ALS Limited (ALQ) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2021 Annual General Meeting for ALS Limited. My name is Bruce Phillips, and I'm your Chairman today. As you're aware, due to COVID-19 restrictions on travel and public gatherings, the meeting today will be held as a virtual meeting. I welcome those shareholders and guests participating and using the Lumi online platform through a computer or mobile device. This allows shareholders, proxies and guests to attend the meeting virtually. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes. Written questions can be submitted at any time. [Operator Instructions] Please note that while you can submit written questions from now, I will not address them until a relevant time in the meeting. Please also note that your questions may be moderated, or if we receive more questions on 1 topic, they will be amalgamated together. For those shareholders who wish to ask a verbal question, an audio questions line is available during the meeting. [Operator Instructions] Finally, due to time constraints, we may run out of time to answer all of your questions. In the unlikely event that happens, we will answer them in due course via e-mail and/or posting responses on our website. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you are eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with your voting options. To cast your vote, simply select one of those options. There is no need to hit a Submit or Enter button as the vote is automatically recorded. You do, however, have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The polling icon will soon appear. Please submit your votes in at any time. I'll give you a warning before I move to close voting. Ladies and gentlemen, I am advised that a quorum of members is present. I therefore declare the meeting legally constituted and open. Before proceeding with the formalities, I'd like to introduce participants joining the meeting today. Firstly, the directors of your company joining the meeting include Mr. Siddhartha Kadia, who is an Independent Nonexecutive Director, a member of the Sustainability and Innovation Committee, the People Committee and the Nominations Committee. Next, we have Mr. Tonianne Dwyer, also an Independent Nonexecutive Director. Tonianne is Chair of our People Committee and a member of the Sustainability and Innovation Committee and Nominations Committee. Next is Mr. Charlie Sartain, also an Independent Nonexecutive Director. Charlie is Chair of our Sustainability and Innovation Committee. He is also a member of the Audit and Risk Committee and the Nominations Committee. Next in line is Mr. John Mulcahy, also Independent Nonexecutive Director, a member of the People Committee and the Audit and Risk Committee and the Nominations Committee. Then we have Ms. Leslie Desjardins, is also our last Independent Nonexecutive Director, Chair of the Audit and Risk Committee and a member of the Nominations Committee. Also participating in the ALS Houston office is Mr. Raj Naran, our Chief Executive Officer and Managing Director; and then we have Mr. Luis Damasceno, who is our Chief Financial Officer. I am chairing the meeting from the ALS boardroom in Brisbane. And with me is Mr. Michael Pearson, our Group General Counsel and Company Secretary. Our Head of Investor Relations, Mr. Simon Starr, will moderate questions during this meeting. We also welcome the company's auditor from Ernst & Young, Mr. Brad Tozer; and Mr. Gary Goldman from our legal advisory firm, MinterEllison, who are both attending online today as well. Ladies and gentlemen, as the Notice of Meeting has been sent to all shareholders, I will take it as a read. I'd now like to explain the format of today's meeting for you. Firstly, we'll have my Chairman's address, followed by a presentation by the CEO, Mr. Raj Naran. We'll then proceed to consider the formal resolutions and the financial statements and reports, as outlined in the Notice of Meeting. Firstly, to my Chairman's address. Ladies and gentlemen, the last year has been a very challenging one for every global citizen. People have lost family and friends, many have suffered serious illness, lost their livelihoods, and for some, much of their life savings. On behalf of the Board and our shareholders, I wish all those affected by the pandemic a healthy, safe and speedy recovery. During the pandemic, ALS' primary focus has been on the safety and health of our employees and our community stakeholders. Our laboratories were designated as essential services in most parts of the world, reflecting the importance of ALS to global communities. Our testing of COVID-19 in wastewater provided one of the only tools available for governments to proactively search for outbreaks. Our COVID surface test kits were deployed in Portugal and rolled out to many jurisdictions around the world to assist in keeping people safe. Needless to say, for me, it's an honor to chair a company that has risen to the challenges of an extraordinary and often dangerous external environment, to deliver an excellent outcome for our shareholders and the communities in which ALS operates. The strong financial '21 performance demonstrates the resiliency of the group. With respect to the FY -- sorry, with respect to the company's FY '21 results, revenue from continuing operations declined by 5% to $1.76 billion, although it was only down 0.1% on a constant currency basis. Underlying net profit after tax from continuing operations was down 1.5% to $186 million. The FY '21 results reflect the resiliency of the group's diverse portfolio of businesses, their widespread geographies and the benefit of swift actions taken early in the pandemic. We emerged from FY '21 with a strong balance sheet and well positioned to capitalize on growth opportunities as the global economy continues to recover. Advancing strategic objectives next is in line with despite the pandemic, we were able to further progress our key strategic objectives. We expanded the food and pharmaceutical network of our Life Sciences division with the acquisition of the U.S.A. and Brazil-based company, Investiga. We started expanding our global leading Geochemistry business to meet the growing client demand. We progressed our drive for margin improvements through efficiency gains and automation. We invested in global first-tier processes, systems and analytical capabilities. And we committed capital to reduce our carbon footprint. And as we've announced today this morning, we have acquired a 49% stake in NUVISAN, a pharmaceutical company based in Europe. This is a highly strategic acquisition for us as it grows our presence in the high-margin pharmaceutical market and expands our geographic reach of our pharmaceutical business. Raj will provide more detail about NUVISAN in his address to you shortly. Capital management also remained a major focus for the Board during the FY '21. Our continued approach is to maintain a strong balance sheet, to invest in our facilities and equipment, to fund growth by acquisition and greenfield investments, to pay sustainable dividends, and thereafter return any excess capital to shareholders. The strong FY '21 performance resulted in us finishing the year in a very good financial position. We reduced debt by $186 million and refinanced short-term bank facilities and U.S. private placement debt. This saw the group close FY '21 with a leverage ratio of 1.6x, down from 2.1x compared to the previous year, which is the lowest level in our recent history. The strength of the balance sheet and performance of the business, particularly during the second half of the year, gave the Board the confidence to declare a final dividend of $0.146 per share, partly franked to 70%. Added to the half year dividend of $0.085 per share, this represents a total annual dividend of $0.231 per share, a 31.3% increase over FY '20. Ladies and gentlemen, sustainability is core to our business. And last month, we published our sustainability report, which sets out our ESG vision and our FY '21 achievements. Our vision is focused on our impact on the environment and society as well as upholding the highest standards of governance. We've also added a fourth pillar, which is people, aligning our core values of people development and safety as a priority. People are the core of our business, and these values have never been more important than in the current global environment. As part of our continually evolving plan for a sustainable future, we launched a climate change strategic plan during the year. While the group's overall carbon footprint is relatively small at an estimated 88,000 tons of CO2 Scope 1 and Scope 2 emissions per annum, we have adopted a goal of delivering a 40% reduction in carbon intensity for these emissions by 2030. We will achieve this by improving efficiency, focusing on sustainable purchasing and investing in renewable energy to power our operations. We developed this strategic plan after consulting with our people across our global operations to ensure we are supporting communities in which we operate. The group will also voluntarily repay our COVID-related government subsidies that were received in all the [ different repayments ] back where we received them in all jurisdictions where repayment mechanisms exist. This includes $20.5 million in Canada and $3 million received under the Australian JobKeeper program. We saw this as the right course of action given our improved performance in the second half of FY '21 and as it demonstrates our support for the communities in which we operate. Turning now to remuneration. The Board strives to deliver a balanced and measured set of remuneration outcomes that are aligned with the culture, the strategy and performance of the business and the contribution, of course, of our executives. It is important that the remuneration framework is a reflection of the conditions and challenges facing the group at any particular time. During FY '21, the Board's overarching philosophy was that our global workforce needed to be incentivized and rewarded if they delivered for stakeholders during what was a very dangerous time for their personal health and that of their families. In addition, we needed to recognize and balance the fact that many of our stakeholders were also suffering financial and health stresses during the year. In the end, the Board was delighted that our workforce delivered a very good financial outcome for shareholders, and we believe an appropriate balance has been achieved in rewarding them. Some of the key principles that management and the Board adhered to include: firstly, ensuring that all government subsidies were refunded and excluded from calculating remuneration outcomes; secondly, by instigating a fixed salary freeze, including for directors, which has now been in effect since 2019; we also reduced the STI potential [ payments ] at target by quantum of 25%; we set a minimum underlying net profit after tax gateway for any short-term incentive payment to be awarded; and we ensured that any increase in STI payments was in line with the percentage increase in dividends to shareholders, which both approximated to 30%. After applying these principles to the STI scorecards, awards to key management personnel ranged from 30% to 88% of the maximum opportunity available. The sustained strong performance of the business over the past 3 years will also result in the long-term incentive plan vesting at a portion of 97% of the maximum potential. This reflects the full achievement of performance hurdles for absolute earnings per share growth, absolute return on capital employed and the relative EBITDA margin versus peers, but also a partial achievement of the relative total shareholder return targets. Comparing all of these remuneration outcomes to the shareholder experience for the year, the settings helped deliver a 74.1% increase in share price, albeit that was off a low base, and a 31.3% increase in the dividend for the year. Following remuneration benchmarking with external advisers and in consultation with our major shareholders, the Board has proposed a package of changes to the executive remuneration framework for FY '22. These changes include the requirement for executives to acquire a minimum holding in ALS shares as well as some adjustments to the executive STI and LTI framework and quantums. A transparent and detailed description of these changes is outlined in the 2021 annual report. Looking forward, we have growing confidence that the strength and the resiliency of the group will continue to deliver acceptable financial returns through the pandemic. Our diverse business model, a strong balance sheet and a talented management team have demonstrated we are also able to capture growth opportunities as global economic conditions improve. In terms of financial guidance, today, we are returning to our tradition of providing first half guidance at the Annual General Meeting. On the basis of no significant deterioration in trading conditions, and I stress that's an important point, we expect to deliver underlying net profit after tax of between $115 million and $125 million in the first half of FY '22 compared to $80.6 million in the prior corresponding period, an increase of 49% of the range's midpoint. Raj will provide more commentary regarding this guidance and the business outlook in his presentation. Finally, ladies and gentlemen, I wish to say thank you to my Board colleagues for their guidance and support during what was a very busy year. I'm sure you will also join with me in thanking the management team and indeed all of the talented and dedicated people across our business for their hard work and dedication during unprecedented times. Most importantly, I wish to thank you, our shareholders, for your continued loyalty and support. I'll now hand over to Raj, who will provide further detail on the operational performance and strategy of the group as well as more detail on the outlook for the first half of FY '22. Thank you, Raj. I now hand over to you.

Thank you, Mr. Chairman. Good morning. I would like to reiterate Bruce's welcome to our shareholders, investors and staff. I appreciate you joining us in this format today, and I'm pleased to have the opportunity to update you on the performance of the business and look to the future. Our people are the most important resource, and their safety has been our key priority throughout the pandemic. We swiftly implemented protective measures, including physical distancing and separation screens in our laboratories as well as additional sanitation and disinfecting procedures and the provision of PPE for all our employees. This allowed us to keep our employees safe while providing an essential service to our clients. Despite the strong COVID controls in place across our business, our overall safety performance this year was mixed. We saw a total recordable injury frequency rate and lost time injury rate increase to 1.98 and 1.01, respectively. Any increase in these measures is a disappointing outcome. However, we are still seeing a positive long-term trend with our total recordable injury frequency rate falling by 26% compared to our fiscal year '18 baseline. As Bruce outlined, our impressive fiscal year '21 financial performance was due to the swift action to prepare the group to withstand the pandemic. This included leveraging our unique hub-and-spoke model to align our cost base to client demand, which also allowed us to capture growth opportunities as the global economy recovers. Our balance sheet was further strengthened following the refinancing of our short-term bank facilities and our long-term U.S. private placement debt, resulting in our weighted average debt maturity profile extending from 4.9 years to 6.6 years at the end of fiscal year '21. This places us in a very strong position to continue to progress our strategic objectives in the years ahead. I will now speak in more detail about our fiscal year '21 performance. This was a very strong result given the impact of the ongoing global pandemic. We were most impacted in the first half of the financial year with the strong recovery in the second half as the global economy improved. Despite the pandemic, our revenue for the year was near flat on a constant currency basis, and we delivered an EBITDA margin expansion across all 3 major business divisions on a full year basis. Looking at each division individually. Life Sciences delivered total revenue of $930 million, down 3% compared to the prior year. The division achieved margin expansion of 72 basis points compared to the previous year, an extremely impressive performance in the circumstances. And this was driven by efficiency gains and the flexibility of our business model. We saw a 3.9% increase in the acquisition growth driven by strong performance from recent acquisitions, ARJ and Aquimisa, with an initial contribution from Investiga, which was acquired late in the financial year. I will speak in more detail about our acquisition strategy and performance shortly. Our Commodities division made a strong recovery in the second half of the year as mining activity increased following a strengthening in commodity prices. Geochemistry recorded a 19% increase in sample volumes for the year with a particularly strong fourth quarter increase of 27% compared to the prior corresponding period. All regions experienced a recovery as both major miners and juniors who benefited from a strong equity raising market increased their volumes. The Industrial division had a difficult year, delivering an 18% revenue decrease compared to last year. This is primarily driven by the Asset Care business as our end markets continued to be significantly impacted by the pandemic with clients delaying their maintenance spend and state border closures within Australia creating mobility challenges for our people. Our acquisition strategy is to identify acquisitions in our key markets to build our geographic footprint and expand our service offering, particularly in the high-margin food and pharmaceutical markets. We remain focused on fully integrating this acquired business as quickly as possible, and the success of this strategy is demonstrated by the strong performance of our recent acquisitions. Since fiscal year '18, our acquisitions have made an excellent contribution to the group, delivering $112 million in revenue at an accretive EBIT margin of 17.3% in fiscal year '21 alone. Our most recent acquisition, Investiga, aligns with our strategy of expanding our pharmaceutical offering in Latin America and the U.S.A. Today, we are pleased to announce the acquisition of a 49% stake in NUVISAN, a European testing pharmaceutical business. This is a highly strategic acquisition for us as this significantly increases our European presence, and it expands our service offering in the high-margin research and development pharmaceutical testing market. As I have discussed, we have an excellent track record of integrating acquired companies into our existing Life Sciences network. We look forward to having NUVISAN as part of the ALS team. As Bruce said, we are pleased to provide guidance for the first half of fiscal year '22 of an underlying NPAT between $115 million and $125 million, which at the midpoint, represents an increase of 49% compared to the prior corresponding period. This reflects the strong start to fiscal year '22 that we are seeing across our Life Sciences and Commodity divisions as volumes continue to improve and global activity increases. Life Sciences has seen volume growth across all geographies, with Latin America, in particular, continuing to improve after being most impacted by the pandemic. We continue to invest in programs to improve efficiencies and drive margin accretion where we expect to drive an increase of approximately 30 basis points for fiscal year '22. Commodities continues to benefit from the positive cycle with Geochemistry sample volume growth of 62% for the first quarter of fiscal year '22 compared to the prior corresponding period. It is worth noting that the comparable period was heavily impacted by the pandemic, but sample volume growth of 25% compared to the first quarter of fiscal year '20 still demonstrates a strong increase in activity. We are continuing our investment in capacity, which we expect to grow by approximately 15% by the end of fiscal year '22 in Geochemistry. In the Industrial division, the trading environment for Asset Care remains similar to last year with limited maintenance budgets and project scopes while the Tribology business is seeing a modest improvement in performance. Our guidance is presented on a pro forma basis and excludes the announced acquisition of a 49% stake in NUVISAN given that completion is still subject to local regulatory approval. The long-term prospects for the group remain strong, driven by structural drivers and our continued focus on efficiency and expanding our geographic footprint and service offering. While the risk of new economic shutdowns remain while the pandemic persists, our diversified and flexible business model leaves us well placed to face any new challenges. In summary, our fiscal year '21 performance was very strong given the circumstances as the management team acted quickly to position the group to withstand the pandemic. We achieved this due to our ongoing focus on the safety of our people and leveraging our flexible business model. And we are now able to capitalize on growth opportunities that we are currently seeing. I would like to thank our hardworking and dedicated team of employees all around the world for their commitment, resilience and dedication during these challenging times. I would also like to sincerely thank the Chairman and the Board of Directors for their guidance and counsel and my family for their continued support. Finally, thank you to you, our shareholders, for your ongoing support. We remain focused on our goals of ensuring no harm to our people, supporting the communities in which we operate and delivering value to our shareholders. Thank you. I will now turn the meeting back to our Chairman to conduct the formalities of the meeting.

Thank you, Raj. Ladies and gentlemen, yes, we now move to the formal business of the meeting. As I mentioned earlier, voting is open on each of the resolutions. I remind you that you do have the ability to change your vote up until the time I declare voting closed. Proxies have been received from 483 shareholders, representing over 320 million ordinary shares, being 66% of ALS' issued share capital. I think that's close to a record for the company. So I'm delighted with the engagement of shareholders there. As we proceed through each resolution though, the proxy votes for that resolution will be shown on your screen. I propose to vote all available open proxies given to the Chairman of the meeting in favor of all resolutions put to the meeting. Results of the polls will be available after the close of the meeting and will be announced on the ASX and posted on the company's website. The first resolution is for voting of the election of directors. In accordance with the company's constitution and ASX Listing Rules, an election of directors is required each year. Charlie Sartain and myself are seeking reelection as nonexecutive directors at this meeting. Normally, Charlie and I would speak to our candidacy at the AGM. That will not be undertaken this year, but we will return to normal practice when we return to face-to-face AGMs. However, Charlie and my respective profiles have been outlined to shareholders in the Notice of Meeting and in the company's annual report. First, to my reelection, I would like to call upon Mr. John Mulcahy to take the Chair for this resolution.

Thank you, Bruce. Bruce was elected to the Board as a nonexecutive director in 2015. He retires in accordance with the company's constitution, and being eligible, offers himself for reelection. Bruce is currently Chair of the Board, a member of the People Committee and Chair of the Nominations Committee. All of the Board strongly supports Bruce's reelection. Details of proxies received for the resolution to reelect Bruce Phillips are up on the screen. Of the proxies received, 96.3% are for the resolution and 3.7% against. Simon, do we have any questions relating to this resolution?

No questions, Chairman.

Are there any shareholders wishing to ask a question verbally?

Also no questions at this time, Chairman.

As there are no more questions, the resolution on the screen is now put to the meeting. So that resolution is carried. Congratulations, Bruce. I'll now hand back [ to Bruce ].

Thank you, John. And thank you, more particularly, to the shareholders for your confidence. It is appreciated. I'll now move to the resolution regarding the reelection of Mr. Charlie Sartain. Charlie was appointed to the Board as a nonexecutive director also in 2015. He retires in accordance with the company's constitution, and being eligible, offers himself for reelection. Charlie is the Chair of the Sustainability and Innovation Committee and a member of the Audit and Risk Committee and the Nominations Committee. And we, as a Board, strongly support his reelection. Details of the proxies received for the resolution to reelect Charlie are up on the screen. Of those received, 97.4% are for the resolution and 2.6% against. I'm jealous of those numbers, Charlie. Well done. Moderator, are there any questions on this resolution?

Chairman, I have 2 questions relating to resolutions relating to directors. The first question is from shareholders, Mr. [ Paul Fedora ] and Mrs. Shirley [indiscernible]. The question is, what is the minimum shareholding requirement for directors? And are there any conditions?

Yes, that's a pretty simple question to answer. There is a minimum shareholding requirement, equivalent to 1 year's posttax director's fees. And that holding has to be acquired over a period -- a maximum period of 3 years from the date of your appointment. So that's the policy of the company. And Charlie and I certainly meet those requirements.

Chairman, the second question is from the Australian Shareholders' Association. The question is, the ALS corporate governance statement gives us skills list but no indication of whether current Board members possess these skills. Will the company make improvements so that shareholders can clearly see which skills the current Board members have?

We can have a look at that. We've looked at it more from a collective point of view where every year, we look at what the skills requirements are of the Board members for the strategy of the company. And we're talking about the future strategy here, of course. And that changes, so the skills requirements change. And each year, we look at those skills. And if we think there are any gaps or holes in the skills matrics, then we talk about education of the directors, the existing directors. But usually, we also look at the next director to come along that we try and appoint to the Board as filling those holes. But in terms of specific skills of each of the directors, we'll consider that. That's not a bad suggestion. So we'll take it on notice.

No other questions, Mr. Chairman.

Okay. Thank you. Are there any questions to be asked verbally on that, moderator?

No verbal questions, Mr. Chairman.

Okay then. As there are no more questions, thank you. The resolution on the screen is now put to the meeting.

Next, I move to the adoption of the 2021 remuneration report. This resolution will be decided in accordance with Section 250R of the Corporations Act. It should be noted that the vote on this resolution is advisory only and does not bind the directors or the company. The Board aims to set remuneration for all key management personnel at levels which are reasonable and designed to attract and retain appropriately qualified people in what is a competitive global market, not just the Australian employment market. In addition, the aim is to provide both incentive and reward to executives and to align a significant portion of executive reward to growth in shareholder value with a view to both the short and longer terms. The reward structure for the managing director and other key management personnel of the group are outlined in detail in the annual report. But the structure simply encompasses 3 main elements: fixed salary; secondly, a short-term incentive over 1 year, which is largely cash-based, but includes a deferred equity component if outperformance or stretch targets are reached; and thirdly, a long-term incentive over 3 years, which is predominantly equity-based. The directors believe the approach taken by the Board in relation to this at-risk remuneration and the outcomes for executives in the 2021 financial year are fair and appropriate and ensure there is a correlation to company performance and shareholder outcomes, especially given the unprecedented challenges faced during the year. Details of proxies received for this resolution are up on the screen now. Of those proxies received, 98.2% for the resolution and 1.8% against. Moderator, are there any questions on this resolution?

Yes, 1 question, Chairman. This question comes from shareholder, [ Lorraine Wheeler ]. The question is, why does ALS continue to overpay key management personnel? Will the payment level for KMPs reduce in the future?

Okay. Well, thank you, [ Lorraine ], for your question. I guess we'll agree to disagree on this one. We don't think our key management personnel are overpaid. We look at, through our People Committee, key management remuneration -- sorry, key management personnel remuneration every year. And the People Committee commissions external advisers to give us benchmarking data. And that benchmarking data relates to similar salary positions in the ASX 100, where ALS resides or companies of similar market capitalization to ALS in the top 100 companies but also, of course, against our global tick peers. And all of that benchmark data is then driven into the position descriptions, but we have to make sure they correlate well. And we try and reward our executives at around the median level. We don't pay them in the top quartile or the bottom quartile. We like to be around about the median level and give them incentive to achieve for STI and LTI plans. So [ Lorraine ], I obviously respect your right to a view here. And at ALS, we're very democratic. We give people airtime that don't necessarily agree with our position. But I think looking at the voting there, there are 98% of our shareholders that do agree or think that it's being reasonable. So I hope it goes some way to explaining your question. Sorry, just there is a second part to your question. Will it reduce -- will the pay reduce in the future? Well, the overall pay will reduce if the management team doesn't perform. It's as simple as that. Under the incentive schemes, they won't get STI or LTI if there's no performance. So that's a simple part of the answer to your question. But by the same token, if they outperform beyond where they are now, it will increase. And that's, I think, in the best interest of shareholders as well. I hope that answers your question. If not, please get in touch with us. Chair of our People Committee, Tonianne Dwyer, would be too happy to talk to you, as would I. Okay. Simon, the next question, please?

No further question, Mr. Chairman.

Are there any verbal questions at all?

No verbal questions, Mr. Chairman.

Okay. Well, thank you very much. If there are no more questions on the resolution, let's now -- the resolution on the screen is now put to the meeting.

Next item of business is approval for grant of performance rights to the Managing Director and CEO, Mr. Raj Naran, under the terms of the company's long-term incentive plan. A summary of the LTI plan and the calculation of Raj's proposed grant were set out in the explanatory notes of the Notice of this Meeting. As the Managing Director and CEO of the company, the issue of the performance rights to Raj requires approval by an ordinary resolution of shareholders. Approval is now sought to make a grant of performance rights to Raj in line with the company's LTI plan rules. The shares will vest in July 2024, but only to the extent the performance hurdles are met. Raj will receive the performance rights and be entitled to the issue of ordinary shares at no cost to him if those performance hurdles are met. No loans will be granted in relation to his participation in the plan. The nonexecutive directors strongly support the issue of these performance rights. Details of the proxies received for the resolution are now up on the screen. Of those received, 97.8% are for the resolution and 2.2% against. Moderator, are there any questions on this resolution?

No questions, Mr. Chairman.

Okay. Including verbal questions?

No verbal questions either, Chairman.

Thank you very much. As there are no more questions then -- or no questions, the resolution on the screen is put to the meeting. Finally, we have resolution 5, the -- and that item of business is the approval of prospective termination payments. Reasons for seeking this resolution are detailed in the Notice of Meeting on Pages 7 and 8. Essentially, the company is seeking advanced shareholder approval for the purposes of Section 200B and 200E of the Corporations Act, so as to obtain certainly about its ability to maintain its existing remuneration arrangements and satisfy contractual and legal obligations in relation to certain STI and LTI payments. ALS shareholders approved a similar resolution in 2018. And whilst there's no legal requirement to refresh this approval, the directors just believe it's good governance to allow shareholders periodically to review this situation. Details of the proxies received for the resolution are now up on the screen. Of those received, 99.4% are for the resolution and 0.6% against. Moderator, are there any questions on this resolution, please?

No written or verbal questions, Mr. Chairman.

Okay, thank you, Simon. As there are no questions, the resolution on screen is now put to the meeting. The final item of business is consideration of the financial statements and reports. The company's financial statements for the year ended 31st of March 2021, including the directors' report and the report of the auditor, were provided to shareholders in the 2021 annual report. Shareholders are now provided with the opportunity to ask questions regarding the financial statements and reports, the operations and management of the company or questions to the auditor in respect of the auditor report. Mr. Brad Tozer, representing the company's external auditor, EY, is available today to respond to any questions in relation to the conduct of the audit and the preparation and content of the auditor's report. Moderator, do we have any questions?

Yes, Chairman. We have a question from shareholders, Mr. [ Paul Fedora ] and Mrs. [ Shirley ] [indiscernible]. The question is, why did net tangible assets per share decline from $0.5595 in FY '20 to $0.48 in FY '21? What is being done to increase this figure? And is net tangible assets per share considered when remuneration is calculated?

Look, I'll call on our CFO, Mr. Luis Damasceno, to answer, in particular, the first part of that question. So Luis, can you comment on that first, please?

Yes, Mr. Chairman. Thank you for your question. Just to be clear, our net tangible assets per share has increased from negative $0.56 per share in FY '20 to negative $0.48 per share in FY '21. These negative values of net tangible assets are due to the values recognized for acquired intangible assets such as goodwill and customer relationships. Now to the main drivers for the slight improvement in the net tangible assets, the main drivers were the positive effects of this translation impacts the group experienced on its no AUD denominated net debt position as well the lower proportion of stock [indiscernible] profit paid out as cash dividends in FY '21. And this was as a -- through the capital management response to the onset of the pandemic. I want to highlight that we do not see the net tangible assets per share as a key measure of our financial performance as we are capital-light business. We believe that through other metrics, financial metrics such as underlying debts, margin and return on capital employed better reflect the nature of our operations. And these metrics, along with the no financial KPIs such as safety of our people, are the key metrics we use to incentivize our management team.

Okay. Thank you, Luis. I'd just like to add a response to the second part of the question, whether or not NTA is considered when remuneration is calculated. The answer to that is no, not really, again, apart from overall financial performance is considered there. That we -- as Luis outlined, we think that there are other drivers that are more important. And in particular, I draw your attention to the long-term incentive plan, where we measure our performance over 3 years on the measures of absolute earnings per share and absolute return on capital employed, but then our relative performance on EBITDA margin and our total shareholder returns. So we see those as the most important drivers of financial performance and the shareholder experience. So hopefully, that answers your question. But again, we're very happy to answer any follow-up questions either now or at some time in the future, and you can get in touch with our Investor Relations manager, Simon Starr, and he can direct you to the right person in the organization to -- for any follow-up. So thank you, moderator. Are there any other questions?

Yes, Chairman. The next question comes from shareholder, Richard Needham. The question is, what percentage of the Commodities division does the Coal division represent?

Interesting question. Look, it's not a lot. The Coal division represents about 3% of our underlying corporate EBIT and about 5% of the Commodities division underlying EBIT. Interestingly, we did see a 9.5% decline in our organic revenue from the Coal division in the last financial year. And that was due to the impact of the decline in the coal price and the restriction trade through the viable trade [ issues ] in China. Hopefully, that answers your question. Simon, any others?

Yes. The next question, Chairman, comes from shareholder, Andrew Craig. The question is, have the problems resulting in falsified records of coal analysis been properly resolved as they may affect ALS' reputation?

Yes, Andrew, this is something, obviously, the Board continues to monitor. We did finish the independent investigation well over a year ago now. And subsequently, we've put all of the appropriate checks and balances and automation of the process in place to ensure that this can't happen again. And at the time of that independent investigation done by McGrathNicol, we also asked them to look at all the other divisions in the organization. And the Board got a report back from them for a clean bill of health. And the main reason behind that is obviously the automation of our systems. Coal wasn't it. It was a lot of manual handling. Whereas most of our -- almost all of our other systems are automatically generating the results. So we've gone ahead and automated their results for the cause of the analysis and results distribution for the Coal division now. And we -- just recently, we had a report back from McGrathNicol because we asked them to go back in and have a look, now that we have put all of these checks and balances in place in the Coal division, what would their view be of the veracity of our systems. And they gave us an absolute clean bill of health there. So we're quite happy that we've instigated the right measures to make sure this can never ever happen again. In terms of where we're at now, we -- at the end of the investigation over a year ago, we handed our results to the New South Wales Police, as we are required to by law. We understand that they conducted an investigation. We understand that ASIC is undertaking an investigation. We have cooperated fully with them, provided all the information that they require, they want. And so we can't comment any further than that because it's still under legal investigation. So I've given you hopefully a detailed response on that. We -- we're very conscious of the fact that, that's still an historical scar in the company, and we're going to make sure it never happens again. Any other questions we have, Simon?

Yes, Chairman. I have a question here from Mrs. [ Sally Mellick ]. The question is, congratulations on a sound year and solid start to this financial year. Does the Board view a strong research program important to the growth of the company? Is research largely focused on quality improvement? Or does it include new developments?

Yes, look, I'll ask Raj Naran as the CEO to address that question because it's more of his line than mine. Raj, go ahead.

All right. Thank you, Mr. Chairman. And Simon, thank you for the question. From a company perspective, we conduct research as it relates to each one of our independent businesses. And really, what we're looking at is to expand our service offerings to better serve the community or the client. So really, that research is focused for us in terms of offering additional service offerings, but it has to be in line with the businesses that we currently operate.

Okay. Then [ Sally ], if you want to have, again, a follow-up to that, please contact Simon Starr, our Investor Relations Manager. Moderator, any other questions?

The final question, Mr. Chairman, it's actually a comment rather than a question, and this comes from shareholder, [ Diane Kanzel ]. The question is, thank you for running the company so well during these very difficult times and for giving us such a handsome dividend while so many companies are not.

Well, thank you, [ Diane ]. I hope that's not a Dorothy Dixer from any of our employees. But look, it's fantastic to get feedback like this. At AGMs, generally, people are unsatisfied with performance, and they're mostly quite right, their anger at those situations. So your comment is greatly appreciated. But all of the credit should go to the management team here. They are the ones that are on the front line. They are the ones that have put their safety at risk within bounds, of course. And we, as a Board of Directors, are very, very proud of them. And I think you, as shareholders, should be as well. So thank you, [ Diane ]. More strength to you. All right. Simon, you said that was the final question. No others come in?

No other verbal questions either, Mr. Chairman.

Thank you very much. And ladies and gentlemen, as there are no more questions, that concludes our discussion on the items of business. In 1 minute, I will close the voting system. Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. [Voting]

Okay. That is looking close to the 60 seconds. So thank you, ladies and gentlemen. Voting is now closed. There is no further business to be conducted. Results of the poll, as I said earlier, will be announced to the ASX as soon as possible after this meeting and will also be posted on the company's website. I now declare the meeting closed. And in doing so, thank you for your participation today. On behalf of the Board and management team, I send our best wishes for you and your families for a safe and healthy future. Thank you.