EVT Limited (EVT) Earnings Call Transcript & Summary

Ladies and gentlemen, I'd firstly like to begin by acknowledging the traditional owners of the land on which we meet today, that being the Gadigal people of the Eora Nation and pay my respects to elders, past and present. I welcome you to the Annual General Meeting of Shareholders of EVT. I would like to also extend a warm welcome to our shareholders who are participating through our online meeting platform. The secretary has informed me that there is a quorum present, and I declare the meeting open. I'd like to firstly introduce my colleagues, starting from my right, Mr. Brett Chenoweth; Valerie Davies; David Grant; our CEO, Jane Hastings; our Company Secretary, Mr. David Stone; Peter Coates and a warm welcome to Jenelle Webster to her first meeting. We also have with us today, both in person and online, a number of our senior executives. Cameron Slapp from KPMG, the group's auditor, is also with us today. Every effort has been made to ensure the meeting runs smoothly. However, if any technological issues arise and it becomes necessary to provide procedural information in respect of this meeting, updates will be provided on our website and through the ASX. Hence we'll begin the meeting with an address from myself and our CEO, Jane Hastings, then go through the formal proceedings. All the resolutions where appropriate, will be decided by poll. Voting on the resolutions is now open, and you can vote any time during the meeting, and voting will continue for 10 minutes following the end of the meeting. I remind you that only shareholders, proxy holders or authorized shareholder representatives may vote. I'll now ask our company Secretary, David Stone, to provide further information regarding the meeting's procedures.

Thank you, Alan. The AGM is being conducted as a hybrid meeting. This means shareholders may participate in person or through our online meeting platform. For those attending using the online meeting platform, the voting icon will appear on the navigation bar. Once you click on this, the resolutions will appear on your screen, you should see for, against and abstain options for each resolution. You can change your vote at any time until the poll is closed. For those attending in person, if you are entitled to vote, you will have received a blue voting card. Please ensure that you complete your voting card and hand in your card to one of the representatives from Computershare. If you need any assistance, simply raise your hand, and one of the attendants will be with you. As Chairman, Alan holds a number of open proxies. As set out in the notice of meeting, Alan will be voting all available proxies in favor of each item of business. Maria Dzopalic of Computershare Investor Services is acting as the returning officer. We will answer questions and comments from shareholders at the end of the meeting after all of the items of business have been presented to you. This includes any questions directed to the auditor. For those attending online, we encourage you to start submitting written questions and comments now. If you have any difficulties in asking a question, please refer to the user guide, which can be accessed through the platform. [Operator Instructions] For those attending in person, you may ask a question or make a comment if you hold a blue or yellow card. Simply raise your hand when the Chairman starts taking questions, and one of our attendants will be with you. Please do wait for the microphone before you begin asking a question. So that shareholders who are attending online will be able to hear you. To ensure that shareholders as a whole have a reasonable opportunity to be heard at today's meeting, we ask you to limit your questions or comments to 2 at a time and then allow others to ask a question. Questions and comments should relate to the items of business under consideration at this AGM. Thank you. I'll now hand the meeting back to Alan.

Thank you, David. Now turning to the first item of business. which is to deal with the financial statements of the group, the director's report and the external auditor's report for the year ended 30th of June 2024. These statements and the directors' report were approved in the meeting of the Board of Directors of the company in August this year and are contained with the annual report. I have pleasure in presenting these statements and reports to the meeting. And in doing so, would like to make a few comments on the group's activities. The 2024 report, which includes financial statements for the year ended June '24, was released in September this year. The group's total net profit after tax for the year was $4.8 million, whilst the normalized result after tax was $34.1 million. Jane will elaborate further on the one-off noncash tax charge that has impacted so significantly on the reported result. Hence this result included a record performance of our hotels, a good Thredbo result considering the challenging 2023 winter season and an entertainment result that was impacted by an inconsistent film lineup following the Hollywood strikes in 2023. In addition, the group's cost challenges have been significant including compliance, insurance, energy and labor, resulting in tens of millions of dollars in extra costs relative to the pre-COVID period. Your management team have successfully developed strategies to offset these as much as possible. And these transformation initiatives will position us well for the future. Jane will comment further on the group's results, strategies and outlook in her address. Your Board was pleased to maintain dividend payments during the year with total dividends for the year of $0.34 per share, fully franked, consistent with the prior year, that is excluding the $0.12 per share special dividend paid in 2022. The Board considers dividends in the context of capital requirements for future growth and a desire for continuity of earnings for both the shareholders and also the group. The group prides itself on the strength of its balance sheet, which is underpinned by property holdings. The group's net debt position at the 30th of June was $304.1 million, comprising of a total cash balance of $106.4 million, with debt outstanding of $410.5 million. This provides a significant headroom in terms of available liquidity within the group's core debt facility, which is currently $650 million. This facility will mature in May 2026. Friends, your Board continues to review, assess and monitor appropriate capital management and strategies. There was a decade of pre-COVID -- there was more than a decade of pre-COVID period, significant capital -- sorry, there was more than a decade, pre-COVID, of significant capital investment in cinema expansion alongside new hotels and property acquisitions. To enable this, our investment in the existing assets at the time was lightened throughout this period. More recently, the Board has been required to increase investment in existing assets due primarily to age and compliance issues. This has limited the group's capacity for incremental growth capital expenditure. The Board's capital allocation and management strategy has also considered dividends as a priority within these strategies. The management team, supported by the Board recognizes the opportunity for continued growth in the hotel division through recycling capital, acquisitions and investment in key hotel properties, together with the investment in platforms to grow the group's asset-light hotel management business. The group and its shareholders have seen the benefit of this focus on hotels with a record result in financial year '24. In this context, we are now at a point where this capital expenditure strategy will pivot towards the expansion of our hotel group. Whilst the Entertainment and Thredbo divisions were impacted by factors outside management's control, we know that these businesses can generate significant cash flow when conditions are favorable. The film industry has not had a normal marketplace for a meaningful period in nearly 5 years with impact from COVID closures through to the recent Hollywood strikes disrupting film supply. However, we now see a pathway to recovery in financial year '26. Whilst we have had interest from potential purchases in the German cinema business, due to the short-term impact on earnings from the Hollywood strikes and COVID, we would all only look to divest of that business when the timing is right, sometime in the future. We are aware, as I've mentioned, we still have a material level of existing asset maintenance to play catch-up on. But we will review each asset and determine if the required capital expenditure will develop and deliver an appropriate return or whether it would in fact dictate the divestment of that asset. We continue to evaluate the group's structure and the team are focused on creating future optionality so that when the markets normalize, we can consider a desirable mix of earnings in the context of the momentum that has been developed in our hotel group. Jane will provide an update on our proposed major developments at 525 George Street and 458 George Street in Sydney. The Board and management continue to evaluate options and market conditions to ensure that each of these projects deliver appropriate value for shareholders, and we are working towards an appropriate outcome on each site. The strategies we will deploy are all intended to support the further development of key assets and maximize sustainable and long-term return for our shareholders. The group has been guided by the ASX Corporate Governance Council's principles and recommendations throughout the year. Our corporate government statement has been published on the group's website and this statement sets out the corporate governance practices and procedures and should assist the shareholders in understanding and appreciating the importance that the Board places upon good corporate governance. The Board also focuses on maintaining an appropriate approach to remuneration and details of this approach are dealt with in the annual report. In particular, the group's policies are designed to, as far as possible, ensure that the remuneration package is reflective of an employee's duties and responsibilities and to enable the group to attract, motivate and retain high-caliber executives. In assessing the group's remuneration, the Board is mindful of the challenges and complexity of our group with its 3 separate operating businesses, substantial property portfolio and multiple geographies. We have commissioned external benchmarking for the CEO and key executives based on relevant and appropriate peer companies and have set remuneration at appropriate levels within that peer group. The Board renewal process is ongoing with Brett Chenoweth appointed to the Board in 2022 and Jenelle Webster appointed earlier this year. The search process is continuing to identify further potential new candidates. Friends, I and the Board acknowledge the outstanding efforts of the CEO and I'm confident that the action of Jane and her team have provided a strong platform for the future. The rest of the executive team and all group employees, I extend to you our thanks for your collective and personal efforts. We are proud to have the depth of experience and recognize the contribution that you have made which has been and will continue to be invaluable as we embrace the opportunities that will arise in the future. Friends, I'd also like to thank my co-directors for their efforts during the year and in particular, thank our 6,800 shareholders for your ongoing support. I'll now ask Jane to us -- on a few comments. Thank you, Jane.

Thanks, Alan, and good morning, everyone. We were pleased to achieve underlying group revenue growth up 4% to $1.221 billion, adjusted for the benefit of German government subsidies in the prior year. We continue to invest for growth and find ways to transform our business to offset the material cost headwinds. Reported normalized EBITDA was $151.3 million, down $35.7 million on the prior year. The prior year included $22.2 million of German government subsidies. And excluding this, underlying normalized EBITDA was down $13.5 million. The hotels division was a standout and achieved a record result in revenue of $407.4 million, up 15.5% and a record EBITDA result of $101.5 million, up $14.1 million on prior year. Full year entertainment revenue was up at $714.8 million, and EBITDA adjusted for German government subsidies was down on prior year due to the inconsistent lineup following last year's Hollywood strikes. Our Thredbo team delivered a solid performance despite materially worse weather conditions, resulting in revenue down 18.9%. Thredbo EBITDA was down $20.1 million, in line with the impact on revenue. Overall group unallocated expenses were down $1.3 million. And on an underlying basis, unallocated expenses are also below the financial year '19. It's important to understand the nonrecurring items that impacted the movement in reported NPAT of $4.8 million. The result included a one-off noncash $26.9 million tax adjustment following a change in the rules on the depreciation of buildings in New Zealand. The prior year included $47 million after-tax benefit from property sales and $15.5 million after-tax benefit from German government subsidies. We also saw an increase in depreciation as expected, following the opening of Rydges Melbourne and IMAX Sydney. The adjusted NPAT was down $12.9 million, in line with trading performance. We have a strong property portfolio valued at around $2.3 billion. Whilst pre-COVID, our property strategy was broad, we have pivoted to focus on owning hotel properties in key city locations that will support the asset-light growth of our managed hotel portfolio in Australia, New Zealand and internationally. We have a competitive advantage when pitching for hotel management agreements as an owner and operator of hotels when our competitors are almost exclusively asset light as we can demonstrate how to grow asset value over time. As Alan has covered, our capital expenditure in the pre-COVID period included a significant investment in cinema expansion alongside hotels. This came at the expense of investment in existing assets. And over time, the age of these assets and changing compliance requirements has required more recent investment in maintenance CapEx. However, we always look for opportunities to enhance returns from existing assets when investment is required as we've done with Rydges Melbourne and QT Gold Coast. As Alan has also referenced, we're still aware that we have catch-up to play on existing assets but we will review each asset and determine if the required capital expenditure will deliver an appropriate return or require a divestment of that asset. We are focused on hotel expansion as our priority. This year, we're working on planning a Lylo development on the underutilized land at QT Gold Coast, which we received development approval for earlier this year. We're planning for the conversion of 19 Essex Street in Fremantle to a new Lylo, the upgrade of the east wing of Rydges Queenstown, planning for new basement bar at QT Sydney, which we received DA approval for earlier this year. We are -- we have additional rooms at Atura Adelaide Airport and currently underutilized conference space and a refurbishment of rooms at Rydges Cronulla. Of course, the timing of all projects is subject to relevant approvals and market conditions. As you know, our hotel strategy has successfully evolved over the past few years to enable expansion and deliver record results. We now have a hotel solution that meets the needs of the entire market from premium to budget experiences from leveraging one of our owned brands or maintaining or creating an independent brand and leveraging our capabilities. Our brands include QT hotels, recognized as a leader in premium boutique experiences. And last month, we're proud to open QT Singapore under management agreement QT Parramatta is also expected to open in the 2026 calendar year. Rydges, we were pleased to secure a management agreement for Rydges Ringwood in Victoria earlier this year and we've signed 2 new management agreements for future developments, including Rydges Resort Wailoaloa Beach in Fiji, which is at planning phase and Rydges Tauranga, New Zealand expected to open in financial year '27. We've also acquired a 15% equity interest in the Esplanade Hotel in Fremantle by Rydges whilst maintaining the ongoing management rights. Atura, our affordable design-led brand will welcome Atura Oran Park, which is expected to open in 2026, a new 184-room hotel in Southwest Sydney. Lylo, our game-changing lifestyle budget accommodation experience with locations now in Auckland, Christchurch, Queenstown and Brisbane will have Fremantle and Gold Coast in the pipeline. Our plan for Lylo is to establish our credentials in Australia and New Zealand to then offshore -- to then explore opportunities offshore in the future. The independent collection by EVT brand enables owners to retain their own brand or we create a brand for them and they leverage our management expertise. We added 3 independent hotels in the year, including The Old Clare and Harbour Rocks in Sydney, the Inchcolm in Brisbane. And we also recently welcomed Alex Hotel Perth. We have grown the EVT Hotels & Resorts network to 84 hotels. Our hotel development team are actively pursuing new hotel management opportunities and with the strength of our brands and operating performance, we are confident that our brands can add value to owners in local and international markets. Our major developments also are progressing. 525 George Street in Sydney is an underutilized asset in our portfolio and a prime Sydney CBD location. The development plan we have created aims to realize the greater value of this asset. We have secured stage 2 DA approval for a 43-story mixed-use development with an integrated hospitality and entertainment offer. We are considering options to generate the best return for shareholders from this asset, and we expect to be able to update the market on our preferred option at the end of this financial year. The second underutilized asset and focused development opportunity is 458-472 George Street. We've secured DA approval for the podium component, which includes the extension of the QT Sydney Hotel, and we've commenced planning for this development, which will be subject to market conditions. In this financial year, we're also planning to divest noncore properties with potential proceeds of around $40 million. In cinemas, we are very focused on our fewer, better strategy. This means we will invest in key locations that deliver quality returns. If this cannot be achieved, we will look to divest or exit locations. In this financial year, we are installing a new IMAX screen at Pacific Fair Gold Coast following the outstanding performance of IMAX Darling Harbour, which is on track for around a 2-year payback. And further IMAX screens are planned in Dortmund and Frankfurt and Germany. In Thredbo, the Alpine Coaster opened in June with great demand and feedback from customers, and this is a fantastic year-round attraction that adds to the overall appeal of the resort. Thredbo snowmaking upgrades and planning for the replacement of snow guns chair lift is underway. Many of you will be very familiar with the overarching EVT strategy. Our 3 strategic goals that guide the group are to grow revenue above market, such as our hotels outperforming their competitive sets, maximize our assets with our refocused property portfolio, divesting noncore assets and generating value from our underutilized key development properties and business transformation initiatives that improve insights and efficiency and assist in offsetting cost increases whilst also delivering material improvements in our culture, community and environment initiatives. In August, we announced that we've committed to carbon emission reduction goals for 2030. We're aiming for a 50% reduction in our Scope 1 and Scope 2 carbon emissions and a 25% reduction in our Scope 3 emissions by 2030 compared to our FY '23 base year. We have a detailed plan on how this will be achieved. But in summary, the Scope 2 emissions, we will transition to purchasing more renewable energy for our cinemas and hotels. We've already been purchasing renewables for Thredbo for a number of years. For our Scope 3 emissions, our focus is on working with our suppliers to understand their targets and over time, drive more sustainable procurement decision-making. And I look forward to updating you the progress -- on our progress towards these goals. I'll now comment on the current year and performance over the first quarter. As noted at the full year results presentation, we were expecting a tougher first quarter on our prior record quarter. On a normalized basis, excluding the impact of AASB 16 leases, the group's EBITDA was $51.2 million, down $22.3 million on the prior comparable first quarter record results. Entertainment and Thredbo had a weaker first quarter whilst hotels achieved a record first quarter. Whilst the result was lower than prior year, given the highly variable nature of our businesses, it was a good result being only 4% below FY '19, our pre-COVID first quarter. In entertainment, Deadpool & Wolverine and It Ends with Us exceeded expectations. In July, we also had the benefit of strong family titles Inside Out 2, which is now the highest growing animation film of all time. We continue to see the benefits of our premiumization strategy, driving yield growth. In Australia, average admit price and spend per head were up 8.5% and 10.7% on the prior comparable quarter. In New Zealand, they were up 2.6% and 10.7%. And in Germany, they were up 5% and 13.4%. Overall, the entertainment group EBITDA was $7.7 million, down $21.8 million compared to the prior comparable quarter, which had set a new record for the company for this division. The prior quarter performance was driven by the stronger film lineup, including Barbie and Oppenheimer. However, most pleasingly, this quarter result was up $3 million on the pre-COVID FY '19 quarter. The weather conditions at Thredbo this season were even more challenging than in 2023 were the worst we have experienced since 2006. Poor weather conditions resulted in the later start of the season and the closure of the resort 4 weeks earlier than planned. Despite these conditions, Thredbo delivered EBITDA of $22.6 million, only 10.7% below the first quarter of FY '24. The hotels division had a softer start given a lack of major events across our markets, particularly in Sydney and Melbourne. The New Zealand market is very challenging with the exception of Queenstown due to a slow recovery in international inbound travel and the lack of stimulus for major events in the country. However, despite these challenges, we delivered a record first quarter EBITDA result of $22.1 million, up 0.4% on the prior comparable result. Pleasingly, our hotels continued to outperform their competitor sets. Occupancy was up on prior year across each of our key brands, including Rydges, up 6.2%; QT, up 3.6%; and Atura, up 2%. Average room rates were below the prior year due to fewer events to drive demand. And RevPAR was up for Rydges, up 8.4%; QT, up 1.8%; and Atura, up 0.5%. Overall, our cost management continued to be strong and unallocated corporate costs were 6.8% below the first quarter of prior year. In closing, I wanted to touch on the outlook for the remainder of this financial year. In entertainment, whilst the entertainment lineup remains somewhat impacted by the 2023 Hollywood strikes, we are pleased to see a more consistent supply of films. Most recently, Joker has disappointed audiences globally, resulting in a weaker October than expected. However, we believe we have a solid lineup of films for the Christmas period based on what the studios have shared to date and therefore, should resonate well with audiences, including Wicked, Gladiator 2, Mufasa: The Lion King and Moana 2. We can now see a pathway for further film lineup recovery with a list of blockbuster titles in financial year '26, including Avatar 3, a new Star Wars film, Jurassic World 4, a new Avengers title, Super Mario Brothers 2 and Toy Story 5. We look forward to having a consistent film supply so we can realize the benefits of all the improvements made. When the studios deliver good films, we will deliver stronger results. In Thredbo, we expect to result below the prior year, subject to conditions in June 2025 and some of the performance will be subject, as always, to weather conditions. In hotels, our goal is to achieve another record year, assisted by Rydges Melbourne and growth in our managed hotel portfolio. However, we are aware that this is a challenge and subdued trading in some key markets like Sydney, Melbourne, Adelaide, Auckland and Wellington and cycling the Taylor Swift market-wide benefit in quarter 3 of this financial year that we're aware of. We'll continue to closely observe and adapt to pressure on consumer spend when it relates to leisure travel and do all we can to cycle the impact of major events in the prior year. Our teams have done an incredible job transforming the way we do business to offset energy, wages and other inflation pressures and still invest in areas for growth, and we're going to continue to do so. I'd now like to take the opportunity to thank team EVT. The positive results we are experiencing from our new strategies and transformation initiatives are a credit to you all. Your commitment to ensuring the best possible outcomes for shareholders and customers whilst contributing to ensure EVT is a great place to work is second to none. I'm exceptionally proud of the team and know that we have the right people and capabilities to achieve our goals. I'd also like to thank all of you for your support and interest in attending and to those participating in the online meeting this morning. Thank you.

Thank you, Jane. As there is no actual vote in this item, I will call for discussions on the financial statements towards the end of the meeting. I now move to consider the first resolution, which result -- which relates to the adoption of the remuneration report. The remuneration report set out on Pages 35 to 46 of the 2024 annual report and explains the structure of and the rationale behind the group's remuneration practices and the distinct link between the remuneration of key management personnel and the group's performance. It also sets out remuneration details for each director of the company and each member of the group's senior executive team who were key management personnel during the year, and it makes clear that the basis for remunerating non-executive directors is distinct from the basis for remunerating executives, including the CEO. Hence, on the basis of the proxy votes already received, we expect that whilst the majority of the votes have been cast in favor of the resolution, we will receive more than 25% of votes against the adoption of the remuneration report. As such, I'll now ask Peter Coates, Chairman of the Nomination and Remuneration Committee to comment further on this matter. Peter?

Thank you, Alan. As Alan said, the majority of the votes were cast in favor of the remuneration report. And I would like to further note that our vote -- that the votes against the resolution represent only about 14% of issued capital. I know that Alan has spoken to many of our shareholders leading up to this meeting, and we have heard many messages of support as well as questions and feedback on our remuneration arrangement. For those shareholders voting against the remuneration report, we understand the role of the proxy advisers, some of them have raised concerns regarding certain aspects of the group's remuneration arrangements. As Alan said earlier in his address, some of these reports make comparisons between EVT and its index peers that do not take account of the challenge and complexity of our group with its 3 separate operating businesses, substantial property portfolio and multiple geographies. We have great confidence in our management team and strongly believe that our remuneration arrangements are consistent with the exceptional ability, contribution and efforts of management to drive positive outcomes for shareholders. We have commissioned external benchmarking for the CEO and key executives based on relevant and appropriate peer companies and have set remuneration at an appropriate level within that peer group. We are also undertaking a review of the long-term incentive arrangements this year and we'll update shareholders on this review in due course. We have also heard feedback regarding the timing of recognition and disclosure of short-term incentive payment. It is important to understand that the accounting and disclosure is correct based on the timing of our long-standing STI approval process. That said, in the context of this feedback, we will undertake a review and consider whether a change may be appropriate in the future. I'll now hand the meeting back to Alan.

Thank you for that, Peter. I'll now move the following resolution that the members adopt the remuneration report for the year ended 30th of June 2024. There is no discussion at this stage. The next item of business concerns my own reelection, and I'd like to hand the meeting over to the Lead Independent Director, Peter Coates. Peter will chair the meeting for the duration of this item.

Thank you, Alan. The third item of business concerns the reelection of Alan Graham Rydge, who retires by rotation in accordance with the constitution. Mr. Rydge's background and qualifications have been outlined within the explanatory notes to the notice of meeting and on Page 4 of the annual report. I move the following resolution: That Alan Graham Rydge, being a Director who retires by rotation in accordance with Rule 8.1(d) of the constitution and being eligible, is reelected a director of the company. Thank you. I will now hand the meeting back to Alan, who will resume the chair for the remainder of the meeting.

Thank you, Peter. The fourth item of business coincidentally concerns the reelection of Peter Roland Coates, who retires by rotation in accordance with the constitution. Peter's background and qualifications have been outlined within the explanatory notes to the notice of meeting on Page 4 of the annual report. I now move that Peter Roland Coates, being a director who retires by rotation in accordance with Rule 8.1(d) of the constitution and being eligible, is reelected a director of the company. I put that to the meeting. We now move to the fifth item of business concerning the reelection of Jenelle Bronwyn Webster, who having been appointed as a director since the last Annual General Meeting, retires in accordance with the constitution. I must say that Jenelle joined us in March this year. And the Board has benefited solidly from her consistent desire to understand and learn the businesses and her valued contribution to our deliberations. I look forward to a long and profitable and beneficial association with Jenelle. Jenelle's background and qualifications have been outlined within the explanatory notes to the notice of meeting. And I will now ask Jenelle to comment further if she wishes.

Thank you, Alan, for the warm welcome. I accepted this nomination after meeting with the Board, Jane, the CEO and her team. What impressed me most was the significant amount of work they've done particularly in the areas of IT innovation and maximizing efficiencies across the business. Their ability to drive these initiatives during the challenging COVID period has clearly positioned to EVT for continued success. By way of introduction, I am a registered company auditor with experience in a wide range of businesses from government entities and private equity firms to ASX-listed companies. My career has spanned diverse industries from telecommunications to oil and gas pipelines. Currently, I serve as the CFO at the Scots College and previously, I was the CFO at St Vincent's Private Hospital, Sydney. Both roles have provided me with leadership and governance experience, particularly within complex, highly regulated environments. Thank you for your consideration and for putting me forward for election today.

Thank you very much, Jenelle. I now move that Jenelle Bronwyn Webster having been appointed as a director since the last Annual General Meeting and who retires in accordance with rule 8.1 (c) of the constitution and being eligible, is elected a director of the company.

I move.

The sixth item of business relates to the award of performance rights to our Chief Executive Officer under our incentive plan. The plan provides an incentive for executives to achieve above-average performance over the medium-to-long term in the group's businesses, which should be reflected in higher group earnings and growth rates. The plan enables the company to grant rights to executives and senior managers of the group, each right, representing a right to receive 1 fully paid ordinary share in the company. The rights best and ordinary shares are allocated to the participant upon the satisfaction of performance criteria that is set out in the notice of the meeting. The Board considers the incentive to management under the plan to be an important tool in motivating and retaining talented employees and executives. I now move that approval is given for all purposes, including ASX Listing Rule 10.14 for the award of up to 225,000 performance rights as a long-term incentive award to the Chief Executive Officer, Jane Megan Hastings, on the terms set out in the explanatory notes to the notice of the meeting. All right. Friends, that concludes the formal notices and formal items. I'd now like to invite questions and comments relative to any of these previous items including questions relating to the financial statements, the director's report and the auditor's report for the year. You may also choose to ask questions of the auditor about the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the statements and the independence of the auditor in relation to the conduct of the audit. We do have a number of questions that have been submitted online, and I think we will have some questions from the floor. So David, I might ask you to...

Thank you, Mr. Chairman. I would like to thank the Board, management and employees for their hard work. I'm representing my personal shareholdings, my company and my self-managed super fund. I only have 1 question. What hurdles do you put to our CEO, our profits falling, our share price falling, our dividends falling, but CEO salary benefits rising. Please explain. Thank you.

So if I understand the question correctly, [ Roman ], you're asking about the current earnings of the company, the share price and remuneration arrangements. Is that right?

I'm asking about your CEO hurdles. When you give someone benefits, you put them, okay, you need to improve this, you need to improve this, you need to improve this. You will get your benefits. When our profit is going down, as Jane mentioned it, our share price going down compared to last year. But again, I thank you guys for your hard work, but it's supposed to be, okay, if we...

Understood. Thanks, [ Roman ].

Look, [ Roman ], I think we've explained in the addresses of Jane and I, the difficulties the company has faced over recent years in terms of its earnings performance. It is not surprising that earnings performance is reflected in the share price. And to that end, I am suffering, if not as much but more than everybody. In relation to Jane's remuneration and long-term incentive, I'd point out that since 2017, there have been only 2 occasions when Jane's long-term incentive grants has vested. The 2020 awards vested to the degree of 29.3%, and the 2021 awards partially vested against the degree of 89%. I think, if anything, whilst Jane is doing an outstanding job, in doing the best we can with the company and ensuring the strongest possible position, she is not being overly rewarded when we are not receiving rewards as shareholders.

Peter also noted that we're undertaking a review of the long-term incentive arrangements this year. Thanks for the question. I think there's a question over here.

Charlie Kingston from K Capital. Just a few questions. Firstly, on the accounts. If -- just like to talk about the premiumization strategy, which I think, has been going on for quite some time, but specifically, the hotels division, notwithstanding the record numbers that you reported today, I'm not sure how much of a record they are. But if we look back in 2018, the profits from the hotel division was around about $69 million in 2019. It was $69 million, 5 or 6 years later in 2024, reported a profit of $69 million, which is basically flat. EBITDA has gone up. Revenue has gone up, but you've also spent over $600 million on -- and again, you don't break out where your CapEx has gone. Some of it you mentioned has gone towards the cinemas, Thredbo, et cetera. But I think the bulk of it has gone towards the hotels. You've sold a few hotels. That's actually adjusted in that $600 million figure. So since 2018, you've spent $600 million, some of which, yes, is not related to the hotels. I'm sure some of it has gone to the George Street assets, which aren't producing a return. But for that supposed growth CapEx the profits of the key hotel division are actually flat. And yes, you've done I'm sure a lot of good work because revenue -- the room rates, et cetera, all those metrics are going up. But to be honest, from a shareholder perspective, that's not really relevant. All we care about is profits or at least all I care about is the profits to which all that money you've spent can deliver us. And to date, it's fair apart from the quarter you reported today, it's actually not delivered anything. So just hoping to ask why that is the case. I appreciate hotels are volatile, depending on when [indiscernible] arrives and Coldplay and the World Cup, there's lots of big events that happen from year-to-year, but that seems like it happens every year. But the premiumization is ongoing. I think you're spending $120 million this year. I'm not sure about next, but you spend a lot of money, and it hasn't actually delivered any uplift in profits, yet. So I'd just like to understand when because otherwise, I think you mentioned there's a big catch up in maintenance sort of CapEx and spend. But to date, it doesn't look like you should be capitalizing all that spend. It might actually need to get expense. So I just appreciate your thoughts on that critical issue given hotels is the future of the company.

Yes. I mean I think we need to have a meeting, which I'd welcome because I think it's probably a simplified version of the world, but that's the information that you're being provided. So that's [indiscernible] view, correct. So hotels, so in our divestments, we sold hotels and that impacted our EBITDA around about $12 million to $15 million through that period of time. So we've offset that with those divestments in order to get to these numbers today. So we're not comparing like-for-like to get there. But regardless, you just want growth overall, and that's what we want overall as well. But making those decisions to divest those properties, it was also looking down the funnel of 20 years of lack of investment in those properties and that are going to cost us truckload to maintain and a lot of CapEx to maintain. So it was the right strategy. And the capital we've been spending and when I took over as CEO, I think we've highlighted it was -- cinema expansion was the focus, and we were rolling those out. And now we're in the phase of fewer, better in that situation. But money had gone into properties and growth. And we've had a period of about, I would say, a good 15 years where the current assets weren't maintained. So within that money, we've been spending over the last period of time, and I've got to highlight the cost of material change and compliance requirements, which is not just new to us. It's been a big chunk of that money. There isn't anything that we have invested in that doesn't reach the threshold and we track that of 12.5% to 15% in any growth capital that we're putting in. And when it comes to cinemas, we want higher than that, and we want a much shorter payback on that. So I think when you're looking through, there's more maintenance CapEx and what you're saying because we have had to, as Alan has said and I've said we have been at a stage where we had to go back in there. We've had -- we've divested hotels, which reduced our earnings, but we offset that through the hotel expansion strategy. And we are really clear that we don't want to spend a dollar unless we're going to make money on it. We just had the unfortunate phase of -- we did that for a long time, and it did benefit the company and benefit earnings and benefit shareholders, but you can't hold a whole lot of assets for a long time and not spend on them and not expect something to catch up at a point in time. And that's really a lot of what we've been doing in the last few years. And what we're saying now is we feel like we've gotten to a stage where we can pivot to more growth capital and hotels and less on substantial maintenance CapEx with incremental growth CapEx in there. I don't think I'm explaining all of your question because it's broader, but as I said, I'd welcome a meeting to actually take you through it. So we can do a bit better look through of what the past was, what the last 5 years has been and what the future looks like.

Yes, that would be helpful because I think that the last year, you spent $160-odd million of CapEx, and you said on the earnings call, $35 million of that was maintenance. A large component is going into growth. And I think in 2023, you said that...

$35 million is maintenance, which is routine. We still have maintenance, which is if we're putting a -- if we're taking an old seat out and we're putting a new seat in, we allocate part of that to growth because it's a new better seat, but we still have to replace the old seat. So I think maybe we can apply a bit more breakdown on what we are meaning by maintenance versus growth.

It's a pretty great line, but that's fine. And then the second question -- am I asking all the questions per -- anyway, I'll ask the question for the reelection of Mr. Rydge, just it seems to be, in my view, that EVT is chronically undervalued by the share market. 10 years ago, share price was around about $11. Today, it's a bit below. $11, that's a very long time frame for anyone. And what you tell investors is that, yes, you've got a conglomerate and you've got 3 different complex divisions. One of those divisions, you own a lot of property, $2.3 billion is what you say in your accounts. Today, the market cap of EVT is $1.8 billion, just to use round numbers. You've got about $300 million of net debt. So your enterprise value is $2.1 billion. So there's almost a 10% difference between your enterprise value today and what you say the market value of your assets is worth, but what's not included in that asset backing is presumably the cinema division, which is pretty much all leaseholds but does deliver profits. You also own and operate your hotels. There are lots of rooms that you manage. So that's also not reflected in the market value of those assets. And I think the market value probably is fair because you've sold a lot of assets at or above the valuations that you carry, which is great. But for whatever reason, the market continues to ascribe a negative value to the operations of this business, the hotels, cinemas. So just given we are all minority shareholders in EVT relative to yourself, Mr. Rydge, given you control this through your shareholding in Carlton. I appreciate -- you're a very wealthy man, I think, over $1 billion. So you can certainly be patient with your shareholding and just wait for the results to get delivered. But I was just hoping given we are minority shareholders, and you control this, to get your thoughts on what does seem to be a structural undervaluation? It's been 10 years now, the market is flat. I think there's been wording in some of the recent accounts that you're looking to change the structure and deliver that shareholders to -- the value to shareholders, but I was just hoping to get your thoughts is your approach, the Gerry Harvey of the world, another billionaire that says, if you don't like it, b***** off and sell your shares. Or does it actually matter to you that the shares have done nothing over 11 years? And if so, what steps are you taking to finally correct that?

Yes. So perhaps the first question would be for Alan to comment on whether he is aligned with shareholders on where the share prices are and whether there's frustration about that?

He is certainly aligned, I know that. But what -- does it matter to Alan that the share...

Does it matter to you where the share price is?

And if so, what steps are you taking to you correct that...

To the degree that it gets lower, I've been purchasing shares where the opportunity presents itself. I am represented personally on the register. And I'm also represented through a public entity and through other interests. And all of those interests are aligned in seeing a higher share price to facilitate their endeavors in their own area. I also am aligned to income. And I believe that once the businesses of this company reach the point where we see significant growth again in dividends. That also is going to support the share price, which will then represent not just the underlying assets of the company, which is pretty much the picture now, but will also represent the earnings and potential growth in earnings that we all hope to get.

And Charlie, there was a sort of sum of the parts analysis in your question, which, yes, that's what the share price implies. It implies very little value on those operating businesses, which is frustrating, but there's short-term reasons for that.

There is. And it's hard to keep hearing because we're sick of hearing it, too. The cinemas division is down about $70 million EBITDA. We've gone from pre-COVID, a supply of about 85 films to 64 because the studios were shut down, and they need to rebuild and get product back up. And so if you look at that -- our peer group just in cinemas worldwide, of course, we're tracking ahead of them, but their share prices have followed the same way because the key thing they sell, they haven't been able to sell. But what we can see is we see it as a pathway to recovery, and that's a big chunk of earnings. That is -- it's a big chunk of earnings, and it's all down to fewer films. That's what we've lost, that's the frustration. It's like when is it going to recover. As we've said, we see a pathway to FY '26 and we have good relationships with the studios to see that. Their business is struggling also. They want to recover those earnings. But that has been the way because if you look at the last 10 years, you should probably break it down to probably a few years COVID and then coming out of COVID, and we are in very different environments at the beginning of that 10 years and at the end. And our job is to create plans and strategies that are able to deliver stronger returns in a new world. And that's exactly what we're doing. That's what fewer, better means in cinemas. That's what our yield strategies are doing. That's why we're pivoting into hotels. That's why we've expanded our brand strategy. And I think I've alluded pretty clearly that we've got 2 sleeping giants but great assets in 525 and 458. And our team have been spending the last 3 years, securing DAs and plans to enhance the value of those properties from what they are today for shareholders. So when the time is right to make a decision on those, we unlock a great deal of value for shareholders.

And we've got some questions online, which I'm...

Sorry, can I just ask, I think that's per item, is that right? And just to follow up, you get asked every earnings call, second question for this item. Are there any actual different measures that you're taking to unlock that value? Or is it just a continuation? You could split it off into sort of an opco propco type entity or -- and looking at your peers Intercon and Marriott, they're all trading at record high, so I'm not sure about the peer comparison, but are you doing anything different to unlock that property value, was my question Mr. Chair. Or is it just a continuation of...