growth target.
Mm.
The lowest hurdle is 4%. Now, the company's been growing at a lot more than that. I realize the top one is 12%. I wonder why the 4% was selected, because it seems very atypical and very low.
It's not atypical, if I could just start with that. In fact, our range of 4%-10% probably is the market standard, and we are very careful to look at market standards. You know, we can see that there's, and I will talk about this a little bit more when we have had this feedback in relation to the LTI hurdles, and that's what you're talking about, the EPS three-year hurdle, over a three-year period, compound growth. We... You know, you are seeing trends in the market with some companies starting to move from 5%-12%, but the bottom layer of 4% or 5% is just threshold, and it only pays a fraction of an incentive.
And you have to get to that 10% in order to, over compound growth, compound EPS growth over three years, in order to, achieve the maximum of that component. And it's only one component of the LTI as well, the TSR being, the other one, which it surprises me that you don't like it, because most investors absolutely love it, because it's nothing you can... You know, it really is an assessment of how you're doing against the market. So certainly our institutional investors are very keen for us, to, to maintain that. So, but the EPS, we, we will talk about in the, the LTI as well. But, you know, but we hear the feedback from yourselves, and some of the proxy advisors have recommended against Resolution Four for the reasons that you're, that you're talking about. But...
And the board will most certainly have a look at that. We'll listen to that feedback. We really believe that you need to have incentives that are reachable, achievable. And, you know, we're very proud of our record of compound EPS growth over the period, certainly that I've been here. And, you know, it, it, it is at the high end of, of the market and what, what companies are achieving.
That's why it's weird.
Yeah. But it doesn't, it doesn't mean that that's always going to happen. The world is constantly getting harder, as we know. With growth come all the challenges of increased need for procedures, for systems, you know, the cybersecurity issues we just talked about. Margins, margins are harder and harder to achieve the bigger that you get. We all realize that, and especially with our movement into, you know, bigger and larger projects, which are going to be different. So there's no guarantee that what we've been able-- You know, I sound like a super fund, but there's no guarantee that what we've been done, done in the past, we'll be able to keep doing in the future. But we do want to have realistic incentives for our leadership team, to chase.
I mean, seriously, I actually think that if they can continue to get to—This is a team that's not going to be striving for the 4%. It's going to be striving for the maximum every single year. If they continue to do compound EPS growth over three years of 10%, you know, you really just should be happy about that. And that is going to be an ongoing challenge for them to do, and we want to keep them focused on achieving that. We don't want to have some sort of stretch target that becomes impossible in a period where, you know, the company is going to another level. So we think it's appropriate. We thought it was appropriate when we put it forward.
We in fact did work on the LTI scheme last year, and we put it forward to shareholders, and it was passed with a 92% vote or something. So shareholders certainly agreed with this last year, but we can see that the proxy advisors have raised it this year, and, as I said, the board will consider that when it sets up the LTI plan for next year. Because the LTI plan, every year it's a fresh grant and can be changed from year to year. So it'll be considered. We hear your voice. Anybody else? Okay, then if there's no further discussion on the remuneration report, can you please now cast your vote on it by marking your voting card? Okay, we'll move to the next resolution.
Ladies and gentlemen, Kym Osley was appointed to the board to fill a casual vacancy on 1 February this year and is standing for election by shareholders. Kym's qualifications and experience are set out in the notice of meeting. The remaining directors unanimously recommend Kym's election. The screen shows details of the proxies received on this resolution. If you have any questions or comments on the election of Kym as a director, can you please ask them now? ... If there's no discussion on that resolution, could you please now cast your vote by marking your voting card? Okay, ladies and gentlemen, Amanda Holt was appointed by the board to fill a casual vacancy on 11 September this year, and is standing for election by shareholders. Amanda's qualifications and experience are set out in the notice of meeting. The remaining directors unanimously recommend Amanda's election.
The screen shows details of the proxies received on this resolution. If you have any questions or comments about the election of Amanda as a director, can you please ask them now? If there's no discussion, can you please now cast your vote by marking your voting card? Okay, we'll move now to the final item, item of business, which seeks shareholder approval to grant performance rights to Mr. Kees Weel under the Performance Right Plan. The performance conditions attaching to the rights are set out in the notice of meeting. The non-executive directors unanimously recommend approval for the issue of the performance rights to Kees Weel, the company's Managing Director. I was gonna go on to talk about the proxy advisors, and the discussion about the EPS hurdle.
But because I think we've had a good discussion on that, I will leave it at that, unless anyone else has any further similar questions. So any questions on that resolution? If not, can you please now cast your vote on the request to issue performance rights to Kees Weel by marking your voting card. Ladies and gentlemen, that concludes our discussion on the items of business. I'll pause for a few seconds to make sure you've completed your voting cards, and I'll ask Computershare to please come through and collect those cards so that they can close the polls. Oh, yeah, I just haven't written my name.
Man, when you get old, you know that? Whatever works. Also, how good is technology? I have—I've made the mistake of the, these, modern rechargeable ones, and, on occasion I've run out of hearing, but I... Quite bumpy, too. Hang on. Well, I'm apparently deaf, and so, I really can't hear anything. That happens quite regularly for you, or— I... Yes, but, I lost the big B one year. Oh, wow! So I'm sure it happened in nineteen ninety-six. I didn't realize it at the time.
Okay, ladies and gentlemen, if we're—I think we're on the voting. Anyone still going, could you just raise your hand if you are? Okay, looks like we're all done. So just checking, any final questions or comments? If not, this draws today's meeting to a close. Results of the polls held at today's meeting will be released to the ASX after the meeting. So on behalf of the board, I thank you for your attendance and your continued interest in the company. It was lovely to get the opportunity to show you through our manufacturing facility and to meet some of you over lunch. Travel safely on your way home, and thank you all very much.