ALS Limited (ALQ) Earnings Call Transcript & Summary

All right. Good morning, ladies and gentlemen, and welcome to the 2022 Annual General Meeting for ALS Limited. My name is Bruce Phillips, and I'm your Chairman. Due to the logistical difficulties our shareholders are still experiencing in attending the AGM, the meeting today is being held in person as well as online via the Lumi platform. For those of you present in the room, we have a couple of housekeeping matters. Firstly, please ensure all your mobile devices are now turned into silent mode. And secondly, in the unlikely event of an emergency, please exit the building via the stairs at the rear of the room whilst at all times following instructions of the hotel staff. All shareholders and proxy holders will have the ability to ask questions and submit votes, and I will provide more detail on that in a moment. I'm advised, ladies and gentlemen, that a quorum of members is present here today. I therefore declare the meeting legally constituted and open. Before proceeding with formalities, I'd like to introduce participants joining the meeting today. Firstly, the directors. Mr. Siddhartha Kadia is joining us via video conference from the U.S.A. today. He is an Independent Non-Executive Director and a member of the Sustainability and Innovation Committee, the People Committee and the Nominations Committee. Here in Brisbane and starting on my immediate left is Ms. Tonianne Dwyer, Who is an Independent Nonexecutive Director. She is Chair of the People Committee and a member of the Sustainability and Innovation Committee and the Nominations Committee. Next is Mr. Charlie Sartain, who's also an Independent Nonexecutive Director. He's Chair of that Sustainability and Innovation Committee and is a member of the Audit and Risk and Nominations Committees. Then we have Mr. John Mulcachy, also Independent Non-Executive Director and a member of the People Committee, the Audit and Risk Committee and the Noms Committee. And at the end of the table on my left is Ms. Leslie Desjardins who is an Independent Non-Executive Director. Leslie is Chair of our important Audit and Risk Committee and a member of the Nominations Committee. And on my right is, first of all, Mr. Raj Naran. To most of you, he's the Chief Executive Officer and Managing Director; and on his right, Mr. Michael Pearson, our General Counsel and Company Secretary. Also in attendance today is Mr. Luis Damasceno, our Chief Financial Officer. And our Head of Investor Relations, Mr. Cameron Sinclair, is moderating questions that will be submitted virtually during the meeting. We also welcome to -- the company's auditor here today, Mr. Brad Tozer from EY; and Mr. Gary Goldman from our legal advisory firm, MinterEllison. They're both in attendance here today. Thank you. Ladies and gentlemen, as the notice of meeting has been sent to all shareholders, I will take it as read. The format and voting procedure for today's meeting will be as follows: first, we will have my Chairman's address, followed by a presentation by CEO, Mr. Raj Naran. We will then proceed to consider the formal resolutions in the financial statements and reports as outlined in the Notice of Meeting. For those present in the room this morning, I will allow the opportunity for questions prior to consideration of each resolution. For those attending virtually, questions can be submitted at any time. To ask a written question, select the messaging tab at the top of the Lumi platform. Type your question in the box towards the top of the page and press the arrow symbol to send. To ask your question verbally, please pause the broadcast on the Lumi platform and then click on the link under the heading Asking Audio Questions. A new page will open, where you will be prompted to enter your details before being connected. You'll listen to the meeting on this page or waiting to ask your question. Virtual attendees should note that while you can submit questions from now, I will not address them until the relevant time in the meeting, and they will follow any questions that might be received from people attending in person. Please also note that your question may be moderated. And if we receive multiple questions on one topic, they most likely will be amalgamated. Finally, due to time constraints and the unlikely event we do run out of time, your questions will be answered in due course via e-mail or posting responses on our website. Voting today will be conducted by a way of a poll on all items of business. For those present, persons entitled to vote on the poll are shareholders, representatives and attorneys of shareholders and proxy holders who hold blue admission cards. On the reverse side of your blue admission card is your voting paper, which details resolutions 1 to 7 being put to a poll. If you require assistance, members of BoardRoom Registry Services are here today to assist you. Please just raise your hand at any point if you require assistance during the voting process. All voting cards will be collected once the formal business of the meeting has been completed. For our virtual attendees, in order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you're eligible to vote at this meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit the 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. For online attendees, the voting tab will soon appear. Please submit your votes at any time. I'll give you a warning before I move to close voting. Results of the polls will not be available until after the close of the meeting and will be announced on the ASX and posted on the company's website. Now to my Chairman's address. Ladies and gentlemen, the world continues to emerge from their profound impacts of the pandemic over the last few years. Now -- during that time, our primary focus has and always will be the health and safety of our employees and the communities in which we operate. It has been very rewarding for the Board to work with the management team to navigate the business through these extraordinary times and see us emerge from the pandemic in an even stronger position. FY '22 saw our increasingly global enterprise deliver a record year in underlying NPAT. Revenue was up 18% to $2.2 billion. Underlying NPAT and dividends were up 42% to $264 million and $0.328 per share, respectively, and the share price rose 36%. The results reflect the continued improvement of Life Sciences sample volumes and the ongoing strength of volumes and prices achieved in the commodity division, all of which was achieved despite global supply chain disruptions, inflationary headwinds and labor shortages. FY '22 also marked successful completion of our most recent 5-year strategic plan. Despite the challenges and impacts from the pandemic, all targets were met, which highlights the strength and resilience of our business model and the capability of our management team to execute on strategy. A particular note was the delivery of revenue growth -- I do hear a phone. A particular note was the delivery of revenue growth of 73% and underlying EBIT growth of 113%. Today, we announced a refreshed 5-year strategy that again, plans to strong business growth, which is the next step in our evolution of becoming a global leader in the discipline of scientific analysis in pursuit of a better world for all. We've continued the trend of establishing aspirational yet achievable financial targets. Our aspirations are to grow annual revenues by 50% to $3.3 billion, to grow underlying EBIT to $600 million and to maintain a minimum margin of an -- EBIT margin of above 19%. Revenue growth, both organic and through acquisitions, will continue to be driven by our Life Sciences division. The portfolio of mix will rebalance with increasing contribution from Life Sciences and focus of capital and resources on core businesses. Our geochemistry leadership position remains important to the company, and the opportunities from the emergence of digitalization and data that will be captured by our businesses. Our strong cash generation profile will see us maintain a cash conversion of greater than 90%, supporting our growth and shareholder return objectives. Raj Naran will provide further insight into the refreshed strategic plan today in more detail at our Investor Day in September. Our approach to capital management has not changed, either. We continue to target a strong balance sheet with priority for investment in organic growth, accretive acquisition opportunities and dividend payments with any excess capital to be returned to shareholders, predominantly via share buybacks. While our net debt increased by $270 million in FY '22, it was used to fund growth investments in new business acquisitions, such as our 49% stake in Nuvisan and our 100% stake in MinAnalytical. And then overall, we had higher CapEx targeting increased capacity in some of our renewable energy projects. The group closed FY '22 with a leverage ratio of 1.9x, up from 1.6x last year, but well within our target gearing parameters and debt covenant thresholds. During the year, the business successfully placed new long-term U.S. private placement debt totaling $269 million at relatively low fixed interest rates. Funding of this took place last month. The proceeds have been applied to refinance maturing debt facilities, resulting in an increased weighted average debt maturity for the group of 6.9 years. The strength of the balance sheet and performance of the business gave the Board confidence to declare a final dividend of $0.17 per share, partly franked to 30%. Added to the half year dividend of $0.158 per share, this represents a total annual dividend of $0.328, a 42% increase over FY '21 and an overall payout ratio of 60% of FY '22 underlying NPAT. Ladies and gentlemen, sustainability is core to our business. Last month, we published the latest addition of our acclaimed sustainability report, which sets out our ESG vision and FY '22 achievements. Our vision is focused on minimizing any adverse impact on the environment and society from our operations as well as upholding the highest standards of governance. We have added a fourth sustainability pillar to ESG, which is people, aligning with our core values of people development and safety as a priority. People are also at the core of our business, and these values have never been more relevant than in the current global environment. During the year, the group achieved a 15% reduction in carbon intensity, which is a significant step to meeting our long-term emissions reduction target of 40% in carbon intensity for Scope 1 and 2 emissions by 2030. This was achieved through investments in new solar PV systems. We increased the use of our -- of electric and hybrid vehicles across our fleet. We replaced more than 6,600 conventional lights with LEDs, and we purchased greater than 25% of our electricity needs from renewable sources. A commitment to the sustainable future for ALS operations is of paramount importance to all our stakeholders. We acknowledge our responsibility and role in participating in a more sustainable future. And as such, we've committed to be carbon neutral for our operations of Scope 1 and 2 emissions from FY '23 onwards. We're also developing a road map that will see the business achieve net-zero carbon emissions, which will be released later in the financial year. Also, as committed at last year's AGM, the company repaid all government subsidies received during the early stages of the global pandemic, demonstrating one of our key sustainability objectives of supporting the communities in which we operate. Turning now to remuneration. The Board strives to deliver a balanced and measured set of remuneration outcomes that align with the culture, strategy and performance of the business and the contribution, of course, of our global executives. As a result of the record underlying NPAT performance and against financial, strategic and ESG key performance indicators, the FY '22 short-term incentive vesting outcomes for our key executives range from between 90% to 100% of the maximum opportunity, and that would be a record for the company, too. Our performance against financial targets, strong cash and debt management, excellent safety and sustainability outcomes and consistent progress against key nonfinancial strategic objectives drove this deserved outcome. Due to the sustained performance against each of the 4 performance hurdles over the last 3-year period, the 2019 long-term incentive awards vested at 100%. Achievement of this result reflects a balanced and consistently strong performance against absolute earnings per share and return on capital employed measures and relative total shareholder returns and EBITDA margin measures. Looking forward, as a result of the increased scope of the key management personnel roles as the business further moves to globally -- a globally aligned structure, and in recognition of continued market demand for our senior executives in the industry internationally, but most importantly, following external benchmarking across relevant industry and geographic peers. The Board has approved the following changes to our KMP remuneration framework commencing in FY '23. Firstly, for the CEO, there will be no fixed remuneration increase, but there will be an increase in the STI opportunity from 60% to 70%, an increase in the LTI opportunity from 100% to 150%. For other executive KMP, an increase in fixed remuneration ranging from 3% to 15%, an increase in the LTI opportunity from 60% to 110%, but no change to the STI opportunity, which remains 60% of target. So our focus is on at risk remuneration outcomes. The Board believes that these changes align executives with shareholders by rewarding long-term value creation whilst providing market aligned incentives to retain our talented management team. We will continue to review both STI and LTI targets to ensure they remain challenging and are aligned with our strategic objectives. The Nonexecutive Director fees also will be increased by 5% in FY '23, noting that there's been no increase since 2019. As a result of the increased complexity of our global business and associated workload of directors, the Board will be increased in size by one director from of FY '23. In conjunction with appropriate overlapping of Nonexecutive Directors associated with Board's succession plans, we are seeking shareholder approval at this meeting to increase the fee cap from $1.65 million to $1.9 million. The first half FY '23 guidance in terms of today's announcement, we're returning to our tradition of providing first half guidance at the Annual General Meeting. We suspended that during the pandemic. On the basis of no significant deterioration in trading conditions, we expect to deliver underlying NPAT between $157 million and $162 million in the first half of FY '23 as an increase of 20% compared to $127.1 million in the prior corresponding period, albeit that was during the pandemic. Raj will provide more commentary regarding this guidance and the business outlook in his presentation. Finally, folks, I wish to thank my Board for their continued guidance and support during what was really a very busy year. I'm sure that 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 difficult times. But most importantly, I wish to thank you, our shareholders, for your continued loyalty and support, it is appreciated. I'll now hand over to Raj, who will further -- provide further detail on the FY '22 operational performance, more on the outlook for the first half of FY '23 and to expand on the new 5-year strategy for the group. Thank you.

Thank you, Mr. Chairman. Good morning. I would like to reiterate Bruce's welcome to our shareholders, investors and staff. I appreciate your attendance today, both in person and virtually. I'm pleased to have the opportunity to update you on the performance of the business during fiscal year '22 and provide some insight into our new refreshed 5-year strategic plan. The group remains committed to our people's health and safety. At the height of the pandemic and through additional waves of infection, the proactive protective measures implemented helped us protect our people, our clients and our stakeholders, ensuring that we continue to provide an essential service to our clients. While some of the COVID controls have been eased across parts of our business as the community manages the risk of the pandemic, our safety performance continued to improve. Our injury frequency rate of 1.52 puts us in the top quartile of all ASX 100 companies. This is a tremendous result and reflects not only management and the Board's commitment to safety, but also the commitment of our people. As Bruce outlined earlier, fiscal year '22 was a record year for the business in underlying impact and marked the successful completion of our 5-year strategic plan. We achieved industry-leading organic revenue growth, supported by both our Life Sciences and Commodities division. Our focus and commitment on operational efficiencies saw us improve our underlying EBIT margin. In addition, we finished the year with a strong balance sheet and solid liquidity to continue our strategic objectives in the coming years. Looking at each division individually. Life Sciences continued to grow revenue, finishing the year with $1.1 billion, up 24% compared to the prior year. The division again continued to expand margin, achieving an uplift of 68 basis points compared to the previous year. This is an extremely impressive performance, driven by the strong increase in volume, process optimization and automation and efficiency gains on invested capital. We had a large 11.5% increase in acquisition growth driven by strong performance across our recent acquisitions of Investiga and Nuvisan. Our Commodities division continues to be a market leader, posting a significant organic revenue growth of 31% and further margin improvement of 230 basis points. Geochemistry sample volumes increased by 32% and with approximately 15% expansion in capacity completed in fiscal year '22 and a further 5% increase in capacity following the acquisition of MinAnalytical. Organic revenue growth was 42% in the year, and that was supported by volume growth and increase in testing of base metals and price improvements. Sample volume increases were driven by both major and increasingly by junior miners, who accounted for approximately 40% of volumes at the end of the period. The trend in testing for battery-related metals, such as copper, nickel, lithium and cobalt, continued through the year, and we expect this to continue going forward as society progresses its sustainability agenda and the world moves to decarbonization. The Industrial division faced a challenging trading environment due to the temporary COVID-19 impacts, particularly the Asset Care business in Australia with state border closures, which created mobility challenges for our people and with the closure of our business in the U.S.A. The Tribology business performed relatively well, posting organic revenue growth of 7.9% with contribution from all regions. As Bruce said, we are pleased to provide guidance for the first half of fiscal year '23 of an underlying NPAT between $157 million and $162 million. This reflects continued improvement across the business with double-digit total organic revenue growth, supported by higher prices achieved across the portfolio. Current performance continues to be supported by strong sample volume flow in geochemistry, which remains up on the prior period and continued positive momentum from Life Sciences. The business continues to pursue pricing and cost management initiatives to address the current inflationary headwinds. The long-term prospects for the group remains strong, supported by positive structural industry megatrends and our continued focus on efficiency and expanding our geographic footprint and service offerings. While the risk of economic pressure from high inflation, interest rates and market volatility continue to emerge, our diversified and flexible business model has proved successful in managing challenging periods as shown in the early stages of the COVID-19 pandemic. On that note, I would like to now provide more detailed overview of our refreshed 5-year strategic plan that will see the business consolidate our position as a global leader in the discipline of scientific analysis in the pursuit of a better world for all. Earlier this morning, Bruce talked about the successful completion of our 5-year strategic plan and our key objectives for the next 5 years. I'll provide a brief overview of the strategic plan today, and will provide more detailed insights at our Investor Day in September. In summary, our new refreshed 5-year strategic plan continues to build on the strength of the current organization and to a clear focus on our end markets. At our very core, ALS is a technical testing services company. And it is what we do best and provides us with a significant market growth opportunities in key markets that our business are aligned with. Our vision, mission and values that guide the Board, our employees and I have remained unchanged. These are our beliefs how we interact and treat others and most importantly, how we conduct ourselves. These values are at the heart of everything we do, and are embedded across the entire organization. We value safety and diversity in the workplace. We value innovation and curiosity. We are resilient in the pursuit of excellence. We always remain commitment. We are caring, and we are honest. Every individual that works within our global operations belongs to the ALS family and lives by these values. Under this refreshed 5-year strategic plan, our vision for the business in 2027 is for us to become a global leader in the discipline of scientific analysis in the pursuit of a better world for all. There are 3 aspects to our vision. Firstly, strategic themes or pillars that support the business; secondly, enablers or opportunities that will help the business achieve its objectives. And finally, financial outcomes on how success will be measured. Each of these aspects is important, and each member of my management team and I are committed to the successful delivery of the next 5-year strategic plan. What does success look like over the 5-year strategic plan at ALS? Our financial goals will see the group increase revenues from a base of $2.2 billion in fiscal year '22 to $3.3 billion in fiscal year 2027, supported by total revenue CAGR of 8% with a total CAGR for Life Sciences of 14%. We expect to deliver an underlying EBIT of approximately $600 million in fiscal year 2027, which equates to a market-leading group EBIT margin above 19%, in line with current margins. As part of our overall strategy, we will continue to optimize our portfolio and ensure we maintain strict capital allocation discipline. We have a strong focus on continuing to grow and invest in our Life Sciences division as we expect to materialize the megatrends supporting their growth. We will strengthen our market-leading position in Geochemistry by continued investment in new technologies and capabilities. The world continues to become increasingly reliant on data and our business is well positioned to capture the digitalization trend. Our data sets are some of the largest in the world, and we recognize the opportunity for us to standardize systems and solutions that will enable us to leverage our positions and provide further client solutions. There are 3 major enablers for our business that will help us achieve our vision and financial objectives for fiscal year 2027, namely our focus on clients, our internal processes and organizational capabilities. We must maintain our client service focus model and be able to meet our clients' growing demands. We will focus internally within the business and find opportunities to extract value through portfolio optimization, innovation and efficiencies. This will support our bottom line, which is increasingly important in these higher inflationary periods. And lastly, focusing on our capabilities as an organization. Our people at the very center of our business, and we need to support them so they can support the business and our clients. Firstly, our commitment to innovation and technology where we will integrate and consolidate our systems globally and pursue advanced data management and analytics for our clients. Secondly, we'll focus on growth, particularly in new markets and sustainable market segments. To date, we have demonstrated our ability to deliver on our strategic plan, including market-leading total shareholder returns. Thirdly, what I call the ALS way. This is our team working as one and living our core values that I talked about earlier. And lastly, client centricity. Our clients trust our knowledge and expertise to deliver solutions to them. There are several megatrends which are driving the long-term growth of the testing, inspection and certification industry. These megatrends will underpin ALS' future growth plans, and the group is well positioned to capture on these long-term sustainable structural growth opportunities in the markets in which it operates. I'm confident that our new 5-year strategic plan is well aligned with these megatrends and will support our vision and financial objectives in fiscal year 2027. I will talk briefly to the underlying key growth drivers that support our business on the next slide. Focusing on our 2 largest divisions being Life Sciences and Commodities, the end markets provide a core and stable growth pathway for our business within commodities, electrification and the accelerated growth of alternative energy supports, continued demand for battery and energy-related metals. Government infrastructure spending is expected to remain elevated and will underpin the commodity demand into the future. In Life Sciences, there's a clear trend of increasing regulatory drivers, largely driven by government and also demanded by society. New emerging contaminants such as PFAS continue to be discovered and will require ongoing testing and monitoring. Consumer demand and awareness for quality and safety, especially in food and water is increasing. For pharmaceutical testing, safety remains critical with the regulatory bodies demanding more testing and the expanded range and usage of medication continues to evolve in a growing and aging population. These drivers underpin our growth and will help us achieve our financial targets for fiscal year 2027. As part of our 5-year strategic plan, we are committed to working together towards a safer, healthier and cleaner world to build a sustainable future for our employees and communities inspired by science, innovation and a value-driven culture. Our focus remains on the issues that are most material on our business where we've identified opportunities under our new strategic plan and in areas in which we have expertise to make a meaningful impact. We have created targeted programs to ensure the achievement of our agreed ESG strategy, some of which are identified on this slide. An important milestone will be the release of our net zero road map in 2023, which will identify a clear pathway for us to contribute to a more sustainable future. I look forward to progressing these opportunities and reporting on their progress in the future. In summary, our fiscal 2022 performance was very strong, reflective of our diverse business. I'm excited about the positive industry megatrends that are helping to shape our company, and we are very well positioned to capture and benefit from these opportunities in the coming years. I look forward to sharing more insights into our refreshed 5-year strategic plan at the Investor Day in September. I would like to thank our hard-working team of employees 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 for their guidance and counsel, and to my family for their continued support. Finally, thank you to you, our shareholders, for your ongoing support and remain committed to delivering value to you. Thank you. I will now hand the meeting back to our Chairman to conduct the formalities of the meeting.

Thank you, Raj. We now move to the formal part of the business. I'm just waiting for the audio queue to catch up. As I mentioned earlier, voting is open on each of the resolutions. I remind you that you have the ability to change your vote up until the time I declare voting closed. Proxies have been received from 426 shareholders representing over 292 million ordinary shares, being 60.3% of ALS' issued share capital. So that's a good turnout from shareholders. We appreciate that. As we proceed through each resolution, the proxy votes for that resolution will be shown. I propose to vote all available open proxies given to the Chairman of the meeting in favor of all resolutions put to the meeting. The first resolutions are voting for the reelection of directors. In accordance with the company's constitution and the ASX Listing Rules, an election of directors is required each year. Ms. Tonianne Dwyer and Mr. Siddhartha Kadia is seeking reelection as Nonexecutive Directors at this meeting. In a moment, I will ask Tonianne Dwyer and Siddhartha to each speak to their candidacy. Their respective profiles have been outlined in the shareholders or to shareholders in the Notice of Meeting and in the company's annual report. Firstly, to the reelection of Ms. Tonianne Dwyer. Tonianne was elected to the Board as a Nonexecutive Director in 2016. She retires in accordance with the company's constitution and being eligible offers herself for reelection. Tonianne is currently Chair of the People Committee and a member of the Sustainability and Innovation Committee and the Nominations Committee. The Board strongly supports Tonianne's reelection. And I now invite Tonianne to address shareholders regarding her candidates.

Thank you, Bruce, and good morning, ladies and gentlemen. It's been my honor and privilege to serve on the Board of ALS for the last 6 years. And over that time, to guide and support the management team as they've grown the business globally and delivered some outstanding results. We all bring different skills and experiences to the Board of ALS. In my case, a career in investment banking in the U.K., helping companies with strategy development and corporate activity was followed by the hands-on experience of building a property fund management business focused on social infrastructure. Since returning to live in Australia, I've built a career as an Independent Nonexecutive Director. In addition to ALS, I currently sit on the Board of the DEXUS Property Group from which I'll retire in October, OZ Minerals and Incitec Pivot. All up, I now have over a decade of experience as a director to bring to our Board. At ALS, I've been the Chair of the People Committee for the last 3.5 years and also served on the Sustainability and Innovation and Nominations Committees. In addition, I attend the Audit and Risk Committee meetings as it's our practice for all directors to attend and contribute to all committee meetings so that we can all be across all of the issues. Over the last year, the Board has been particularly focused on the development of our new 5-year strategic plan, which Raj has already spoken to you about, on our carbon reduction plan and on the acquisitions we've made, most notably Nuvisan, Investiga and MinAnalytical. In the People Committee, we're focused on the continued evolution of our remuneration framework to mention -- to ensure that it enables us to attract and retain high-caliber executives we need to drive the performance of the business. Bruce has already outlined the changes we've implemented for the current year, and I will be grateful for your support for our remuneration report later in the meeting. We've also continued our focus on programs to support the development of leaders across the business and in particular, our women leaders. I'm delighted with the progress we're making through our RISE network to highlight our talented female employees and for the other programs we have in place to support inclusion and equity across the business, and this includes a mentoring program matching our high-potential women leaders with our most senior executives, and I'm pleased to say our executive team has embraced that with enthusiasm. I take my responsibilities as a director in your company very seriously. I seek to bring an independent mind to our discussions, to be curious and to challenge constructively. If reelected, I will continue to bring my enthusiasm for the business and its people to bear to support its continued success and your prosperity as shareholders. Thank you for your support for my reelection.

Thank you, Tonianne. Details of the proxies received for the resolution to reelect Tonianne are up on the screen. Of those received, 89.4% are for the resolution, 10.5% against with 0.1% abstaining. First of all, are there any questions from the floor? No. Thank you. Moderator, do we have any online questions relating to this resolution?

Mr. Chairman, there are no online questions or questions on the line.

Yes, go ahead. Sorry. No questions?

There are no questions.

Okay. Thank you. As there are no questions, the resolution on the screen is now put to the meeting. I'll now move to the resolution regarding the reelection of Mr. Siddhartha Kadia, resolution #2. Siddhartha was appointed to the Board as a Nonexecutive Director in January 2019. He retires in accordance with the company's constitution and being eligible, offers himself for reelection. Siddhartha is a member of the Sustainability Innovation Committee, the People Committee and the Nominations Committee. The Board strongly supports his reelection. I now invite Siddhartha to address shareholders via video regarding his candidacy. Siddhartha?

Thank you, Mr. Chairman, and thank you dear shareholders. Hello from the U.S.A. My name is Siddhartha Kadia, and I'm offering myself for reelection as a Non-Executive Director of the company. Over the past 3 years and 8 months, I've had the privilege of investing a significant portion of my professional time to work with my colleagues on ALS Board as well as and more importantly, with the management team. I've been especially pleased that this service opportunity has been really fantastic to fully utilize my 3 main areas of expertise, my experience living in various parts of the globe, serving life sciences industry, especially in North America and Asia, my current and prior business experience in life sciences industry, as well as my strategic insights and professional relationships in testing, inspection and certificates industries. I'm committed to serve for the next term at your pleasure, and I look forward to serving this company with all I have to offer. Thank you for your support.

Thank you. Yes. Thank you, Siddhartha. Unfortunately, it was the video link there wasn't the best at the end, but I think everyone got the message there. Details of the proxies received for the resolution to reelect Mr. Kadia are up on the screen. With the proxies received, 66.7% for the resolution, 33.2% against with 0.1% abstaining. Are there any questions regarding the resolution from the floor? We have one lady near the center aisle, please.

Thank you. Good morning. I'm Kelly Buchanan from the Australian Shareholders Association. Dr. Kadia holds directorships in 5 unlisted U.S. companies. And more recently, he's become CEO of a NASDAQ listed Berkeley Lights. We see his commitment to other companies, especially his role as a CEO of a publicly listed company is putting him in a position to be unable to devote adequate time to ALS, especially in the event of a corporate or industry catastrophe. Can you give shareholders any comfort that one person can hold so many jobs and do justice to all of them?

Yes, it's a good question. It's one that we, as a Board, have turned our mind to as well. So thank you for the question. I can assure you that since taking the position at Berkeley Lights as CEO, it's a small company, but Siddhartha -- it hasn't changed Siddhartha's commitment to ALS. He's attended every committee meeting, the ones he's not a member of. He's been on every Board meeting. He is still connected and helping the management team with introductions to business opportunities around the world with his vast global network. He also brings a level of expertise in what I call adjacent industries for ALS' core industries or core business streams as well, which allows us visibility to determine where we might grow laterally at some time in the future. So I can't fault his commitment to the company. But he has given an undertaking to me that he's going to try and rationalize these smaller interests. He just notified the Board yesterday that he's come off one of those boards already. And so he's got all of that in progress. And I think you'll see some changes over the next year in that regard. Does that answer your questions?

Yes. We still think he's an awfully busy man.

He's a very busy man, but he is a highly intelligent man and manages his time very well, too. Thank you. Okay. Moderator, are there any online questions on his resolution?

Yes, Mr. Chairman. There is one question in 2 parts from Stephen Mayne. The first part is, did any of the main proxy advisers recommend a vote against any of today's resolutions? And the second part of the question, why is there a large vote against the reelection of Siddhartha Kadia?

Okay. First of all, I think the major proxy advisers or each of the ones that we spoke to, I think, Ownership Matters, [ AXE ] and there was one other attorney in [ ISS ], thank you, all voted in favor of his reelection. I believe one, CGI Glass Lewis, who we didn't get to speak to. They didn't want to talk to us. They recommended against his reelection based on, as the Australian Shareholder Association has pointed out, the perception of a large number of external appointments. But we've talked to most of them, and they were quite supportive in the end. The second part of the question, sorry, Cameron?

Why is there a large vote against the reelection of Siddhartha?

Sorry, I think that's already been answered by what I said as well. It's obviously the perception that he's got too many external appointments. If there's only one question there, thank you, Cameron. There are no other questions obviously on the floor. So the resolution on the screen is now put to the meeting. I now move to resolution 3, the Adoption of the 2022 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 a competitive global market, not just an Australian employment market. In addition, the aim is to provide both incentive and rewards to executives and to align a significant portion of executive reward in growth -- 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. The structure encompasses 3 main elements. First of all, it's the elephant in the room. The first one, of course, is fixed salary. The second one is a short-term incentive over 1 year, which is approximately 2/3 cash based and 1/3 detailed in the Notice of Meeting. But essentially, the company is required to seek shareholder approval to allow MinAnalytical to provide financial assistance in the form of guarantees in connection with the acquisition by ALS, and that has to be done in accordance with the Corporations Act. This is because the acquisition of MinAnalytical was secured by guarantor companies in the ALS Group and which will allow the group greater flexibility to structure its lending arrangements and to allow MinAnalytical to be added as guarantor under the group's lending arrangements. Details of the proxies received for this resolution are up on the screen. Of those received, 99.7% are for the resolution, 0.2% against and 0.1% abstaining. Are there any questions on this resolution from the floor? No. Cameron, do we have any online questions regarding this resolution?

Yes, Mr. Chairman. There is one question from [ Raymond Regan ] and he asked, would the auditor comment on the MinAnalytical financial assistance? Are there any debt associated with the acquisition? And has it been profitable?

Diane, may we have the microphone for Mr. Tozer please.

Chairman, I thank the shareholder for the question. Certainly, as a result of our procedures, we're not aware of any hidden debt. The only debt that came with MinAnalytical was disclosed in Note 5A to the financial statements, which are its lease liabilities. We would consider this resolution in the ordinary course of business. And as far as we've seen, the entity has been profitable since it was acquired by ALS.

Yes, that is correct. It is profitable. And this is a unique resolution for me personally as a Chairman, and I sought some advice on it. And clearly, the feedback was, yes, we've seen this, particularly from proxy advisers and major shareholders. They say they see it every year. Essentially, it just arises out of peculiarity of a perceived conflict of interest because the banks have provided debt funds to help ALS to acquire MinAnalytical. In return, ALS wants MinAnalytical to join its guarantor group so it gets better terms and conditions from the banks. But there's this relationship that the banks are providing debt to MinAnalytical. MinAnalytical is providing a guarantee back to the banks when it joins our group. And this perceived related party transaction, if you like, is -- needs to go to shareholders to give them the opportunity to ask us questions and to vote whether it's appropriate, so that's what we're doing today. All right. Cameron, are there any other questions on the resolution?

There are no further questions, Mr. Chairman.

Okay, then thank you. Since there are no more questions, the resolution on the screen is now put to the meeting. The final item of business today is consideration of the financial statements and reports. The company's financial statements for the year ended March 31, 2022, including the director's report and a report by the auditor were provided to shareholders in the 2022 annual report. Shareholders are now provided the opportunity to ask questions regarding those financial statements and reports, the operations and management of the company or questions to the auditor in respect of the audit report. As I've said earlier, Mr. Brad Tozer, representing EY, our external auditor, 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. Are there any questions from the floor? No. Thank you. Cameron, do you have any online questions?

Yes, Mr. Chairman. There is one question from [ Norman West ]. And he asked, has the company being successful in the integration of a common order revenue profit report system across its diverse world operating segments?

Right. Is that a question to the auditor, Cameron? Or to the Board to the Board?

To the Board, but I think the auditor would be quite great.

Yes. I think it's more appropriate for the auditor to answer this one. It's dealing with their business.

Chairman, thank you Mr. West for the question. Look, as part of our procedures, we test the ALS Global Group right across the group. So Ernst & Young is the appointed auditor right across the globe for the group. As part of our work, we have teams in all of the material locations working under common instructions as it relates to the accounting policies and the formation of the financial statements. All of those teams report through to me as the lead audit partner. The group does not have a consistent ERP platform across the globe. However, it is undertaking a project and is significantly advanced in achieving that outcome. But Chair, I guess in summary, I can confirm that we have tested that there are common accounting policies, common reporting packs, which all come up into a common set of financial statements, which are here today before the meeting.

Thank you, Brad. And I think it has greater weight for an external auditor to be making that statement than the Board. Cameron, do we have any other questions online?

There are no other questions, Mr. Chairman.

Okay. Ladies and gentlemen, as there are no more questions, I can -- sorry.

We have general question time...

No, no, this is general question time. Sorry, we have one more question then on the floor. On your left, George.

Thank you. Mr. Chairman, you were talking before about the share buyback. Have you recently reintroduced the dividend reinvestment. Is that going to continue? I noticed that when the share price was low, that you canceled it. When the share price went up, then it was reinstated. I've been in dividend reinvestment whenever it was available, missed out on getting shares when the share price was low, then the share price goes up, so we don't get as many shares. Is the dividend reinvestment going to continue? You've got a share buyback that sort of counteract each other. What is the company policy? Thank you.

Okay. I might just make the observation, first of all, George, is that when the share price is low you can still buy shares and you can reinvest your dividends that way, if you wish. But look, when we have a share buyback in place, there's a conflict of interest if you have a dividend reinvestment plan as well. You're buying back shares, and then you're issuing shares at the same time. Yes. But the policy is that when we have the share buyback, we won't have the DRP in place. We got one -- sorry?

Are you going to have a share buyback or are you going to reinvest? What's your main cup of tea?