Amotiv Limited (AOV) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. On behalf of your directors, I welcome you to the GUD Holdings Limited AGM for the year 2020. I'm Graeme Billings, Chairman of your Board of Directors. I was delighted and proud to be recently elected by my fellow directors following the untimely resignation of Mark Smith. I will talk on Mark's contribution a little later. The Company's Secretary has advised me, and I declare a quorum is present and open the 63rd Annual General Meeting of GUD Holdings Limited. The notice of meeting was distributed to all shareholders in excess of 28 days ago, along with the company's annual report for the year ended June 30, 2020. With your consent, I'll take it as read. Now ladies and gentlemen, we meet in a manner unusual for most of us due to the extraordinary and unusual circumstances which have consumed the world. The COVID-19 pandemic has had considerable and distressing impacts on our lives and will continue perhaps in ways as yet unforeseen well into the future. As this is the first virtual AGM of the company, you will experience a few changes to the format. By reason of the travel restrictions currently in place, in particular, in Victoria, your Board is not assembled in the one place. Your Managing Director and I are hosting this virtual AGM from the company's head office in Melbourne. There are other format changes, which I will speak to shortly. Now before I introduce our directors, on behalf of all the Board, management, employees of GUD, we acknowledge the recent passing of our former Chairman, Mr. Mark Smith. Mark's passing followed a short period of illness that caught us all by surprise. And was thus, particularly, devastating. We can only imagine how difficult this was for Mark and his family. We have extended our sincere condolences to Mark's family as I'm sure you do as well. We remember Mark for his significant contribution to GUD. Mark stepped into the role of Chairman of GUD this time 3 years ago, having been on the Board for 8 years and having served as Chair of the REM Committee. Mark had a deep understanding of the GUD business. He was a great supporter of innovation, both in technical solutions and operational processes. As a Chairman, he was pragmatic and sought to keep things simple. He believe that in complication, there is wasted time and effort that could be better focused on the business. He was at all times inclusive of his fellow Board colleagues and management. Mark was passionate about engagement with employees, in particular, seeking to ensure their well-being. His commercial experience and expertise, along with his clear focus on strategy, have been instrumental in positioning GUD for the future. He has had an enormous impact on GUD, and we will always be indebted to him for his contribution. Now please allow me to introduce your directors. This is the first change you will experience. Most of your directors are attending these proceedings as you are online. They will be available to answer questions you may ask. With me today is our Managing Director and CEO, Mr. Graeme Whickman. Graeme joined the Board on 1st of October, 2018, following his appointment as Managing Director and Chief Executive Officer. He will address us later in the meeting. Online is Ms. Anne Templeman-Jones residing in Sydney. Anne was appointed Nonexecutive Director on first of August, 2015. She is an independent Director, Chair of the Risk and Compliance Committee and is currently acting as interim Chair of the Audit Committee. Anne was recently elected as Deputy Chair of the Board. Also online is Mr. David Robinson, based in Houston, Texas. David was appointed a Nonexecutive Director on 20 December, 2011. He's also an independent Director and is Chair of the Remuneration Committee. Last, but not least, is Ms. Jennifer Douglas, also online. Jen was appointed Nonexecutive Director on first of March 2020. She is an independent Director. In accordance with the law and our constitution, Jennifer Douglas is standing for election as a director by the shareholders later in the meeting. I will invite Jen to address you when standing for election. In addition, present online is Mr. Martin Fraser, our CFO; and Company Secretary, Mr. Malcolm Tyler. We also have online present at this meeting, Mr. Chris Sargent of KPMG, the company's auditors. KPMG have been our audit firm since the 2007 financial year and are in their 14th year as GUD''s audit firm. That said, there is a rotation of audit partner every 5 years. And consequently, Mr. Chris Sargent completed his fourth year as audit partner in the 2020 financial year. Before we begin with the formal business of the meeting, I'd like to make you aware of some housekeeping matters, particularly as this virtual meeting will have some features certainly unfamiliar to you. This meeting is being facilitated in virtual format by the Lumi platform. Lumi has facilitated nearly 2,500 virtual meetings in 35 countries this year. The platform allows shareholders, proxies and guests to attend the meeting virtually. To attend this meeting, you will have downloaded the Lumi app and entered the credentials provided to you that recognize you as a shareholder or proxy. Alternatively, you may have entered as a visitor or guest. All attendees can watch a live webcast of the meeting. Only shareholders and proxies have the ability to ask questions and submit votes. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting, either when the particular item of business is open for discussion or after the close of the business, but before the close of the voting polls. [Operator Instructions] Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we may run out of time to answer all your questions. If this happens, we will answer them in due course either via e-mail or by posting responses on our website. In accordance with current practice, voting today will be conducted by way of a poll on all items of business. Voting on every resolution is held over until the end of the meeting. However, in order to provide you with enough time to vote, I'll shortly open voting for all resolutions. At that time, if you're eligible to vote at this meeting, a new polling icon will appear. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You have the ability to change your vote up until the time I declare voting closed. In the unlikely event that we experience a loss of signal with the webcast, please do not log out of your Lumi app. We have backup webcast streaming running, which will automatically appear in your Lumi app within about 30 seconds of the initial loss of signal. This will restore your video, audio and slides of the meeting. I now declare voting open on all items of business. Polling icon will soon appear, please submit your votes at any time. I will give you a warning before I move to close voting. I advise shareholders that the status of proxies on each item of business will be shown on the screen as we address each item in turn. To the extent that there are open proxies available to be voted by me on any item, I advise the meeting that I will vote them for each of those items on the agenda. The Board unanimously recommends that you vote in favor of all resolutions. This meeting is being webcast live today to shareholders, staff and other stakeholders of GUD Holdings Limited. At the conclusion of this meeting, an on-demand version will be available on the company's website for playback to interested parties who could not be available for the live stream. Today's proceedings will commence with my address to shareholders. Copies of my address will be available following the meeting on the company's website. Following my address, I'll ask our Managing Director and Chief Executive Officer, Mr. Graeme Whickman, to address you on key operational and financial highlights and provide commentary on the business. We will then turn to the formal business of the meeting, including consideration of the financial statements and reports; the election of Ms. Douglas as a director; the approval of the remuneration report; the special business of meeting, which includes a resolution to approve the grant of equity in the form of performance share rights under the company's long-term equity plan to the Managing Director, Mr. Graeme Whickman; and the approval of the renewal of the proportional takeover provisions in our constitution. So ladies and gentlemen, my address to you today covers 5 topics. I will firstly speak about the importance of safety at GUD. I would then like to address the long-term strategy, the positioning and the portfolio of the group; the efforts that are being made to ensure sustainability of the business; identifying and managing risk and the development of our people. I'll then touch on the financial performance of GUD in FY 2020, which can best be described as a solid performance, in particularly difficult and variable trading conditions late in the second half. I will also address you on Board developments. And finally, following a review of aspects of the operations and financial position of the company from our MD, Graeme Whickman, I will provide commentary on the outlook for the current financial year. Okay. Turning to safety. Safety is a key priority for GUD. Throughout the year, the directors and management of GUD maintained a strong safety focus and continue to develop and implement initiatives intended to drive a strong level of engagement, ownership and accountability for health and safety. As a Board, we remain vigilant and encourage management's efforts to maintain the physical and mental welfare of our employees, particularly throughout the latter part of the year when COVID became a significant factor. Early in the year, prior to the arrival of COVID-19 pandemic, your Board visited two major operational facilities. In conjunction with holding town hall meetings with all available staff, directors conducted site safety walks. These opportunities allow the Board members to get closer to the operations, understand the cultural aspects and hear from all staff members on a range of matters and views held in the workplaces. We will be looking to reengage these visits when permitted under government restrictions. Across all of GUD, we saw a reduction in the lost time injury frequency rate, cases declined from 5 to 4. However, there was an increase in medically treated injury frequency rates, cases increased from 4 to 6. Pleasingly, our lost time injury frequency rate of 2.7 is now less than half of the Safe Work Australia warehousing and distribution industry sector benchmark rate of 8.6%. Turning now to strategy. GUD business portfolio is centered on the core automotive and water businesses. We continue to grow organically and to seek acquisition opportunities. GUD has a position of strength in the automotive aftermarket business. Whilst the slowdown in new vehicle sales has been experienced in recent years, exacerbated by the impacts of COVID-19, the automotive aftermarket has shown some resilience. Your Board considers it an inherently attractive industry for the following reasons: Firstly, the addressable market, which is the 5-year old plus car parc is around 15 million vehicles and is expected to grow at around 1% to 2% per annum. Secondly, a shift in the car parc composition complements our product portfolio. And in particular, the growing composition of SUVs and pickups within the car parc place to strength in businesses such as BWI and DBA. Thirdly, inter-business synergies exist within the automotive business due to the operational commonalities. Fourthly, the ability to grow through acquisitions. GUD has the internal resources and financial strength to undertake further complementary acquisitions. We also recognized the long-term future challenge and opportunity in terms of electric and autonomous vehicles. GUD currently generates less than 45% of its automotive revenue from products discrete to internal combustion engines, vehicles and can see a strong and evolving aftermarket within the future EV landscape. It remains the case that each of GUD's larger automotive businesses continues to enjoy a strong and unique market position. In recent brand surveys, many of our market-leading brands are in the top quartile of their respective segments, combined with a healthy track record of both product and service innovation. The year also saw much activity around building a foundation within Davey for profitable midterm growth. While revenue grew modestly, the EBIT was impacted through new product development costs, restructuring and the significant impact of government lockdowns and factory load recovery variance. Davey's farm trials of modular water treatment products continue. In addition, those sales have been secured in new applications such as hospital and hospitality and other agricultural applications. Further, Davey sold out its entire allocation in Europe of its Nipper chlorinator and delivered the launch of the Tank Sense product. Davey remains committed to its strategic plan. Management efforts are focused around the strategic pillars of supply chain optimization, commercialization of product innovation, diversifying channels to market and improving people and culture outcomes as they roll out their strategy. The Board and management have been deeply engaged in individual business unit strategy reviews throughout the year. We are satisfied with the current business portfolio, and we remain willing to make logical automotive acquisitions. FY '20 represented the second year since we created a separate Board committee to focus on risk and compliance. This year's risk review is added to the foundation work of the prior year and saw a fine-tuning of risk assessments and greater familiarity with the aligned risk management tool. The COVID-19 pandemic provided an opportunity to test whether the risk mapping, reviews and action plans, which have been prepared in the prior year were realistic, complete and effective. This proved to be the case in the face of the COVID-19 pandemic, which saw significant custom demand, supply chain and cybersecurity risks occurring in an overlapping time frame. While we did not foresee the exact nature of the COVID-19 event, the risk mitigation, business continuity and crisis management plans, complemented by the COVID-19 response framework and defense actions, responded appropriately. While levels of disruption were relatively high at times, the company did not experience unacceptable trading or liquidity position. Consequently, there has not been a need to make any fundamental changes to risk themes, key risks or key mitigating action plans. The company is committed to innovation. Our award-winning innovation program taps into the creativity of our people to deliver better customer experiences. Each business has its own innovation and product development framework, one that is tailored to its specific needs. Several group-wide initiatives to tie these individual programs together under a collective banner dedicated to collaboration and shared learning. In 2020, GUD businesses have kept the innovation mindset strong and launched many new products. GUD products and businesses have won awards for design and innovation. Most recently, two of our businesses, Ryco Filters and Brown & Watson International, known for its Narva and Projecta products, were awarded fifth and eighth places, respectively, in the AFR BOSS Most Innovative Companies of the year in the manufacturing and consumer goods sector, a continuation of awards GUD achieved in 2018 and 2019. Turning now to people. Our highly engaged employees enable us to deliver positive outcomes for our stakeholders. Our focus over many years has been to ensure that our culture fosters a high-performing and engaged workforce within each of our businesses. Increasingly, we bring together employees to cross-pollinate ideas and shared learnings. Diversity is seen as a key driver of innovation and company performance. The Board is active in setting and guiding the culture of GUD. The recruitment of the Chief People Officer in May 2019 led to greater emphasis on diversity and inclusion, talent development and realizing the full potential of the human capital of GUD. This year, we enhanced our diversity inclusion strategy covering the period through to 2022. Our aim is to strengthen the open culture of each business by ensuring inclusiveness and encourage the contribution of all employees by leveraging differences that exist. Training and development are critical elements of our workforce planning. We support development by training our employees with the workplace as well as supporting them to undertake further education. This year saw us launch our inaugural leadership development program and make online, open-access, self-directed learning available to all employees. Each year, we conduct an employee engagement survey, 6 of the 17 areas measured showed further increase against 2019 results. Pleasingly, the overall employee engagement score improved from 75% to 77%, placing the organization in the global top 25th percentile. On a question whether employees believe that the company is committed to equal opportunity for all employees in 2020, there was a 70% favorable response to this question, which is up from 60% in 2019. This year, the company published its second sustainability review focusing on environment, social and governance aspects. GUD's Board sees this review as an opportunity to outline the impact GUD has on the environment, its people and the communities we operate in as well as identifying and discussing some of the longer-term sustainability consequences for the company. The topics addressed included health and safety, product safety and quality, compliance, innovation, equality, human capital, sustainable procurement, water management and climate change. Whilst GUD businesses have historically had close relationships with their suppliers, the introduction of GUD's comprehensive Ethical Sourcing Code, which goes beyond the requirements of modern slavery legislation, has increased the level of contact, cooperation and accountability. Our environmental sustainability and governance efforts are comprehensively set out in the sustainability review. Turning to financial performance. The 2020 financial year was a year of two parts: Solid performance in the first half, impacted by the arrival of COVID-19 in the second. In hindsight, the year demonstrated the relative resilience of GUD's businesses and the industries in which we trade. Our businesses continue to deliver branded products, which are needed on a day-to-day basis by customers to keep their vehicles on the roads or water pumping in their homes, farms and businesses. The Board firmly believes GUD remains well positioned in the medium to long term. We strengthened our focus on the operational fitness of our businesses and continued with innovation efforts and new product introduction. Critically, we didn't reduce these expenditures even when COVID-19 required cash conservation. Revenue for the year increased 1% to $438 million, despite second half COVID-19 volume impacts. The company received about $3 million in FY '20 from government JobKeeper and like subsidies. Now on a like-for-like basis, excluding AASB 16 impacts, underlying NPAT was down 16% to $50.9 million. The reported basic earnings per share on a pre-AASB 16 basis of $0.53 per share was down from the prior year's result of $0.69 per share. Our balance sheet remains strong, with gearing being net debt against net debt and equity of approximately 34% and robust interest cover. Pretax conversion of 98% was achieved for the period well ahead of internal targets, very pleasing. In line with the desire to position the company for growth opportunities, the Board reactivated the dividend reinvestment plan for the final dividend and it is pleasing to note some 24% of shares participated in the DRP. The total dividend for FY '20 was $0.37 per share, consisting of an interim dividend of $0.25 per share and a final dividend of $0.12 per share. Both dividends were fully franked and represented 67% payout of full year underlying NPAT. This compares with total dividends of $0.56 per share in the previous financial year. The lower final dividend reflected uncertainty around prevailing trading conditions. We retained significant franking credits in order to continue to provide into the future, a traditionally high payout ratio of fully franked dividends. The Board considers such prudence as appropriate. Now turning to Board matters. In March 2020, we welcome to our Board, Ms. Jennifer Douglas. With considerable experience in communications and technology, Jen is a Nonexecutive Director on two other listed companies and serves the community in not-for-profit roles. The appointment of Jen followed a comprehensive search process assisted by a global recruitment firm. We look forward to shareholders approving her election at this AGM. Your Board are a tight cohesive Board of 4 Nonexecutive Directors plus the MD and one that interacts constructively and ongoing with management. An externally facilitated Board effectiveness and performance evaluation concluded in late 2019, confirmed that the Board was performing effectively and representing shareholders well. The same external consultant advised recently on the succession to Chairman. Your Board remains aware that certain skills and experience could be added to enhance performance. We have commenced a process to appoint another member in the next 6 to 12 months. On a personal matter, my election as Chairman has made me consider my commitments. I've put a plan in place to relinquish a number of Board positions in an orderly manner. The execution of my plan is begun and will continue over the coming months. My commitment and diligence in carrying out my professional responsibilities will continue to be at the highest level going forward. So in conclusion, there is no doubt that we have a relatively resilient portfolio of businesses with organic and acquisition growth potential and which continue to perform solidly in the current financial year. Before addressing that particular topic on outlook, I invite GUD's Managing Director, Graeme Whickman, to provide you with some more perspectives on the financial, people and operational performance. But just before we do, I'd like to share this 1-minute video that shows how our team at Ryco are using high-tech 3D scanning of engine base to rapidly prototype new products via 3D printing. [Presentation]

Well, good morning, ladies and gentlemen, and thank you for the opportunity to address you, our shareholders. Now I'm pleased to be able to share with you today commentary on our safety, operating and financial performance, including our responses to the COVID pandemic with additional comments about our ongoing efforts on business foundations and business unit strategies. Now since I last spoke to you in October 2019, the following 12 months have been challenging for the world human population for the global economy and for automotive markets and obviously, our own businesses. Firstly, I'd like to talk about safety at GUD. It's no coincidence that both the Chairman and I are speaking to the subject. It's a key area of focus, not just last year, but every year. GUD has been careful in ensuring we maintain a safe working environment. Now this was made increasingly more difficult with the overlay of so many off-standard working practices brought about by the COVID situation. We increased the level of attention, engagement and communication across all our businesses. Importantly, our overall safety statistics didn't deteriorate through the second half of the year when COVID-19 impacted. Now whilst the full year safety metrics deteriorated slightly over the last year, we were very pleased with the reduction in the high-consequence lost time injuries in the last year. Now given these are more significant injuries and therefore, have a more profound more longer-lasting impact than those recorded in the medical treatment category. We also note that in the 2020 employee engagement survey, our employees agreed that the company treated their safety as a priority, with the question on whether the company is committed to employee safety. This was reflected in the 94.2% of all our employees responding favorably to that question, a percentage that not only exceeds the global 75th percentile score of 88.5%, but one that has shown steady increase year-on-year over the last 4 years, up from 89.3% in 2016. The Board and executive leadership group conducted regular safety walks prior to COVID and will return to these when permitted. We received comprehensive monthly reports, which cover a range of leading and lagging indicators, including training initiatives, audits completed, corrective action plans implemented, the number of work injuries, near misses and a number of other incidents. Efforts in the matter of safety are never complete, and we challenge ourselves to maintain a chronic unease and have further plans for ongoing health and safety enhancements. Now as we entered FY '20, management were clear the year was one of consolidation. We needed to manage significant currency shifts, absorb domestic cost inflation, bed down new multiyear supply agreements, push hard on supply cost reductions and deliver appropriate pricing increases. We are working hard to isolate and secure a steady state on the differing financial outputs alongside developing the refreshed business unit strategies for future growth and also keeping up with the acquisition dialogue. Up until March, GUD's performance was tracking to our expectations. However, it was clearly impacted by the well-documented and challenging COVID realities as we approached Q4. Now as sobering as these impacts were felt around Australia and the world, we are thankful for the actions taken and resulted in a relatively respectable and, I think, very solid financial result. In terms of the COVID response, while the impacts of COVIDs naturally require a special mention, in late March 2020, at the height of COVID uncertainty around the world, GUD made a statement to the ASX withdrawing earnings guidance. Now we noted that our COVID task force established in January, had developed a COVID response framework, focusing on people health, operational health and financial health with a strong stakeholder management plan. Now we were well placed in terms of our risk management response, given many of our senior management members past experience and managing through several black swan events, including the Asian Financial Crisis, SARS and the GFC. Using our COVID response framework, our approach was to go early and planning for the possible eventualities, with as much emphasis on offense as defense in our minds. The leadership team and the Board viewed the potential of COVID impacts to be temporary in nature, whether it be 6, 9 or 12 months. We also believe that there was no significant longer-term structural shifts in the industries we serve. We identified 20 key defense and offense actions, and I'll speak to some of these a little later. And these planning and these actions served the company well. Now throughout this period, the executive leadership team met regularly. And the senior management held special COVID meetings with the Board initially weekly in March, April and May, but later within the regular monthly Board meetings. Now let me give you some detail on the COVID-related impacts, our responses and mitigating actions within that response framework. Let me start with people health. From late January 2020 and through early March, our response to COVID, the company implemented air travel bans and heightened hygiene protocols and social distancing measures in the workplace. We activated business continuity plans to support working from home wherever possible and that was consistent with the government health directions. In late March, before JobKeeper was even announced, the company provided employees access to 2 weeks special COVID leave. Now this leaves supported those who needed to be isolated, but couldn't work from home or needed to care for family members affected but was an income supplement for those experiencing work hour reductions or government-required lockdowns. Now where a business claimed JobKeeper, senior management in that business and also the group staff management agreed to have their salary scaled back by between 10% and 15%. The scale back of salaries for key management personnel and the Board members was at 20% subject to the same triggers. And these scale backs were in place for June and July of 2020. Now these initiatives reflected the desire not to address cash conservation, but also, as far as possible, keep our workforce intact, avoid employee financial hardship and maintain a highly engaged workforce for a post-COVID recovery. And just as a note that there were no redundancies due to COVID. Now throughout this period, significantly greater attention has been paid to the mental health and well-being of our staff. We've heightened the counseling services available, developed and implemented mental health champions in each operation and rolled out well-being seminars across the business. In terms of operational health, well, the early stages of COVID when supply side issues were emerging, all the way through to the more recent demand side challenges, we've remained operational despite all these issues. From a supply point of view, through a combination of our pre-existing safety stock levels, a strong collaborative relationship with our suppliers and early supplier engagement, we ensured a high rate of product supply through the first 6 months of the COVID period. In addition to product supply, shipping and logistics also presented a significant challenge, which we actively managed through. We made significant operational changes to accommodate the COVID directions from the varying government agencies. We introduced staggered shifts in warehouses, split shifts in our manufacturing and assembly operations and significant health and safety changes to all our workplaces, whether in-situ or in remote places of work. This unparalleled series of changes came at a cost measured in dollars, but gave strong assurance on the desired safety outcomes. Well, from a financial health point of view, crucial financial modeling was completed through this COVID period and confirmed our existing lending facilities were adequate for trading during the COVID period. The company is in solid financial health. Financial health efforts also addressed cash conservation actions focused on the typical variable costs within each of our operations. Some businesses qualify for JobKeeper or it's equivalent. And the FY '20 subsidies amount to about $180 for the water business and about $2.8 million for the automotive businesses. And then turning to stakeholder management. Well, as part of our desire to be a good partner to our stakeholders through this time, we had put in place a strong stakeholder management plan. Now this was primarily across our supplier, employee, customer and financier stakeholder basis. Our level of communication naturally increased both in frequency and intensity to ensure clarity of key messages and actions. And we're satisfied to work with our stakeholders, ranging from union partners all the way through to employees across to investors and financiers was well recognized and proved productive. Now let's turn to our financial results in FY '20. Well, the Chairman spoke to the 1% revenue, which I'll address in more detail. The automotive businesses reported a slight increase, while Davey's revenue grew by 3%. And the results, as the Chairman has mentioned, was a year of 2 parts. After tracking well to guidance in the third quarter of the year, we experienced volatility in the sales tempo with COVID impacting underlying demand or the inventory levels held by our resellers. Reporting underlying earnings before interest and tax was $80.7 million or $80.1 million on a pre-AASB basis compared to the prior year's result of $88.9 million, a decrease of 10%. Now the result principally reflects lower end-user demand from partial or total lockdowns, coupled with reseller destocking, which resulted in negative operating leverage. Cost savings from internal cash conservation efforts and the receipt of government COVID wage subsidies were more than offset by higher operating costs under COVID, lower second half factory load utilization and a significantly weaker AUD in much of the second half of the year as well as some appropriate group provisions considering the economic climate. Reported cash flow from operating activities in FY '20 was $65.5 million, up $21 million from the $44.5 million reported in FY '19. On a pre-AASB basis, which was the basis of the FY reported result, cash flow was -- cash flow from operating activities was $54.3 million. So measured either on a reported or a pre-AASB basis, cash conversion of 98% was achieved compared to the 78% in the prior year. Now the cash conversion was well ahead of our internal targets for the year due to the timing of supply purchases in the last quarter. And this yielded a higher level of payables than usual at year-end, alongside the efforts to tightly manage our other net working capital elements. Now net debt was $142 million, just over, and an increase of $9.5 million over the prior year. The increased debt level is primarily from a combination of higher tax payments, a slight increase in capital expenditure to support innovation and renewal, and a loan to a key supplier to assist in building a new plant in Vietnam. In January 20, the company completed its refinancing some of its debt facilities of $225 million on commercially compelling terms. Now this involved a core debt facility with Westpac, NAB and Citibank for 4 years, totaling $150 million; short-term facilities of $25 million; and an 8-year fixed-term loan of $50 million with Pricoa. In response to the COVID situation, we also secured additional short-term facilities of $22.5 million, commencing in July 2020, frankly, to capitalize on organic and acquisition opportunities that may present. Well, last year, I outlined a focus on 5 key topic areas of customer relations -- relationships, supplier engagement, people cycle planning, product cycle planning and operational efficiency, all with a view to strengthen our business foundations. Now the attention has continued and further improvements have been made. With customer relationships, we've leveraged our multiyear preferred supplier agreements, experiencing positive growth in a number of own brands, of our own brands. We've seen the take-up of new products and in a few cases, seen our customers turn to us for house brand supply and management. We've added further OEM customers, worked tirelessly through the COVID period to assist our customers in creative ways. And FY '20 was also a proud year for the Supplier of the Year recognition as seen at both BWI, Ryco and also Davey. In terms of suppliers, well, we continue to work with critical suppliers to confirm sourcing security as a priority. Additionally, our project work on supplier cost reductions became incredibly important and proved to be successful. Utilizing our quality supply council, we also embarked on the journey to drive better environmental social governance outcomes with our supply base and announced the launch of the GUD sourcing -- Ethical Sourcing supplier program. This program articulates a bronze, silver and gold level standard of achievement. The Ethical Sourcing program covers guidance and minimum expectations with respect to slavery practices, labor standards, health and safety, discrimination, the environment, business ethics, and it's all available to be read on the GUD website. Moving to people. Well, we've been working diligently to develop future leaders for our current businesses and future acquisitions. In December 2019, we launched a talent development program, a first for GUD. And this concentrates on emerging leaders across GUD and has 2 cohorts, participating in a 2-year program, facilitated by a selection of external leadership and business experts. Also, GUD remains an inclusive place to work, and we launched an enhanced diversity and inclusion program with a clear charter and vision of success. Product cycle planning, well, we continue to bolster our innovation and product creation focus. Throughout the year, GUD released hundreds of new SKUs. Davey and BWI each had more than 10% of revenue generated by products that didn't exist 24 months ago. Amongst those new launches were Lifeguard, a connected chemical control unit for swim-ready pool water year-round and Projecta’s Intelli-RV range of plug-and-play smart power management systems. Narva won a good design award, Projecta took home the top honor for the most innovative product at the Australian Automotive Aftermarket Awards and Ryco Filters ranked third in the consumer goods and manufacturing category in the 2019 Most Innovative Companies list from the AFR. Moreover, we're also awarded 4 government grants under the Automotive Innovation Lab Access Grants scheme, matching R&D funding of about $0.5 million. And then finally, operational fitness. Well, the need for operational efficiencies remained paramount in a year of consolidation. Now this business foundation was modified to increase its remit to review the broader operational fitness levels of the business units. Part of the fitness work has been to look across the GUD Group to achieve cost savings through leveraging greater commonality and scale. In parallel, the opportunities to improve operational fitness in the areas of revenue management, sales ordering and purchasing management and lean operating structures have also been embraced. Over the last 12 months, we've completed operational fitness actions, such as the business restructuring at Davey and embarked on a proof-of-concept integration between AAG and Ryco. Now throughout the year, the Board and management continue to refresh individual business unit strategy plans. At an individual business level, we continue to apply the GUD high-performance approach for both operational fitness actions and broad strategy execution. In 2019, we introduced the Roger Martin Where to Play and How to Win framework to guide strategy development, and this remains critical as we reinforce the need to future-proof our individual businesses. GUD continues to sharpen its strategic direction, focusing on 3 pillars of: Core, growth and acquisition. Think of core as group-wide initiatives; growth being at the individual business unit level; and finally, acquisition, which, of course, currently concentrates around the automotive vertical of our portfolio. Now further progress has been made in each of these pillars. And our belief is the focus on these pillars will provide a good level of opportunity for further top and bottom line growth, although these aren't overnight solutions and require a steady and thoughtful approach across the short to medium term. Importantly, we've dedicated resources and continue to leverage the wider group management team to pursue results in core, growth and acquisition work streams. Now let me get pivot to the trading update. In mid-October, we took the opportunity to release a trading update for Q1 FY '21. Now back in late July, GUD spoke to the brisk start to the current year sales with double-digit growth in auto sales compared to the prior year. At that time, we were experiencing a recovery of underlying demand and an unwind of past reseller destocking. Also at that time, we expected this demand to moderate as resellers restocking concluded and the pent-up end-user demand started to abate. Pleasingly, though, we continue to experience strong sales performance across both water and auto divisions. Group sales in the first quarter grew approximately 14% over the prior year. Over the first quarter, though, of FY '21, obviously, the government lockdown restrictions impacted our sales, particularly in Victoria, and to a lesser extent, in the Auckland region. This was felt more by auto and the water. And offsetting the Victorian and Auckland situation, there was strong demand in geographies where mobility restrictions had already been eased. Now due to the Victorian lockdown, Davey was required to idle parts of its manufacturing operations, not regarded as being essential, which impacted our manufacturing efficiency and ability to produce certain product lines. All said though, the businesses still remain resilient and performed ahead of our sales expectations for the first quarter. Davey has seen a solid start of 10% revenue growth versus prior year. And this has been driven by the Australian business buoyed by favorable agricultural conditions and rural demand, which has more than offset lower demand from our New Zealand operation and profoundly slower sales to some of our tourism-dependent export markets. The automotive business has experienced a strong start to FY '21 with first quarter sales up nearly 16% over the prior year, and these gains experienced across our BUs, our business units, in a broadly uniform way. It is, however, important to note that the temporary nature of the drivers of this growth and the uncertainty from the economic ramifications of government stimulus efforts, alongside the ongoing public health situation, that the first quarter sales performance cannot be extrapolated over the remainder of the financial year. Finally, I'd like to take the time to acknowledge our employees. Now we've enjoyed a tremendously uncertain time, one that hasn't abated and is not likely to in the near term. I want to say thank you for the hard work and dedication shown by our 808 employees, which hasn't faltered even in the most challenging of times. Thank you also to the leadership team for displaying great resilience. You've been leading your teams in a way that's been recognized so positively in the employee surveys and ongoing anecdotal employee feedback. I know we have an engaged workforce due to you, striking the right balance of people and business outcomes. With that, I'd like to thank you, and I'll hand you back now to our Chairman.

Thank you, Graeme. Prior to addressing the various items in the business of the meeting, I will provide the customary outlook for the current financial year. At this time, GUD would normally provide insights and thoughts on the coming year with a view on expected industry trends and company prospects. The current COVID-19 situation and the ever-changing social and economic landscape gives us less certainty as to the backdrop we operate within. As you have heard from Graeme's trading update as well as in our ASX release on Thursday, the 15th of October, GUD has started FY '21 in a positive manner. While GUD notes the Q1 results highlight the potential to deliver a solid first half, the uncertainties due to the nature of the COVID-19 situation make it inappropriate to provide uncertainty or full year earnings guidance. That said, GUD remains well positioned for the medium to long-term horizon. The automotive division maintains strong brands, products and customer service in support of a large and proliferated car parc, which is strongly defensive. The water division continues to increase its customer intimacy and product lineup, as pumping and treating water remains an important societal challenge. The short-term prospects for GUD is still relatively positive, and this has proven out in the resilience exhibited late in FY '28 (sic) [ FY '20 ] and the rebound in revenue seen in the first quarter of FY '21. This seems to be true of the automotive aftermarket, particularly as you consider the potential industry level tailwinds such as domestic tourism increasing, average fleet age increasing and more used car volumes and less public transport usage, although we need to be clear that things can change daily and probably will. The situation remains fairly volatile, and we are not forecasting a return to pre-COVID-19 normality in the near future. In the event the core markets of Australia and New Zealand don't enter a prolonged series of lockdown levels, then we would expect vehicle service and repair to still be needed. It should not be overlooked that other structurally attractive drivers of the aftermarket industry were also at play pre-COVID-19. The overall car parc growth of the 5-year plus vehicles; more SUVs and pickups; increased diesel engines; and the ongoing proliferation of the vehicle car parc, with clear customer access to the independent workshops through the right of repair legislation have not changed through this period. Davey continues with the rollout of its strategic vision. We experienced improvements in the first half of the year although clearly impacted in the latter part. We expect the plan to continue and will not relent on the 4 key strategy execution pillars of people and culture, supply optimization, product innovation and channels to market. Our view as a company has remained unchanged as Davey progresses over the next 24 months and pulls through the potential value of the water segment. Our businesses are close to our end users and customers, framing new products and services throughout a deep understanding of real customer needs. Through this, we are uniquely placed to grow organically and to deliver quality returns sustainably. Now in closing, I thank the Board, management and staff of GUD for all of their efforts in what has been a most challenging year. Thank you to our shareholders for your continuing interest in and support for the company. It is now time to conduct the business of the meeting. Now turning to the business of the meeting. There are 3 items of ordinary business and 2 items of special business to be put to the meeting. The company has received some written questions from shareholders in advance of the meeting. I trust that the presentations today contain responses adequately addressing those questions. I thank shareholders for their questions and their interest. I invite questions on each of the items of business. [Operator Instructions] They will be addressed at the relevant item during the business of the meeting or at the end of the business of the meeting. I ask that you indicate at the start of your question, which particular item of business your question relates. Our company Secretary, Mr. Malcolm Tyler, will be receiving your questions lodged through the Lumi platform and will act as moderator. I'll ask Mr. Tyler to read out your questions as we get to each item of business. So ladies and gentlemen, in accordance with current practice, I will call for a poll on each resolution. I will hold voting over -- sorry, I will hold voting on every resolution over until the end of the meeting. The status of proxies on each item of business will be shown on the screen as we address each item in turn. To the extent that there are open proxies available to be voted by me on any item, I advise the meeting that I will vote them for each of those items on the agenda. I advise that only shareholders and proxy holders can ask questions and vote on any of the agenda items. This is facilitated through the Lumi platform. The Board unanimously recommends that you vote in favor of all resolutions. Item 1 is to receive and consider the financial report of the company, and the reports of the directors and auditor for the year ended June 30, 2020. No vote is required on this item of business. However, it provides shareholders an opportunity to ask questions relating to the financial statements and reports as well as more general questions about the management and operations of the company. You may also ask questions in relation to the conduct of the audit, the content of the auditor's report, the company's accounting policies and the auditor's independence. The company's auditor is here online today to help answer any of your questions. If you have a question for the auditor, please initially address it to me as Chairman of the meeting. The company didn't receive any written questions addressed to the auditor submitted by shareholders prior to the meeting. I remind you that if you have questions you want to put to the company, you may submit them now. [Operator Instructions] Please note that you can submit questions at any time on any item of business. I will try to address them when we come to the relevant item of business or towards the end of the meeting when we will have more time for questions. So Malcolm, are there any questions?

Mr. Chairman, the first question today comes from Mr. John Whittington, Company Monitor with the Australian Shareholders' Association, representing over 100 shareholders and 500,000 shares. His question is, Mr. Chairman, congratulations on the improvement in diversity on both the Board and other levels, but diversity in senior management has gone down from 21% to 16% female. How did that come about? And what are you doing to address this? And how can we judge the company's diversity in other areas, not just gender?

Thanks for your question, John, and good morning. Good to have you here. I think the CEO is best placed to answer this question. So I'll hand over to Graeme. Over to you, Graeme.

Thanks, Graeme, and appreciate the question, John. So the senior management reduction is accurate. Having said that, though, I would also add that we've just announced very recently, in the last week or 2, that our most senior leader in New Zealand, we just made an appointment that happens to be a female. And we're also very close to appointing a senior people leader, who we believe will be also a female. That's a direct answer to your senior management. Going more broadly, though, I mean, obviously, you'll recognize that we've added to the Board an extra Director who happen to be female. Our Board representation is at 40%. And encouragingly, when you look to some of the feedback around equal opportunities across the organization, you would have seen and heard earlier from Graeme that actually we've increased from not just 60%, but also through to 70% of all our employees viewing the company favorably in terms of equal opportunities. So we recognize that we always have to work on this, but I think reasonably encouraged with some announcements to be made and also some of the theme and feel from our own organizational employees and also the actions we've taken at the Board level.

Malcolm. Are there any other questions?

Yes. Mr. Chairman, we have another question from John Whittington. Mr. Chairman, the company's franking balance is still rather high. Does this mean there is an opportunity to return some of these franking credits to shareholders by, say, a special dividend?

Thanks, John, for your second question. It's fair to say that the franking credit balance is still relatively high. Just a little bit of background would be useful, I think. We do tend to pay out -- most of our franking credits payout ratio tends to be around about 70%, a little less most years. So we -- before the BWI acquisition, our franking credit balance was quite low, and that was probably 3 to 4 years ago. With that acquisition came along quite a number of franking credits. And since then, we've had quite a balance buildup. This year, the dividends were less than in previous years. And it was really felt by the Board that it was prudent to strike the dividend, to declare the dividend at the level that we did. It doesn't mean that there will be a special dividend down the track. I'd say, in fact, that's probably unlikely. Again, prudency will kick in. And in case of any future potential acquisitions that may be considered or any capital expenditure. So the short answer is unlikely to be a special dividend. But certainly, the level of franking credits that were paid were prudent along with the dividends. Thank you. Any other questions, Malcolm?

Mr. Chairman, we have no further questions at this time.

Okay. Thank you. So we will move, therefore, to the next item of business. Turning now to Item 2, which is the election of a new director. In accordance with Rule 34(b) of the company's constitution, Ms. Jennifer Douglas, who was appointed as a Nonexecutive Director of the company on the 1st of March 2020, being eligible, offers herself for election by the shareholders. No other nomination has been received. And consequently, no other person is eligible for election as a director. Details of Ms. Douglas' experience and qualifications are set out in the notice of meeting. Jen has prerecorded an address to the meeting in respect of the motion for her election. Of course, Jen is available online to answer any questions. But first, let's hear her address.

Hello. I'm Jennifer Douglas, and I'm delighted to be standing for election to the GUD Board today. I have over 30 years experience in the technology and telecommunications sectors. First, as a lawyer and then as an executive, before becoming a full-time Nonexecutive Director in 2017. I currently sit on 2 other listed Boards, Hansen Technologies and Opticomm, and I'm also on the Board of electricity provider, Essential Energy. And I also sit on 2 not-for-profit community organization Boards, Peter MacCallum Cancer Foundation and also St Kilda Football Club. And on each of my Board, I sit on various sub-committees. I'm Chair of the Remuneration Committee for Opticomm, I'm chair of the Regulatory Committee for Essential Energy, and I'm also on the Audit and Risk Committee for Essential Energy and Hansen Technologies. As I mentioned, I started my career as a lawyer at Allens and Mallesons as an intellectual property lawyer, before moving into executive roles. I did this, first of all, at Sensis, where I spent over 5 years on the executive leadership team as General Counsel and Head of Regulatory Affairs. And this was at a time when Sensis embarked on a major transformation journey, moving from being the established print publisher, Yellow Pages, White Pages, into a media -- a leading media but digital and online platform. From there, I moved to Telstra. And from 2006 to 2016, I spent my time in a diverse range of senior executive roles. Those roles included responsibility for managing the $3 billion fixed voice business of Telstra. Responsibility also for establishing one of Telstra's first connected live businesses called Platinum. I also had responsibility for managing the internal change and customer-centered team that was responsible for rolling out the change program under David Thodey. And in my last role, I had responsibility for all things customer as Executive Director of customer experience. I bring this executive experience into the Boardroom, particularly my deep expertise in developing strategies that drive growth using customer-centric thinking. I also bring a really deep knowledge of technology and the possibilities it creates, together with my background in legal and regulatory. And I also bring a very high regard on the role of the Board in fostering a healthy culture in every organization, where there is a really high importance placed on the customer, on staff well-being, on integrity, on inclusion and diversity and sustainability. I hold a Bachelor of Science and a Bachelor of Laws, a Masters of Laws and an MBA, and I'm also a graduate of the AICD. And I'm very much looking forward to continuing to work with the GUD team to help GUD become an even stronger and more successful business in the many years ahead. Thank you.

Thanks, Jen, and good luck. The resolution for Item 2 is set out on the screen. It reads that Ms. Jennifer Douglas, who was appointed as a Nonexecutive Director of the company on 1st of March 2020 and who in accordance with Rule 34 subsection B of the company's constitution. holds office as a director until the conclusion of this meeting and being eligible, offers herself for election, be elected. Now ladies and gentlemen, the details of the proxies received in relation to this item are now displayed on the screen. [Operator Instructions] Are there any questions of Ms. Douglas?

Mr. Chairman, we have a question today from Mr. Stephen Mayne. He asks, Proxy Advisor Ownership Matters released a report yesterday which suggested that ASX 300 companies fish from quite a shallow pond when sourcing new directors and that this is more pronounced with female directors. Could our newest director, Jennifer Douglas, who is up for election today, please outline the GUD recruitment process from her perspective and could the chair give his perspective?

Yes. Thank you for that question. First, from me, I'll say upfront that certainly Jen was not known to anyone on the Board prior to her election. In fact, the process was quite a robust process. It really began last September -- last August, September, where we had independent consultant come in and review Board performance and the effectiveness and efficiency of the Board processes. That took place then and we got a big tick in that area. The consultant also looked at skill gaps perceived and potential skill gaps that the Board may have, and that was input into the Board's thinking as well. We then went to Russell Reynolds for search, a global firm in search, and a shortlist was put together. And the Board then interviewed the shortlist. So Jen came out of that shortlist, and we're very pleased that Jen is on our Board. So having said that, Jen, over to you to add to that, if you can?

Thanks, Graeme, and thanks, Stephen, for the questions, and hello, everybody. Yes, look, I can just confirm that the recruitment process was highly professional, very objective and certainly very thorough as well. I was first approached by Russell Reynolds about the possible role who'd been engaged by GUD. And as Graeme said, I had -- whilst I was familiar with GUD, of course, by its reputation and knowledge of the industry, I had no personal relationship with anyone on the Board or indeed anyone from management. I then had a series of interviews, facilitated by Russell Reynolds first two internally with the recruitment firm before moving to interviews first with then Chairman, Mark Smith, and then with the whole Board. We then moved to doing core reference checks and other very comprehensive checks conducted by the company and the firm before a formal offer was made. And I, of course, then completed my own due diligence as well alongside that before being delighted to accept the role. So from my perspective, Stephen, it was a very objective, highly professional and [indiscernible] process. Back to you. Thanks, Graeme.

Malcolm. Are there any further questions?

Mr. Chairman, there are no further questions on this item.

Thanks very much, Malcolm. So ladies and gentlemen, as there are no further questions, we'll proceed with the resolution. I'll now put the resolution to the meeting. In accordance with current practice, I call for a poll on this motion and hold voting on this resolution over until the end of the meeting. We will proceed to the next item on the agenda. We will now move to item #3, which is the adoption of the company's 2020 remuneration report. Please note that the vote on this item is advisory only. However, the Board takes the outcome of the vote into consideration when reviewing the remuneration practices and policies of the company. The remuneration report is set out on Pages 31 to 42 of the 2020 annual report. Additional statutory information is -- in relation to the remuneration of key management personnel is included in Note 33 to the financial statements. The remuneration of nonexecutive directors as recommended in the ASX corporate governance guidelines is by way of fixed remuneration and has no incentive element. On the other hand, remuneration of the company's senior executives has a fixed element and variable element, comprising a short-term incentive based on achieving predetermined financial performance criteria and a long-term incentive related to the total shareholder return on the company's shares. Both the short-term and the long-term performance incentives have considerable at-risk benefits. Your Board reviews the remuneration policy and the incentive elements annually. Whilst we believe that our remuneration policy and outcomes are appropriate, taking into consideration the feedback we received over time when speaking with major shareholders and proxy advisers, your Board regularly reviews the remuneration policy with a view to ensuring the most appropriate outcome for shareholders, including alignment of executive interest with those of shareholders. The most recent review concluded that the fixed element of remuneration was market competitive and that the variable components were, if anything, slightly below market benchmarks. Your Board has not changed the remuneration structure in the last 3 years other than to introduce additional threshold hurdles into both the STI and LTI schemes. And with the most recent grant under the LTI scheme, introduced a mechanism to prevent executives to defer receipt of shares for a period of up to 15 years from the date of original grant of underlying performance share rights. Whilst this has potential tax deferral benefits for executives, it comes at little or no cost to the company and means that executives potentially retain greater skin in the game. We will continue to look for innovative ways to attract and retain talented executives to our company, including from time to time, reviewing the remuneration structure, all the while with the interest of shareholders, of course, in mind. The resolution on item 3 appears now on the screen. It reads that the remuneration report for the year ended June 30, 2020, as set out in the directors' report on Pages 31 to 42 of the 2020 annual report be adopted. The details of the proxies received in relation to this resolution are now displayed on the screen. [Operator Instructions] Please indicate in your question, the item of business relevant to your question. Are there any questions, Malcolm?

Mr. Chairman, there are no questions on this item.

Thanks, Malcolm. As there are no other questions, we'll proceed with the resolution on item 3. I advise that any votes by directors and other key management personnel or any of their closely related parties will be disregarded, except in relation to votes available to be cast as a proxy for another person who is entitled to vote. As your directors are not eligible to vote on this item of business, they make no recommendation on it. I will now put the resolution to the meeting. In accordance with current practice, I call for a poll on this motion and hold voting on this resolution over until the end of the meeting. We will proceed to the next item on the agenda. We now move to the special business of the meeting. Item 4 on the agenda is an ordinary resolution regarding the approval of an LTI equity grant to the Managing Director, Mr. Graeme Whickman, under the terms of the company's long-term incentive equity plan. A detailed explanation of this resolution was set out in the explanatory notes accompanying the notice of meeting. Under this structure, Mr. Whickman has a maximum long-term incentive set at 60% of his FY '20 fixed remuneration, which is subject to the meeting -- to meeting the performance hurdle will be delivered in 3 years' time. The maximum incentive grant for FY '21 is 53,198 performance share rights calculated as 60% of his FY '20 fixed remuneration divided by the volume weighted average price of GUD shares in the month of June 2020, which was $11.21. I note that we have had in the past questions from shareholders questioning why the Managing Director should receive this grant. Such an incentive is common in publicly listed companies, necessary to attract and retain the executive talent considered by the Board as crucial to the delivery of sustainable long-term shareholder wealth. Typically, these incentives are designed to align the interest of executives, in this case, the Managing Director with the interest of shareholders. That is, the benefit of this incentive will only vest for Mr. Whickman if the total shareholder return of GUD, that is the share price increase of GUD plus dividends paid over the next 3 years equals or exceeds the median total shareholder return of the comparative group. At equal to the median, 1/2 of the shares vest. When the GUD total shareholder return significantly outperforms, Mr. Whickman receives an increasing amount of those shares up to the maximum amount of 53,198 shares at the 75th percentile, that is, the company has outperformed over 3 years, 75% of the other stocks in the comparative group. So it is clear that Graeme only benefits when he delivers significant value to shareholders. And that is certainly the way it should be. Consequently, your directors, other than the Managing Director, unanimously recommend that shareholders vote in favor of this resolution. The resolution for item 4 is set out on the screen behind me. It reads as follows: That approval is given for the grant of 53,198 rights to the company's Managing Director, Mr. Graeme Whickman, under the company's long-term incentive equity plan and on the terms summarized in the explanatory notes to this notice of Annual General Meeting. Now ladies and gentlemen, the details of the proxies received in relation to this resolution are now displayed on the screen. [Operator Instructions] Malcolm, are there any questions?

Mr. Chairman, there are no questions on this item.

Thanks, Malcolm. As there are no further questions, I'll now put the resolution to the meeting. In accordance with current practice, I call for a poll on this motion and hold voting on this resolution over until the end of the meeting. We will now move to item #5 on the agenda, which is a special resolution regarding the renewal of the proportional takeover approval provision in the company's constitution. An explanation of this resolution was set out in the explanatory notes accompanying the notice of meeting. In order to retain this provision in the company's constitution, it is necessary that shareholders renew it every 3 years. Your directors unanimously recommend that shareholders vote in favor of this resolution. The resolution for item 5 is now set out on the screen. It reads that the company renew the proportional takeover approval provisions contained in Rule 73 of the company's constitution with effect from 1 December 2020 for a period of 3 years. Ladies and gentlemen, the details of the proxies received in relation to this resolution are now displayed on the screen. [Operator Instructions] Malcolm, are there any questions?

Mr. Chairman, there are no questions on this item.

Thank you. As there are no further questions, I will now put the resolution to the meeting. In accordance with current practice, I call for a poll on this motion and hold voting on this resolution over until the end of the meeting. So ladies and gentlemen, that concludes the resolutions to be put to the meeting. I'll now proceed with the poll on all resolutions. I will give the meeting ample warning of the close of the polls. In the meantime, we have further time now to devote to hearing and responding to your questions. Malcolm, are there any questions?

Mr. Chairman, we have a number of questions. The first one comes from Mr. John Whittington of the Australian Shareholders' Association. He says, congratulations on the company's -- on the improvement in the company's operating cash flow and cash flow conversion. Is this level you have achieved this year likely to be a one-off or likely to be ongoing?

Thanks, John. Our CEO is much more qualified to answer this question. He can take the glory. Over to you, Graeme.

Well, thanks, Graeme, and thank you for the question, John. Obviously, we achieved a 98% cash conversion. That was up from 78% in the prior year, but we did see some one-off unusual purchases right at the end of the quarter given some strange behavior in terms of the market, the market we serve that is. So it's probably unreasonable to suggest that, that percentage would be achieved. We have stated prior that we would expect to be operating in the sort of mid-80s. And we see no reason that, that shouldn't change through the course of this year, of course, with a caveat around any other unusual COVID impacts. But that would be our sort of target range as opposed to the approaching 100% that we achieved in the year just gone.

Thanks, Graeme, and well done. Malcolm, are there any other questions?

Mr. Chairman, there is a question from Stephen Mayne. He says, can the Chairman please be more specific on his plans to reduce his workload in the period ahead to allow more time to fulfill his GUD commitments? Was this issue raised by proxy advisers or institutional investors apart from ASA?

Thanks, Stephen. Yes, I'll be glad to elaborate. First of all, I'll make the comment that I am a full-time professional director. So I do have a lot of time, and my time management, I think, is very good. Having said that, it is time for me to have a look at my commitments on right across my portfolio, now that I've been elected as Chair of GUD. And in doing that, I'd put a plan together where I will step off a select number of Boards over the next few months. As you would be aware, there are a number of Boards who have quite unique circumstances and over the next few months, those circumstances will unravel, and I'll be able to free myself up a little bit. So the plan is in place. Certainly, up until then and post then, of course, I'll be just as diligent and committed in my service to the Boards as I always am. I hope that answers your question, Stephen. Malcolm, are there any further questions?

Yes, Mr. Chairman, we have a question from the Australian Shareholders Association, Mr. John Whittington. COVID has been a great example of a black swan event and provides an opportunity for all companies to learn about how they manage unexpected events. What would you say has personally been your biggest learning regarding risk management during this crisis?

Thanks, John. I'll just say a couple of words, then I'll hand across to Graeme to give more detail. But certainly, when COVID was upon us, John, we felt we were pretty well placed. We had experience in our senior management ranks that had, had experience with other pandemics, if you like, SARS, swine flu, even the Asian Financial Crisis and the GFC, that gave us a really good platform to plan, and our planning was very early. It was a credit to management how they dealt with it right throughout the last 6 to 7 months. Enough from me. I'll hand over to Graeme to give some further detail. Over to you, Graeme.

Well, thanks, Graeme, and thanks, John. Well, Graeme has already mentioned that probably a number of us already had quite a few salient lessons and some recent crises. I mean, I lived through SARS up in Asia. I was in North America through the GFC. And so that's why we actually quickly put in place that COVID response framework. We talked about people health, we talked about operational health, we talked about financial health. And of course, there was underpinning effort around stakeholder management. And I guess that was the learning more than anything. The effort we put in terms of stakeholder management and the effort around actually our people actions, I think, was a very good learning to us. Fortunately, we moved very quickly, as mentioned previously, in fact, at the full year result, we talked about us actually activating in January, well ahead of other organizations at first in the demand side and then moving very swiftly through the supply-demand -- sorry, supply side and then to demand side. And a crisis management team formed very early with all the right functions and actually a very cohesive response, frankly, to what was a very evolving situation. So I guess a mixture of lessons learned in past crises. Unfortunately, many of us were outside of Australia, so we actually had to bore the brunt of those. Whereas perhaps some of the Australian executives were a bit more arm's length to say, SARS or the GFC. And then actually on the way through probably more of an emerging realization, just how important the stakeholder management was on the way through. So thank you for the opportunity to give you that point of view.

Thanks, Graeme. Malcolm, are there any other questions?

Mr. Chairman, we have one more question from Mr. Stephen Mayne. He asks how many other independently governed ASX 300 companies can you name that only have 4 nonexecutive directors. Rather than just expanding it to 5 next year, could you please increase this to 7, an odd number is always preferable in order to better complete your skills matrix?

Thanks, Stephen. Off the cuff, I can't answer that. But what I can say is that we have a plan in place to recruit at least one more director on to the Board. We have commissioned a -- or about to commission a search firm for that. And we'll be looking at our skills matrix, we'll be looking at where we think we've got some skill gaps. And if it requires more than one, then we'll also consider that as well, Stephen. So it's work in progress at the present time, but we do want to make sure that we've got the right skills from the right people who sit on the Board. Thanks, Stephen. Malcolm, any further questions?

Mr. Chairman, we have a comment from Mr. John Whittington of the Australian Shareholders' Association in relation to the remuneration report. He says, Mr. Chairman, we believe your remuneration disclosure is generally good, and many aspects of the policy are satisfactorily shareholder aligned and believe in many in the community would be comfortable that no incentives were paid whilst the company received JobKeeper benefits. We also welcome what we see as a significant improvement implemented this year where executives can now postpone exercise of their LTI performance rights for up to 12 years after vesting. All these factors have given us ground to support your remuneration report this year after voting against it last year.

Okay. Well, thanks very much, John. That was an observation, not a question. So appreciate your comments on that. Okay. Ladies and gentlemen, if there are no further questions, that concludes our discussion on the items of business. In a couple of minutes, I will close the voting system. Please ensure that you have cast your vote on all resolutions. I will now pause to allow you time to finalize those votes. Whilst we give those shareholders some time, here is a short video from our team at Davey, after which I will be back to close the meeting. [Presentation]

Welcome back, everyone. I hope you enjoyed that video. I now advise that voting is now closed. The results of the poll will be announced via the ASX later today. So ladies and gentlemen, I thank you for your attendance, and I now declare the meeting closed. We certainly look forward to meeting with you next year under much better circumstances. A copy of this webcast will be available for viewing on the company's website later today. Please enjoy the rest of your day. Thank you very much.