ALS Limited (ALQ) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2023 Annual General Meeting for ALS Limited. My name is Bruce Phillips, and I'm your Chairman. Today, the meeting is being held in person, obviously here, as well as online via the Lumi platform. We have a couple of housekeeping matters for those of you in the room here today. Firstly, please ensure all your mobile devices are now turned to silent mode. And secondly, in the unlikely event of an emergency, please exit the room, proceed down the stairs, whilst, at all times, following the direction of the hotel staff. 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 would like to introduce the participants joining the meeting today. Firstly, the directors. There have been several important changes to our Board of Directors since we last met. The 2 new Board members have been appointed, both of whom are present in person here today. Mr. Peter Possemiers, first of all. Please acknowledge, Peter. Peter is appointed as an Independent Nonexecutive Director. Peter has extensive experience in the global TIC industry, having been a member of the Executive Council at SGS, the world's largest TIC company. And secondly, Mr. Nigel Garrard, who is also appointed as an Independent Nonexecutive Director. As a former CEO and now an experienced Nonexecutive Director, Nigel is also a strong addition to the Board. Peter and Nigel are being proposed for election today, and we'll speak to their candidacy later in the meeting. Also, in June 2023, Mr. Charlie Sartain retired from the Board after 8 years of service. We thank Charlie for his valuable contributions to the growth of our company. And in particular, for his outstanding leadership as Chair of the Sustainability and Innovation Committee. And then more generally, his wise counsel and sharing of his expertise with our high-performance commodities team. Also, in March 2023, our CEO and Managing Director, Mr. Raj Naran, resigned, and the Board undertook a global search for his replacement. The company's robust continuous succession planning for all ALS leadership positions enabled the Board to appoint Mr. Malcolm Deane, who is here today as Managing Director, within a few months. Malcolm's experience includes leadership positions in operations, commercial and strategic roles in diverse business, cultural -- sorry, in diverse business and cultural situations. His most recent role was Chief Strategy Officer and responsible for corporate strategy, business development, and mergers and acquisitions. Malcolm was instrumental in developing ALS' latest 5-year strategy released in September 2022. The other members of our Board of Directors are Mr. John Mulcahy, who is joining us today via video conference from Europe. He is an independent nonexecutive director. He's a member of the People Committee and the Audit and Risk Committee and the Nominations Committee. You'll hear from John today regarding his candidacy for reelection to the Board. Then we have Mr. Siddhartha Kadia, who is also joining us via video conference today, but from the U.S.A. in this instance. He is also an independent nonexecutive director. He is Chair of our Sustainability and Innovation Committee and a member of the People Committee and the Nominations Committee. Here in Brisbane, there are 2 other independent nonexecutive directors. First, we have Ms. Tonianne Dwyer, who is Chair of the People Committee and a member of the Sustainability and Innovation Committee and the Noms Committee. And last but certainly not least, Ms. Leslie Desjardins, who is Chair of the Audit and Risk Committee and a member of the Nominations Committee. You'll hear from Leslie also today regarding her candidacy for election to the Board. I'd also like to introduce Mr. Michael Pearson, our Company Secretary and General Counsel; and then Mr. Luis Damasceno, our Chief Financial Officer; and Mr. Cameron Sinclair as well as our Head of Investor Relations. He's based out of Melbourne, and he's moderating questions that will be submitted virtually during the meeting today. We also welcome the company's auditor from Ernst & Young, Mr. Brad Tozer; and we have Mr. Derek Pocock from our legal adviser firm, Baker McKenzie. Ladies and gentlemen, as the notice of meeting has been sent to all shareholders in advance of today's meeting, I will take it as read. The format and voting procedure for today's meeting will be as follows: First, I will deliver the Chairman's address followed by a presentation by CEO, Malcolm Deane. We'll then proceed to consider the formal resolutions and the financial statements and reports as outlined in that notice of meeting. For those present in the room, this morning, I will allow the opportunity for questions prior to considering each resolution. For those attending virtually, questions can be submitted at any time. [Operator Instructions] Virtual attendees should note that while you can submit questions beginning now, I will not address them until the relevant time in the meeting, and I 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 consolidated. Finally, due to time constraints, in the unlikely event we do run out of time, your questions will be answered in due course via e-mail or the posted responses will come on the ALS website. Voting today will be conducted by way of a poll on all business items. 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 9, which are being put to a poll. If you require assistance, members of the 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. Poll voting cards will be collected once the formal business of the meeting has been completed. For our virtual attendees, you will have enough time to vote. I will shortly open the 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 your voting options. To cast your vote, simply select one of the options. There's 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. For online attendees, the voting tab will appear soon. Please submit your votes at any time. I'll give you a warning before I move to close the 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. Well, thank you all. Now that those things are over and done with, the formalities, let's go to the Chairman's address. Look, folks, the 2023 financial year represented a record performance by your global business. The company continued to demonstrate its resilience operating through challenging periods of global instability, high inflation and economic uncertainty. It's been very rewarding for the Board to work with the management team to navigate the business through these formidable times and see us emerge even more resilient. FY '23 was highlighted by a record year in underlying net profit after tax of $320.6 million, up 23.4% versus the prior corresponding period, which exceeded the top end of our upgraded market guidance. Underlying revenue from operations for the consolidated group saw a 19.5% increase over 2022, with associated organic growth of 10.8%. In terms of underlying EBIT, the business showed a 21.8% improvement. The company paid a total dividend for the year of $0.397 per share, up 21%. This very pleasing performance was underpinned by the contribution of our 2 largest businesses, Geochemistry and Environmental, which delivered industry-leading growth and improved margins for the group, despite the difficult trading conditions. The strong performance was a meaningful step towards the objectives of the new 5-year strategic plan. The group continued its disciplined and proactive approach to capital management during the year, balancing investment in growth with returns to shareholders. Overall capital expenditure increased by 27% versus the previous corresponding period, as the group invested in strategic organic growth opportunities across Life Sciences and the Commodities divisions. Investment in acquisitions will continue to be a focus in the future with a robust pipeline of opportunities continually being evaluated. The balance sheet remains strong with an improved leverage ratio of 1.8x and available liquidity of $423 million, including $336 million of undrawn bank facilities at the end of the financial year. Pleasingly, 80% of our total drawn debt is fixed at an average interest rate of just 2.9%. Following the successful completion of the previous 5-year strategic plan at the end of FY '22, the group provided a new plan to continue the transformation of ALS into a market leader in the global testing inspection and certification industry. The plan consists of a series of strategic growth priorities with emphasis on investment to capitalize on industry megatrends linked to sustainability and Life Sciences as well as rebalancing the portfolio into higher-margin businesses. The aspirational financial targets set to be achieved by 2027 include growing revenue to $3.3 billion, underlying EBIT to $600 million and maintaining group margin floor of 19%. In addition, the group aims to keep cash conversion above 90%, and continue to improve the return on capital employed above 20%. The TIC industry in which we operate as several megatrends, which are driving the long-term growth of our industry. The megatrends such as increased regulation, client outsourcing, transition to renewable energy and digitalization of technology underpin our company's future growth plans. The group's strong focus on our people, our culture of innovation and collaboration provides the necessary support to achieve this growth agenda. At ALS, our most important core value is that we are safe. The safety and health of our employees and the communities in which we operate will always be our primary focus. As we know, safety is not just about preventing physical harm, it's also about preventing psychological harm. As we continually strive to provide an environment where our people can achieve their best, we will continue to work together to create healthy, inclusive and respectful work environment and cultural setting. In FY '23, we achieved our best ever total recordable injury frequency rate and maintained our position, as the industry leader in safety. We intend to also become the leader in our industry in ensuring that our employees around the world feel psychologically safe as they do physically safe. As a global leader in scientific analysis, our purpose at ALS is helping make the world a better place. Our vision, in pursuit of a better world for all, lays the foundation for our approach to sustainability. It means we seek to protect our planet for the future generations and provide a better standard of living for all of our next generations. Last month, following World Environment Day, we published the latest edition of our sustainability report which sets out our people, environmental, social and governance visions and the related FY '23 achievements. During the year, we reduced carbon intensity by 10%. We achieved carbon-neutral operations for Scope 1 and 2 emissions against our 2020 baseline and developed a road map to achieve net zero emissions by 2050. We remain committed to the continued integration of sustainability into all aspects of the business, and ensuring all our stakeholders continue to benefit from our growth and development. Our sustainability strategy continues to align with and support the advancement of the United Nations Sustainable Development Goals, which seek to address the world's most important economic, environmental and social challenges. Shareholders can also be very, very proud of ALS' $2.4 billion per annum economic contribution to the communities in which it operates. The significant contributions take many forms, from local employment, to business suppliers, to science and education programs, to social projects, government taxes for the benefit of broader communities and, of course, dividends to shareholders. Turning now to remuneration results. After setting the new 5-year strategy, which involved significant changes to the scope of work for our executive key management personnel, the Board engaged external remuneration experts to ensure our settings remain competitive in the international markets in which we operate. This resulted in executive KMPs receiving increases in fixed remuneration ranging from 3% up to 15%, and an increase in the LTI opportunity from 60% to 110%. The STI opportunities remain the same at 60% at target. These changes reflected benchmarking against both relevant industries and our geographic peers, and importantly, reflect the Board's strategy to weight incentives towards equity and long-term objectives aligned with positive shareholder outcomes. Our strong performance against the financial, strategic and ESG KPIs resulted in commensurate SDI vesting outcomes ranging between 38% and 96% of maximum. The ESG's outcome was driven by our performance against financial targets, particularly underlying EBIT and NPAT within the minerals segment. And at the corporate level, strong cash and debt management, strong safety and sustainability outcomes and consistent progress against key nonfinancial strategic objectives. With respect to the LTI program, the excellent sustained performance against each of the 4 performance measures have been absolute growth in earnings per share and return on capital employed and relative performance against our peers and EBITDA margins and total shareholder returns over a 3-year period, and that resulted in the 2020 LTI awards vesting at 100%. Later in the meeting, we will most likely see a strike against the FY '23 remuneration report. While approximately 72% of shareholders approve the remuneration report, there is a considerable 28% vote against. As you would expect, we have engaged with the latter shareholders to listen to their concerns. They predominantly relate to one-off grant of our retention payments to 2 of our internal candidates who are unsuccessful in the CEO process. And then also, there was an objection to a 38% STI discretionary award to the Head of our Global Food & Pharma business as well. And thirdly, the continuation of the existing LTI entitlements continuing to the past CEO. Each of the shareholder concerns were a result of the sudden changeover of CEO and the Board's desire, of course, for a smooth transition to minimize any adverse impact on the company's strategic objectives. Whilst the Board's objectives have been achieved to date, we understand the shareholder concerns, and we'll work hard over the next year to engage earlier with respect to any unusual remuneration events. Turning to FY '24, which we're currently in now, the remuneration adjustments will understandably be more modest. For executive KMPs, fixed remuneration will only receive an inflation adjustment reflecting the CPI in their home countries, and that will range between 4% and 5%. There will be no increase in the LTI percentages and a small increase in the STI from 60% to 70% for most of the key KMPs. Nonexecutive director base retainer fees have been increased by 4.5%, reflecting just the CPI increases to the remuneration group across the world. Due to the increased complexity of this global business and the associated workload of directors and to give flexibility for overlap of director tenures as we manage Board succession, we are seeking shareholder approval today to increase the cap on the number of directors from 8 to 12 under the company's constitution. No increase in the fee pool is being sought to accompany this proposal. And ladies and gentlemen, as is our tradition, today, we are also announcing our profit guidance for the first half of FY '24. With all the usual caveats around no significant change to our operating environment, we expect underlying net profit after tax to fall in the range of $150 million to AUD 150 million. CEO Malcolm Deane will provide more detail on the outlook in his presentation. Finally, for me, this is a day where the Board and the management not only report to you as our shareholders, we also acknowledge and thank you for your continued loyalty and support of our business and its objectives. In return, I'm sure that you join with me in thanking my colleagues on the Board and the management team and, indeed, all of the talented and dedicated people across our company for their hard work and commitment during what was a very busy but very successful year. On an entirely personal level, it's with mixed feelings that I also advise, after completing 9 years of service, I, as your Chairman, I will not be seeking reelection at the 2024 Annual General Meeting. As you would expect, succession planning for the Chair role is already well advanced as is the ALS way. I now would like to hand over to our new CEO, Mr. Malcolm Deane, who will provide further detail on our FY '23 operational performance and the outlook for the first half of FY '24. Thank you.

Thank you, Bruce, and welcome, everyone. I truly appreciate your attendance here today, both in person and virtually. It is an honor to be serving as CEO and Managing Director of ALS. I feel privileged to be leading the company on its strategic journey. I would like to thank the Board and our management team for their support and collaboration. And a very special thank you to you, our shareholders, for your trust, confidence and support of the company's growth and mission. At ALS, we are guided by our vision to be the global leader in the discipline of scientific analysis in pursuit of a better world for all. Whether we are helping protect the environment from toxic pollutants, assuring the safety of our food and water or accelerating decarbonization in alignment with the United Nations Climate Action Plan, our commitment to a more sustainable world is the passion behind everything we do at ALS. We already play a meaningful role in testing sustainability-linked activities with approximately 50% of our revenue linked to sustainability outcomes. This focus on sustainability drives everything we do at ALS. It has helped us deliver industry-leading revenue growth and operating margins in fiscal year '23. We are well positioned to support the needs of our clients and achieve the performance goals in our 5-year strategic plan, which I will now discuss. A year since establishing our new 5-year strategic plan, we have already made meaningful progress on our fiscal year '27 vision. By continuing to meet the plan's financial goals, we will be able to advance our position as a global leader. We will achieve our revenue and EBIT targets by focusing our growth on key end markets, both organically and through acquisitions, ensuring that our growth is aligned with the industry megatrends. We will also improve the underlying performance of the business. We expect margins to remain at industry-leading levels and above our minimum floor of 19%. Operating margins, cash generation and return on capital will all remain above the minimum targets. We will continue to preserve a solid balance sheet that can support our strong growth ambitions. So how we will deliver this excellent performance? We will do this by focusing on 6 key objectives. They are a strong growth agenda, rebalancing our portfolio, growth of our sustainability efforts, market leadership in Geochemistry, a strong focus on our people and the acceleration of our innovation journey. I would like to highlight 3 of these objectives, which will continue to drive excellent performance. First is advancing our strong growth agenda through investments to capitalize on megatrends linked to sustainability and Life Sciences. We are expanding our environmental business in key geographies and services, supported by the new sustainability regulations that are increasing the overall contested market. We are also building operational scale in our food and pharmaceutical businesses. We will continue executing on our inorganic strategy. Next is expanding our market leadership in the Geochemistry business, where we see an upside opportunity in addressing green metals exposure. ALS has become an enabler of the global energy transition. Currently, battery metals represents 40% of the total mix tested in our labs. We will continue expanding market share in our exploration and mine site businesses. Lastly, we will stay focused on our people, building a strong culture of innovation and collaboration with a high level of employee and client engagement. Strengthening our culture of diversity and inclusion will help us minimize psychological hazards at work to advance our industry-leading safety efforts. In addition to our key objectives, there are 2 important focus areas that will help us continue to deliver value for our stakeholders and reach our fiscal year '27 goals. These are client centricity and cultural imperatives. Client centricity means that our plans and actions must always center on our clients' needs. We will develop new technologies and innovations through our client partnerships, and we will solve problems for clients that they didn't know they had. Our cultural imperatives includes innovation, which means we think and act differently. We stay open to new ideas and take calculated risks, agility, enabling us to deliver superior results, while always looking for opportunities with a sense of urgency; collaboration by focusing on creating and expanding partnerships; and inclusion, we must continue building an inclusive culture to enable everyone to succeed. Strengthening these aspects of our culture and being a client-centric organization will guide our actions moving forward and position us to become the partner of choice for current and future clients. It is important to understand how success is measured in this 5-year strategic plan. From a financial perspective, success means achieving the $3.3 billion revenue target, which represents an overall CAGR of 8%; delivering an underlying EBIT of $600 million with a floor margin of 19%. Second, success means that the company effectively rebalances its portfolio, increasing its Life Sciences division, while expanding the market-leading position of commodities. ALS will continue supporting end market growth in core activities and ensuring we maintain strict capital allocation discipline. Third, as a world increasingly relies on data to be successful, we should position our business to capture the trend towards digital enablement. Our data sets are some of the largest in the world. So standardizing our systems and solutions will enable us to strengthen our leadership in providing client data solutions that are well aligned with industry megatrends. Turning to the financial highlights of the fiscal year 2023. As the Chairman shared, our business has continued to deliver industry-leading revenue growth and operating margins. We showed strong financial performance despite a challenging environment. We maintained strong cash conversion and a solid balance sheet and liquidity, supporting our growth agenda. Our 2 core businesses, both expanded margins in the period, growing the underlying performance of the overall business, delivering on both growth and profitability, is helping keep us on track to deliver on the fiscal year '27 financial objectives. Looking at divisions individually. Life Sciences continued its growth momentum, increasing revenue to $1.3 billion from $1.1 billion, which now represents approximately 55% of total group's revenue. This impressive revenue growth was supported by strong organic growth within our Environmental business and meaningful scope growth within our food and pharmaceutical business. Our market-leading Environmental business maintained solid revenue growth across all geographies and successfully increased its margins despite inflationary headwinds. This was achieved by leveraging its global footprint and scale. Our Food business was impacted by global economic uncertainty, while our underlying pharmaceutical business excluding NUVISAN, posted strong organic revenue growth with only minor margin deterioration. Our Commodities division continues to be a market leader increasing revenue to $1.1 billion from $0.9 billion, an increasing underlying EBIT margin to 30.4%, up 155 basis points. This growth was supported by strong operational model and the underlying driver of the economy decarbonization. The Geochemistry business increased both market share growth and profitability in fiscal year '23. Despite a slowdown in sample volume growth in the second half of fiscal year '23, we improved overall margins due to our superior service offering, effective capacity planning, global quality solutions, as well as the increased use of premium analytical testing services by our clients. Our Metallurgy business continued to expand its market share and showed a very strong performance. Our Other businesses, including Inspection and Tribology, all contributed to the overall strong results of the year. Overall, divisional performance has contributed to our strong financial results and demonstrated the resilience and stability of our business irrespective of underlying macroeconomic conditions. As the Chairman announced earlier, the business expects to deliver an underlying NPAT from continuing operations of between $150 million and $155 million in the first half of fiscal year '24. The midpoint of this range represents a decrease of approximately 5% compared to the prior corresponding period, largely attributed to the underperformance of our minority 49% shareholding in NUVISAN. Although challenges such as inflation, economic uncertainty and geopolitical issues persist, our demonstrated business model continues to prove its resilience while operating in an uncertain environment. Our environmental business has continued to deliver strong organic revenue growth and margin expansion across all regions, benefiting from strong pricing discipline and the ability to leverage its global scale. Our other market-leading business, Geochemistry, has maintained resilient margins in a period of soft sample volume demand. This reflects the benefit from an increased uptake of our value-added services, effective capacity planning from our hub-and-spoke model and superior client service offering. As mentioned before, ALS has become an enabler of the global energy transition. The Life Sciences portfolio, excluding NUVISAN, has delivered solid organic growth and maintained margins comparable to the previous year. NUVISAN remains significantly impacted by unprecedented industry challenges arising from limited funding for new drug development research and challenges associated with the CRO, CDMO testing industry. We are actively engaged with NUVISAN as 49% minority shareholder through the established joint advisory board with representatives from ALS providing advice to improve operational efficiencies and cost management. The NUVISAN acquisition was structured to provide ALS with optionality to manage both risk of exposure to different parts of the NUVISAN business and to provide some protection for the initial capital outline. Our option window commences in January 2024 and closes in September 2026. The company continues to evaluate all strategic options with regard to NUVISAN. Strategic growth remains at the forefront of our agenda. We remain committed to targeted acquisitions that complement our existing business, expand our geographic reach and enhance our service offering, but these acquisitions must also enable ALS to add value. We remain open to pursuing strategic opportunities as they arise. In closing, our commitment to our long-term strategic journey has helped us lead the industry in growth and performance. We will continue to pursue our mission and strengthen our determination to become one of the world's most respected TIC companies. Through the proven resiliency of our business model, the strong margins of our Environmental and Geochemistry businesses and new opportunities for long-term growth, we are well positioned to continue meeting our clients' needs and advance our position as an industry leader. I would like to sincerely thank the Chairman, the Board and the hard-working team of employees worldwide for their passion and dedication. And finally, thank you to you, our shareholders, for your ongoing support. I will now, hand the meeting back to the Chairman.

Ladies and gentlemen, we now move to the formal part of the business of the meeting. As I mentioned earlier, voting will open on each of the resolutions. I remind you that you can change your vote, up until the time I declare voting closed. Proxies have been received from 545 shareholders, representing over 352.9 million shares, being actually 72.9% of ALS' issued share capital. And that's a record for the company. So well done to all the shareholders, and thank you for your interest. As we proceed through each resolution, the proxy votes for that resolution will be shown. On all available open proxies given to the Chairman of the meeting, I propose to vote in favor of all resolutions. The first resolution is voting for the election or reelection of directors. In accordance with the company's constitution and the ASX listing rules, an election of directors is required each year. Now moving to resolution 1, the reelection of Ms. Leslie Desjardins. So we have a question from the floor already. Can you just wait until -- unless it's a point of order, we can go. What is it, sir?

Mr. Chairman, I'm a bit confused about the deadline for online voting. In the notice of -- amended supplementary notice of AGM issued by the Company Secretary on the 3rd of July, said the deadline was 10 a.m. Monday, the 20, last Monday. On an e-mail that was sent out last Friday, on the 21st of July, it said the deadline was 10 a.m., Monday, the 24th of June. Now today, you've said that there's no deadline until the actual motion is put. I'm really very confused about all that.

I'll have to confirm with the Company Secretary here.

I think there's -- certainly, there's a typo with the June number from -- sorry, the June date. The online voting is for people who are online through the Lumi platform. They can vote during the course of the conduct of the meeting today. If you're voting online through on proxy, those -- the deadline was on Monday earlier this week.

So it appears the deadline was for the proxies last -- and the online voting today, right?

Yes. If you're online, not in the physical meeting here today, if you're going through the Lumi platform, you're able to vote on the resolutions during the course of the meeting, and that's what the Chairman was referring to just previously.

I'm sorry for the confusion there because it's -- what you've said there has just confused me as well. So, we'll get to the bottom of that. But I don't -- hopefully, it hasn't affected anyone's voting. They still have the -- everyone here in the meeting has their blue voting card. They can vote today. Everyone on the Lumi platform can vote today. They actually change their -- can change their vote up until any time until I declare the voting closed. So hopefully, that's clear. All right. Thank you for raising that, sir. Very good. Okay. Leslie Desjardins is seeking reelection as a nonexecutive director at this meeting. The profile is outlined in the notice of meeting and in the company's annual report. Leslie was elected to the Board as a nonexecutive director in 2019. She retires in accordance with the company's constitution, and being eligible, offers herself for reelection. The Board strongly supports the reelection of Leslie, and I now invite her to address shareholders.

Thank you for that introduction, Chairman, and good morning members. My name is Leslie Desjardins, and I stand for reelection today. So, I thought it'd be a little helpful to talk about my experiences and skills and how these relate to the ALS Board and to you, as shareholders. My work experience was primarily with 2 companies, General Motors Corporation and Amkor. And through these 2 companies, I gained experience in finance, corporate governance and different business models in Canada, the United States and here in Australia. And like ALS, both General Motors and Amkor transact in many countries around the world with all the global complexities of multinational corporations such as matrix organization charts, global footprints and from a financial and risk perspective, exposures to multicurrencies and different tax jurisdictions. My work experience here in Australia as the Chief Financial Officer for GM Holden and then subsequently as a Chief Financial Officer for Amkor Limited, gave me exposure on a strong understanding of Australian regulatory bodies and listing rules, banks and accounting firms, which are all critically important to ALS shareholders to ensure strong corporate governance. Throughout my career, I've had a lot of exposure in all facets of finance, including internal control, financial performance, accounting, treasury, tax, debt and equity funding. And the skills that I have learned in these assignments are relevant to my role as the ALS Chair of the Audit and Risk Committee. While it's clear that directors have to have the skills and experience to be an effective director, I think it's also equally important to have the energy for the task at hand. So a few comments about my personal motivation. First, and as described in our vision, it's really what the company does every day. And that is it uses science and technology to make the world a healthier and safer place and just really a better place to live. And second, it is about the strength of the financial health of the company. ALS has a very strong balance sheet and very strong cash generation, which positions us extremely well for growth. And I really like that. So with the vision that resonates with me and the financial capacity to grow, I'm very keen to continue my work representing all of you on the ALS Board. In summary, I'm very proud to serve as a director of this company and to work alongside a very capable management team and also my colleagues on the Board, and I look forward to contributing in the future. Thank you very much for your support.

Thank you, Leslie. The details of the proxies received on the resolution to reelect Leslie Desjardins are up on the screen now. Of those received, 89% are for the resolution, and 11% against. Are there any questions from the floor? No. Thank you. Moderator, are there any questions online?

Mr. Chairman, there are no questions online, but there is one question that was earlier submitted. The first question comes from the Australian Shareholders' Association. Will you consider the inclusion of the representative Board skills matrix?

Yes. Okay. And that's -- I'm not sure what's to do with this resolution, but I'm quite happy to answer that question. The Australian Shareholder Association actually talked about this at last year's AGM. And we actually took notice of them. We went out and prepared a Board skills matrix. And we've placed it in the 2023 corporate governance statement from memory. So, I just refer the ASA to that. They'll find all the information they want because we've outlined all of the skills and backgrounds of professions for each of the directors. It's a reasonably comprehensive board skills matrix. Cameron, are there any other questions?

There are no other questions, Mr. Chairman.

All right. Okay. Thank you then. The resolution on the screen is now put to the meeting. Okay. Now I'll move on then to resolution 2, the reelection of Mr. John Mulcahy. John is seeking reelection as a nonexecutive director at this meeting. His profile is outlined in the notice of meeting and in the company's annual report. John was elected to the Board as a nonexecutive director in 2012. He retires in accordance with the company's constitution, and being eligible, offers himself for reelection. Again, the Board strongly supports the reelection of John Mulcahy, and I now invite him to address the shareholders from Europe.

Thank you, Bruce, and good morning, ladies and gentlemen. It is amazing that despite being overseas, modern technology allows me to attend the ALS AGM electronically. This is one of the many changes has occurred since I was first appointed to the ALS Board in February 2012. ALS is a wonderful company that has changed from being a multi-market conglomerate to being a focused-testing business. It has a very extensive footprint all around the world. I personally have enjoyed working with the past and present board members and executives to help influence the massive change in successful growth of ALS, over the past 11 years. My background as an engineer and finance executive as well as sitting on a variety of boards in the last 10 years gives me experiences that can be used to help guard the strategy, tactics and decision-making at ALS. For any corporation to be successful, ongoing change is essential. ALS is now in the process of transitioning to a new Managing Director with Board renewal. In these circumstances, as the longest-serving current director, I can provide knowledge and support for a smooth transition. Accordingly, I respectfully put myself up for reelection and appreciate the unanimous support from my fellow Board colleagues. Thank you very much.

Thank you, John. Details of the proxies received on the resolution to reelect John are up on the screen now. Of those received, 83.8% are for the resolution, 16.2% against. Are there any questions from the floor? No. Thank you. Moderator, are there any questions online, please?

There are no questions online, Mr. Chairman.

Thank you. I now move to the -- sorry -- that resolution. I now move to the election of Board members rather than reelections. The third -- resolution 3 pertains to the election of Mr. Peter Possemiers. Peter Possemiers is seeking election as a nonexecutive director of the company. His profile is also outlined in the notice of meeting and in the company's annual report. Peter was appointed to the Board as a nonexecutive director in 2022. He retires in accordance with the company's constitution, and being eligible, offers himself for election. The Board strongly supports Peter, and I now invite him to address shareholders.

Thank you, Mr. Chairman. Greetings to all. Ladies and gentlemen, dear shareholders, it's a real pleasure for me to stand here today, and look for election to the Board. Just a little bit about myself. I'm proud to call myself an Australian, but I have Belgian heritage and carry both citizenships. So it makes it a bit easy for me to work in Europe, where I am based. A bit of history on how I got involved with the TIC industry. About over 40 years ago, I looked up in the Adelaide advertiser, and I'm glad that a fellow board member is also from Adelaide. I looked up in the advertisement. And it was a small advert, 3 lines. It said Chemist Inspector wanted, apply to SGS, and that had the address. No Google, no understanding of what companies such as SGS did. And I applied, and I was given an interview. And I remember after the interview, coming home and saying to my mother, this is a job I don't want. It was night work. It was working on oil tankers. It was drawing very dirty oil samples. It was then taken to the laboratory and testing. Well, I said to myself, I don't want this job. But as luck would have it, I got the phone call and I got the job. And that 3 lines of advert has taken me now, all over the world, working with numerous cultures, working with a group of great people and some of them came from ALS, and really getting to know the TIC industry. And I think, once you're in that industry, you really become passionate about what the TIC industry can do. Not only does it have the ability to return significant shareholder value, but it's also a value to society. And often, I have to explain what I do to even my family and friends. And it's pretty easy to say, hey, listen, any of the air you breathe, any of the food you eat, any of the water you drink, any of the products you're using now sitting here, the carpets, your clothes et cetera, often goes through a TIC company. And that's a real value to society because we're there to ensure safety, we're there to ensure compliance. So it's really an industry which you, as shareholders, should welcome to be involved in. During my time with the SGS Group, it would be expected of me to look at competition and certainly competition, which you had a great amount of respect for. And ALS was one of those, not just because they're Australian, but also because they have a very high reputation amongst its peers. Our reputation for growth, a reputation for delivering best-in-class margins. And often, I have to stand in front of the CEO and my Board at that time and explain why my organic growth wasn't as high as ALS and why margins weren't as good as ALS as well. So it was with great pleasure when the -- when Bruce and the team reached out to me and said, would you like to join the Board at the -- at your retirement of the SGS Group? And I welcomed that because as I said, I have a great and immense respect for the ALS group. So, over the past 9 months, I've spent time looking at the company from the inside rather than the outside. And I can say that I'm wholly aligned with Malcolm and his team on the goals, the aspirations, the vision and the targets they have set for themselves. I'm extremely passionate about the environment, which was my business sector. I led many large acquisitions at the SGS Group. In fact, the largest that they did in the Life Sciences area. I'm based in Europe, where there is a target for growth for our company. And so, I ask for your support in my nomination to the Board. And again, I thank you for listening to my small story. Thank you.

Thank you, Peter. Details of the proxies received on the resolution to elect Peter are up on the screen now. Of those received, 91.6% are for the resolution, 8.4% against. Are there any questions from the floor? None after a story like that? Okay. Moderator, are there any questions online?

There are no questions online, Mr. Chairman.

Okay then. Well, that resolution is obviously going to be put to the poll later on. We move then quickly to resolution 4, the election of Mr. Nigel Garrard. Nigel is seeking election as a nonexecutive director of the company today. His profile is outlined in the notice of meeting and in the company's annual report. Nigel was appointed to the Board as a nonexecutive director in -- sorry, in 2023. He retires in accordance with the company's constitution, and being eligible, offers himself for election. The Board also strongly supports the election of Nigel Garrard, and I now invite him to address shareholders.

Thank you, Chairman and fellow shareholders. It's tough coming forth, when you're behind after 3 eloquent co-directors, so I'll do my best to not drop the standard of presentations that we've seen so far. I've been involved with ALS for only a few months. And I must admit, the first time I was called about joining the ALS Board, I had to go to Google, there was Google at that stage, Peter. And say, well, let's learn a bit -- let me learn a bit about ALS. I've been a customer through the businesses I've worked with in the past. And I quickly understood that this was a great Australian success story that have grown into an enviable international business. For my history, I've been a CEO. I'm a chartered accountant by training, but I left the profession after 9 or 10 years, and I've been CEO 3 separately listed companies in Australia and have broad domestic and international experience across all regions around the world across different industries. So I think that experience and a few scars to show for that will help me in advising the Board and the management team, as we go forward. In my post CEO life, I'm a NED of a couple of other Australian-based listed companies and some -- and a chair of a couple of privately unlisted businesses. My view after a short 3 months is that this is a business who has established a strong platform, has exciting opportunities, and with continued discipline and execution excellence, will continue to deliver above-target and above-market returns to their shareholders. I'd like to thank the Board for their support in firstly appointing me 3 or 4 months ago, and in their endorsement for my reelection, and I look forward to contributing to the ALS growth story in the future. Thank you.

Thank you, Nigel. Details of the proxies received on the resolution to elect Nigel Garrard are up on the screen now. Of those received, 99.7% are for the resolution and 0.3% against. One shareholder wants to know who the 0.3% is. Are there any questions from the floor? Yes, we have one here, please.

Good morning. My name is Paul Donahue, and I represent the Australian Shareholders Association today. So, I think that previous question may have come from written submissions made earlier, but I'm the representative today. I might reask that question about the Board's skills but with a bit more nuance, if it's okay. So it's not particularly against Nigel -- not the 0.3%, so don't worry. So the corporate government statement includes a Board skills matrix, which provides an aggregate view of the Board's skills. However, that matrix doesn't cover skills -- specifically cover skills in your 2 core businesses of Life Sciences and commodities. So I read the blurbs for each director and was able to sort of piece together who had skills in those areas. And it seems that Mr. Deane and Mr. Kadia have experience in Life Sciences, but since the resignation of Mr. Sartain, there is much directly experience in commodities on the Board. So that's the context. So the question is, would the Board consider adding commodities and Life Sciences to the skills matrix so it's clearer?

Yes. I think you'll find that with the addition of Mr. Peter Possemiers, he has the experience in those areas of Life Sciences and commodities. My own background is in commodities of oil and gas, but I didn't think it was important enough to put in the skills matrix. Some directors underplay their skills. Others might overplay them. But broadly speaking, the way we try and structure a Board, or I do anyway as a chair, is have roughly 50% or half of your Board members to have experience in -- related to the industry they're governing or company they're governing. And then the other half, they've got to have -- cover the functional roles, the finance, the science in this particular industry as well. And when -- you should cover all of those bases. And I think the Board is very well balanced in that regard. As I said, pointed out today, I'll be retiring in a year's time, and Charlie Sartain has just retired. And so, when we look at replacement directors, so all of those factors will be taken into account for the next appointment as well. But I don't think there's any weakness on this Board, to be frank.

Thank you.

Okay. Any other questions from the floor? If not, moderator, are there any online questions?

There are no questions online. Mr. Chairman.

Okay. Then thank you. That will be put to the poll later on as well for resolution 4. We move now to resolution 5, the remuneration report adoption for 2023. This resolution will be decided in accordance with Section 250R of the Corporations Act. It should be noted that this vote is advisory only and does not bind the directors or the company. The Board -- talking about remuneration. 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 in the Australian market. In addition, the aim is to provide both the 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 term. 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, a fixed salary; second, a short-term incentive over 1 year, which has a 70% cash and 30% deferred equity component; and thirdly, a long-term incentive over 3 years, which is predominantly equity-based. KMPs must also meet a minimum shareholding requirement. As outlined in the remuneration report and in my Chairman's address, the directors believe the approach taken by the Board in relation to at-risk remuneration and the outcomes for the executives in the 2023 financial year are both fair and appropriate. There's been a good correlation to the company performance and shareholder outcomes, as evidenced by the record underlying net profit after tax and dividends despite the difficult external environment during the year. Details of the proxies received for this resolution are up on the screen. Of those received, 71.85% are for the resolution; 28.15% against. It's worthy to note that 20.8 million shares, or almost 5.89% of those shareholders voting, abstained from voting on this resolution. Now are there any questions on this resolution from the floor? The ASA has one, please.

My question relates to the retention arrangements. So Mr. Damasceno and Mr. Johnson, in which they'll receive onetime their fixed remuneration as a bonus if they meet certain conditions. So one of those conditions, is that they remain employed with the group on 31st of May in both 2024 and 2025. I read through the rem report, but I couldn't find the other conditions.

Sorry, they'd be the normal conditions that we have under the plans. It's mainly driven around behavioral issues to make sure that they remain good -- pretty good productive executives.

Okay. Thanks for that. Just to follow-up. So the ASA doesn't normally support retention bonuses where the only hurdle is continued service. But given the circumstances of the CEO leaving, we think it's appropriate in this case.

Well, thank you for your support there. And it's interesting that if I include the ASA as a proxy adviser, I know you're not, but if that's the case. I think we looked at 5 organizations, and 4 out of 5 recommended voting for all of the resolutions, including the rem report. So there was one that was an outlier there, but that's life, and they have their principles and everyone has their entitlement to vote. And the shareholders, 28% of them have said, look, we don't like what we saw. So we're voting against it. And we accept that as a Board of Directors, and we'll do better next time to make sure we can convict some otherwise. Okay. Good. We have another question at the front from George?

Thank you, Mr. Chairman. You talk about this retention bonus, but listening to these directors that have spoken today, they've all said they wanted to come and work for ALS. It's a good company. It's got good ethics. These people that you're paying a retention bonus to obviously want to work for ALS. Why is there a need to pay them a retention bonus, when we have such a wonderful company that these directors have all said, hey, we wanted to come and work for this company because it's a wonderful company, yet we're paying a retention bonus to people that are already working for the company. Now how good the company is now that there's a future in the company for them, yet we need to pay the retention bonus.

Yes. Okay. Thank you for the question. We'll comment then, George. Look, the -- I think the directors, number one, they don't participate in any of these LTI schemes. The nonexecutive directors don't get any share performance rights whatsoever. So I just wanted to clarify that upfront. In terms of the executives involved, one of the issues is that this is an extremely competitive labor market in the TIC industry. And unfortunately, the regulations in Australia require such detailed information to be given out about our executives, that our competitors there from private equity to our peer group TIC companies know exactly what our top employees get paid. We don't know what our competitors get paid. It is a ridiculous situation. So any of our competitors could see these 2 gentlemen who had missed out on being appointed as CEO, they'll be bitterly disappointed, they were. And they're good -- they're really good at what they do. And our competitors admire them. So they just got to go to the rem report. Look it up and say, "Right, I want to know what they get paid so I'll go pay them more and take them away and weaken one of our competitors -- one of our major competitors, ALS. And so, the Board took the view that we wanted to have make sure that, one, we retained outstanding talent; and number two, that we didn't want any disruption to the company that they would cause, if they left the company. And so, it was a small price to pay in the view of the directors. If I look at the magnitude of this, it's just over $1 million you paid over 2 years. In a company that generates over the same 2 years, probably $5 billion in revenue. And it was a cheap insurance policy, if you like, to make sure that we had continuity of our strategic objectives. So that was the main reasoning behind it, and I still think it was a reasonable judgment call made by the Board. So we thank you for your comment. We have another question at the back, please.

I'd just like to support the Board in having made that decision. Having been a Chairman of a company where the Chief Executive was going, the last thing in the world you want is other very senior executives departing at exactly the same time so that you wind up with not 1, but 3 or 4 disappearing, and suddenly, you've got a lot of people who aren't there. Every time, a chief executive is appointed from outside or within the ranks, those who miss out are at flight risk. And in a company this size where expertise is really necessary, holding on to them is well worth of money. So I say to the Board, do not be terrified by the proxy advisers who have their ticker box approach to this thing. The real world is very different from the way that the ticker box works for advising about proxies. Well done, Board.

Well, thank you very much for your support. Thank you, indeed. But it takes lots of different people in a broad church such as ALS, and we'll always give people a say. And we might differ in opinions, but we've got to articulate our position probably clear. This was an unusual event, obviously. And next time around, we've learned our lesson will engage a lot earlier with the proxy advisers to make sure they're convinced. All right. Moderator, are there any questions online?

Chairman, there are some questions that were earlier submitted from George Bomber. Would you like me to read those questions out or...

Yes, please. George is in the audience here this morning. So we'll make sure that they were perfect.

Thank you. It is great to see the improvement in profit. However, the dividend per share is almost the same as 2014. The profit increase is approximately 90% with very little increase in dividend and less franking. Can you please comment on this?

Yes, George. Well, I think I'd make the same comment I've just already made that directors don't get these share performance rights. The only one is the CEO and Managing Director. All nonexecutive directors don't participate in the LTI or the STI whatsoever. So -- but let's take the case of the executive directors. 2014 is a very well-chosen year because it was the year that we paid out 90% of underlying NPAT. And the policy has since changed to pay out 50% to 60% of underlying NPAT. So in actual fact, the dividend now that's being paid is based on 60% of our underlying net profit after tax. The 2014 one was based on 90% payout. So we have improved. I guess the other observation I'd make is when we made the decision to go to that 50% to 60% payout ratio, it was based on the fact that we needed to invest in growth, right? And so, we did that. We decided on the 50% to 60%. The dividend came back a little bit, but we reinvested in growth. And we now got that growth, and that's resulted in the dividend coming back and exceeding 2014 based on a much lower payout ratio. But even more importantly, in the intervening period, the share price has tripled. So shareholders have had a capital appreciation as well. If we stayed at a 90% payout ratio, we wouldn't have the money to invest in growth that we've had over the last 6 or 7 years. So that's the reason why it's happened. Okay. So next question, moderator?

Next question also comes from George. Why is there not an escrow on shares given to executives?

This is to do when people have left the organization, George.

[indiscernible].

Okay. Raj Naran. Yes. Okay.

We didn't know, however, a shareholder.

Yes.

It's very bad from a company's point of view when some people -- when an executive leaves and wants to disposes their interest in the company [indiscernible] I think it is a good company to have...

Yes. Look, I agree with you. It's not a good look. There's no argument from you there. But it is almost unanimous practice in the ASX that this is the standard that is used, that once a person resigns from a company and leaves the company, then they're a free agent to do what they like. We don't control them. We can't control them. And so yes, I'm disappointed that it's happened, but I don't think we could force an escrow on a departing executive. And I argue that, that's probably not -- would not be allowed under law, but I'd have to take advice on that. Yes, in effect, we also don't know what Raj Naran's personal position is. For some reason, he may need the money. Like I don't know what that case is. But you and I don't know what position he is in that's caused him to do that. So look, that's the only explanation I can give, but we won't be changing that policy, sorry. But thank you for the question. Moderator?

There are no more questions.

No more questions on that one? Very good. Well, thank you very much, shareholders, for your interest in that. There's obviously diverse views in the company, but that's welcome. We now move to resolution 6, the amendments to the constitution. This is a special resolution that must be passed by at least 75% of votes cast by shareholders entitled the vote on the resolution. Shareholders will note that this resolution has been amended following feedback from such stakeholders to remove any proposed changes that would allow the conduct of virtual general meetings without a physical meeting taking place at the same time. Shareholders can rest assured that the Board considers hybrid general meetings to be best practice, and the amendments to the constitutions seek to ensure that we can continue to hold such meetings in the future. Importantly, the amendments also provide for the increase of the maximum number of directors on the Board from 8 to 12. This is important to allow the flexibility to have overlapping tenures for directors -- for director succession planning purposes and to expand the Board if it is required or necessary to do so in the future. Details of the proxies received for this resolution are up on the screen. Of those received, 99.7% are for the resolution, 0.3% are against. Are there any questions on this resolution from the floor? The ASA representative, please.

I think this is more of a comment than a question. So not the 0.3%, don't worry. The ASA's preferred meeting format is hybrid in which shareholders can participate in person online or via telephone with a full opportunity to participate regardless of how they choose to attend. We're seeing some companies moving away from that post COVID, and we're pleased to see that you're not joining them. So we support the amendment.

Okay. Thank you. As I said, rest assured, we believe it's best practice. It can be uncomfortable for Boards. Like today, for example, on the resolution of the Remuneration Report, there's a divergence of views. But as a Board, we accept different views. Diversity of thinking gives you good business outcomes, and challenging is always appropriate. And if it's done in the right manner, we welcome it with open arms. So thanks for your support. Okay. No other questions from the floor? Okay, moderator, are there any online questions?

There are no questions online, Mr. Chairman.

Okay. Thank you. We'll go to the poll later on. Now we move to Resolution 7, the 2022 Performance Rights to Grant to the CEO, Mr. Malcolm Deane. Under the terms of that is of the 2022 long-term incentive plan, a summary of the LTI Plan and the calculation of Malcolm's proposed grant was set out in the explanatory notes of the notice of this meeting. This resolution is brought as a result of Malcolm being entitled to the grant of 15,943 Performance Rights under the 2022 LTI plan prior to his appointment as Managing Director and CEO, but which were not able to be granted without shareholder approval following his appointment as Interim CEO in March and as the permanent CEO in May of 2023. So approval is being sought to make grant of the Performance Rights to Malcolm in line with the company's LTIP plan rules. The shares will vest in July 2025, but only to the extent that performance hurdles are met over the next 2 years. Malcolm will receive the Performance Rights and be entitled to the issue of the ordinary shares at no cost to him if the performance hurdles are met. No loans will be granted in relation to his participation in the plan either. The Nonexecutive Directors strongly support the issue of these Performance Rights. Details of the proxies received for the resolution are up on the screen now. For those received, 93.6% are for the resolution, 6.4% are against. Are there any questions on the resolution from the floor? No? Thank you. Moderator, are there any online questions?

There are no online questions, Mr. Chairman.

Okay. Thank you. And that also will go to a vote under the poll. The next item of business is to approve -- is approval for grant of 2023 Performance Rights to the Managing Director and CEO, Mr. Malcolm Deane, under the terms and conditions of the company's long-term incentive plan. The summary of the LTI plan and the calculation of Malcolm's proposed grant are set out in the Explanatory Notes of the notice of this meeting. As a Managing Director and CEO of the company, the issue of the Performance Rights to Malcolm requires approval by ordinary resolution of shareholders. Approval is being sought to make a grant of Performance Rights to Malcolm in line with the company's LTI Plan rules. The shares will vest in July 2026, but only to the extent the performance hurdles are met over the next 3 years. Malcolm will receive the Performance Rights and be entitled to the issue of ordinary shares at no cost to him if and only if the performance hurdles are met. No loans will be granted in relation to his participation in the plan, and the Nonexecutive Directors, of course, strongly support the issue of these Performance Rights. Details of the proxies received for this resolution are up on the screen. Of those received, 87% are for the resolution, 13% against. Are there any questions on this from the floor? No? Thank you. Moderator, are there any online questions?

There are no questions online, Mr. Chairman.

All right. Very, very good. Thank you. I now move to Resolution 9, the approval of financial assistance in relation to the acquisition of HRL Holdings by way of takeover bid in June 2022. The reasons for seeking this resolution are detailed in the Notice of Meeting. Essentially, the company is required to seek shareholder approval to allow HRL and its subsidiaries to provide financial assistance in connection with its acquisition by ALS in accordance with the Corporations Act. This is because the acquisition of HRL Holdings and its Australian subsidiaries was paid for using debt funds guaranteed by companies in the ALS Group. By approving this resolution, it will allow the ALS Group greater flexibility to structure its lending arrangements and to allow HRL Holdings and its subsidiaries to be added as a guarantor under the group's lending -- broader lending arrangements. Details of the proxies received for the resolution are up on the screen. Of those received, 99.7% are for the resolution, 0.3% against. Are there any questions on this resolution from the floor? No. Moderator, any online questions?

There are no online questions, Mr. Chairman.

Very good. Thank you. The final item of business today is consideration of the company's financial statements for the year ended March 31, 2023, including the Director's report and a report by the Auditor that were provided to shareholders in the 2023 annual report. Shareholders are now provided the opportunity to ask questions regarding those financial statements and reports about 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? The ASA, please.

We have 2 questions. The first one relates to the higher level of intangible assets on the books. So this year, intangibles were just over $1.4 billion, having risen from about $1.2 billion last year, and they now represent 42% of total assets. So most of this is goodwill presumably from your numerous takeovers. But there's been some recent write-downs of intangible assets in other companies. So just wondering if you could comment on the risk of carrying such a high level on the books?

Yes. Look, it's a good question. It's one that Leslie and her role as Audit Committee Chair looks at in a lot of detail at her committee. We're very aware of it as a Board. And whenever you've got a highly acquisitive company and our peers, TIC companies are no different as well. They have high intangibles because -- well, their very definition. Basically, when we make an acquisition, we're effectively buying customers, it does come with some other tangible assets, obviously, on some equipment, buildings or land or something that predominantly, it's about the long-term customers who are aligned with that business and going to continue on. So every year, when we make an acquisition, we get -- particularly if it's any sizable acquisition, we get an external party to come in and assign the appropriate intangible number to the carrying value of the assets. And then, of course, every year, we go through and value those assets -- the intangible assets to see if there are any reasons for any write-downs. So that's the reason for the write-down. So yes, it's a company that does have high intangibles. There are a number of very high-quality companies that have similar situations. And -- but it's something we watch very, very closely.

Thank you. Second question relates to the high margins of the Commodities business. So your EBIT margins for Commodities are double that of Life Sciences at roughly 30% Commodities compared to 15% Life Sciences. Why are the Commodities margins so much higher? And is it sustainable? And so in your opening address, you talked about reaching it into businesses with even higher margins. So what might they be?

Yes. Maybe I'll ask Malcolm to comment on this because it's largely an operational question as well. But -- yes, Commodities' margins are higher. It's a function of the competition in that space. In Life Sciences, for example, where there is a lot lower margins, there's a lower barrier to entry than there is in the commodity space, particularly the fire assay type work or even if you're going to use the latest [ Chrysos ] technology, there's a higher barrier cost-wise to get into that, and it's a more cyclical industry. And so some people shy away from it. You make very high margins at the top of the cycle. Some people believe you make low margins, but we're seeing a change in that system or that trend going forward at the moment because of the decarbonization is causing a lot more action in mining circles than there has been historically. In terms of higher margin businesses, well, the pharma industry sometimes has got very, very high margins. But I think it's -- I shouldn't talk about this because I'm nowhere near as skilled in this as Malcolm is. So if you could...

Thanks for the question. It is -- in fact, it has -- if you see it independently it has higher margins. As Bruce mentioned, if you look into the portfolio within Life Sciences, the margin of each vertical is different. We have high-performing margin businesses within Life Sciences where, obviously, it's an average. The underlying drivers of the Life Sciences business are different from Commodities. And the third part of the answer is what Bruce mentioned about competition. Obviously, ALS is one of the leading players in the Geochemistry and the Commodities business, and that will put us in a much different position. And the Life Sciences, at large, is much more fragmented. That would be the answer.

Thanks so much.

Thank you.

Are there any other questions from the floor? No? Okay. Thank you. Moderator, are there any online questions?

Mr. Chairman, there are 2 questions that were earlier submitted. The first question comes from Andrew Fitzsimons. And he asks, what is ALS doing to support the [ ES verdict ] later this year?

Look, there are lots of comments coming from the floor, a lot of free advice. Thank you for -- thank you for that. Look, ALS is a global company. And we operate in a lot of different cultures and in a lot of different regulatory regimes. And we just stay totally apolitical. It's not in the company's best interest and not in the shareholders' best interest for us to become social commentators. We're here to be business people. That's where our skill is. And I think it would be the height of arrogance for me, as a Chairman, to get up here and speak on behalf of nearly 19,000 employees and from lots of different foreign jurisdictions who have very different views to Australian values. And even our shareholders, they are speaking on behalf of them, I wouldn't comfortable. This is -- these sort of things are a personal choice in my view. And so we stay out of it, and we'll continue to do so.

Thanks, Mr. Chairman. Your final question also comes from Andrew Fitzsimons. And he asks, what else can ALS do to improve sustainability performance?

Well, I think it's pretty good at the moment, but we're always out for continuous improvement. Like we -- I think there are about 4 major benchmark organizations, and ALS always compares very, very favorably in that regard. I think at ACSI, the Australian Council of Superannuation Investors, the big proxy group for the big fund managers, they rate us in, I think, the top level of what we do in sustainability there. But if I look at the 4 pillars of sustainability that we follow, there's kind of people, that's planet our business -- the community and our business practices. And on people, just in the last year, we've got a couple of statistics here. When I talked about us being the industry leader in safety, and that's a terrific outcome for us. We have what we call a PPI scorecard, which measures all of the management team's leadership and their culture and risk management, their compliance programs and training and awareness and injury management. And so that's a really strong focus for us with people. We've just actually hired more people to help with what Malcolm was talking about. And I talked about briefly about mental wellbeing of our people and making sure we've got diversity, equity and inclusion embedded into our organization. So we're doing a lot on the people front. On the planet front, as we put it, we've achieved carbon neutrality for Scope 1 and 2 emissions, and we'll maintain that going forward. We now buy 90% of our electricity from renewable sources. And that will increase over time. We're actually building solar panels onto the rooftops of a lot of our laboratories where we can do it around the world. And we actually installed over 1.5 megawatts of solar PV capacity in the last year as well. And we've also developed our road map to reach Net Zero by 2050. So -- there's a lot happening with the environmental side of our business. In terms of community, I talked about the $2.4 billion contribution we make every year to various parts of the community. And we even look at modern slavery to ensure that our business practices are good in terms of our supply chain. We send out questionnaires to all of them to make sure that most of -- and all of our suppliers have got to comply with that and the contracts we send out to them now. So that we make sure there's no children, in particular, affected by that sort of situation. And then finally, on the fourth pillar of our sustainability on the business practices side of things, we have very, very strong cybersecurity controls. That's a very strong focus of the Board, as you can imagine. But more importantly, the management team is driving that. We do a lot of code of conduct training. And 100% of the [ compulse-free ] training was completed in FY '23. As I said, we've maintained or improved our ESG ratings. And even our STI incentives are tied to a lot of our ESG metrics as well during the year. So I think we're doing a lot in the sustainability front. Does that mean we can't do better? No, we'll continue to strive to do better. And the committee headed by Siddhartha Kadia, Sustainability and Innovation Committee, is all over it like a rash. So moderator, are there any more questions?

No other questions, Mr. Chairman.

All right. Okay. As there are no more questions, this concludes our discussions on the items of business. We'll now move to collect the poll voting cards. In 1 minute, I will close the online voting system. So please ensure that you've cast your vote on all resolutions. I'll now pause for 60 seconds to allow time for you to finalize your votes and have them collected. [Voting]

People are coming around the room to collect the voting cards now. Just for the online participants, there's a good rollout in the house today. So it's probably going to take us a little bit longer, but the 1 minute is still a rough guide. We're in the final stretch of collection of voting cards in the room. Okay. Are there any more cards in the room that need collecting? There's one over at the other side, please. It's like watching the grass grow, isn't it? At least I've got all your faces to look at. You only got mine -- my colleagues, sorry. Okay. Ladies and gentlemen, voting is now closed. There is no further business to be conducted. The results of the poll voting will be announced to the ASX as soon as possible after the 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 the management team, I offer our best wishes for you and your families for a safe and healthy year ahead. Thank you very much. And Mr. George Munger would like to make a final comment, I understand. Can I have a microphone, please? Hey, everyone. The meeting is closed, George, but we'll listen to you.

Well, you did say that you were going to bring up some things at the end of the meeting because I did write to the Secretary. And I noticed in your annual report that you have a future short- and long-term plans. The short-term plan was for 4 years; a medium term, 17 years; long term, 27 years in your forward planning. And my question was, why aren't the Directors the incentives paid in relation to the executives, more in line with these short- and long-term plan? At the moment, the short term is 1 year. The long term is 3 years. We have a short-term plan, which is 4 years, and the medium term, which is 17 years, but the incentives aren't in line with these plans.

Well, I don't know where those 14 years and [ 27 ] year numbers came from.

They were in your annual report that you came out with the short- and long-term plans.

Right. Okay. Well, that's one that's got slipped by me. But look, I think -- look, I apologize. I know you did send that question in for someone saw it. I guess our moderators missed that. So apologies for that. But at the end of the day, the reason that we don't tie them to, say, 14 and 27 years, quite clearly, is you'd never attract an executive to take a job like that for the simple reason, who would wait 14 years or 27 years to get an incentive payment for their long-term work? No one.

[indiscernible]

Well, that's if we tied it -- if we tied it to the dates that you say so...

[indiscernible] short-term candidate to be for 4 years and the long term to be 7 years, it's more in line with the progress of the company and build a foundation to drive the company more.

So what you're looking for is longer -- slightly longer tenure in the LTI plan, by the sounds of things?

Absolutely.

Yes, right. Got you. No, I get you. But not tying it to 14 and 27 years. Okay. Right. Okay. I didn't see that question, sorry. Look, that's something that the ASA, I think, has raised with this in the past as well. I think your view at the ASA was increasing from 3 to 4 years. You're saying increasing from 3 to 7. Yes, we look at this every year. And there's always that tension between what is attractive to employees to get the best people versus what is in the best interest of the shareholders. And market practice out there is still, I think, biased towards 3 years. I don't know of anyone doing 7 years. For example, I know there are people that did 4 and 5 years, but it's something we look at. And again, we've got to retain people in the international arena, not just the Australian arena as well. So it's a bit of a balancing act for us. People get paid a lot higher in terms of incentive payments in TIC counterparties, but the Australian sector doesn't like that. The remuneration [indiscernible] don't like that here in Australia. But it's just a balance, and we have to make a judgment call on what the right outcome is for the company as a whole.

[indiscernible] to take your intangibles, we will increase intangibles this year, a short-term band next year we'll write it down again [indiscernible].

No, no, no. They don't get to make that decision. The Board makes that decision.

I understand. But that's what happens.

Not in this company.

[indiscernible] over quarter of a period.

Yes. Okay. Look, we'll take that under advisement, and we'll consider that at our next People Committee meeting as well. And you always come up with some ideas that stretch the mind, George, so thank you for that. All right, ladies and gentlemen, the meeting has already been declared closed. So thank you very much for your attendance today. It's a wonderful turnout. We had a huge voting turnout as well. So people are really engaged with the company. And that's what we, as directors, want. Thank you very much.