Ansell Limited (ANN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Nice to see some very familiar faces in the room. My name is John Bevan, and I am your Chairman of Ansell Limited. It is my great pleasure to welcome you today to the 2023 Ansell Annual General Meeting. I'd like to begin by acknowledging the traditional owners and custodians of the land on which we meet today. The Wurundjeri people of the Kulin Nation. I pay my respects to their elders, both past and present. Before I open the meeting, I'd like to take you through the procedural aspects of the meeting. Today's meeting is being held in person as well as virtually via the Computershare platform, whether shareholders proxy holders and guests can watch a live webcast of the meeting, and shareholders and proxies can ask questions and submit questions and votes online. A significant number of shareholders have already voted, appointed proxies and submitted questions ahead of this meeting, and I thank them for doing so. Every effort has been made to ensure the meeting runs smoothly. A full recording of this meeting will be provided on our website. Now I'll start today by walking through a few procedural guidelines for question and voting submission for those in person and online. It is my duty as Chairman to ensure that shareholders have the opportunity to ask questions and discuss the items of business during the meeting. I ask that all questions and comments be concise, be confined to matters relevant to shareholders as a whole and be informative and respectful. I will take questions from those physically present at the meeting, followed by written and audio questions from participants who join us online. Depending on questions asked, I will decide as to whether I will answer or ask a member of management or the auditor to respond. I will now move to the formal proceedings of the meeting. The Company Secretary has confirmed that a quorum is present, and I declare the Annual General Meeting open. Voting is now open on all aspects of business. So please submit your votes at any time. I will give you a warning before I move to close voting. The notice of meeting was released on the 25th of September 2023 and with your approval, I will take the notice as read. This is a shareholders meeting, and only shareholders, their attorneys, proxies and authorized company representatives are entitled to vote and ask questions at the meeting. If you are attending as a proxy and have been instructed how to vote, I ask you to ensure that any vote you cast is in accordance with those instructions. Voting today will be conducted by way of a poll on all items of business, and we have appointed Michael Hutchinson, a Manager of Computershare Investor Services as a returning officer for this meeting. For those attending the meeting online and who are eligible to vote, as the poll is open, a voting icon is available on your screen. Selecting this icon will bring up a list of resolutions and present you with your voting options. For those voting online, you are free to submit your votes at any time. To cast your vote, simply select one of the options. There is no need to hit submit as the vote is automatically recorded. Please ensure you cast a vote for all resolutions. You will receive a vote confirmation notification on your screen. Now to change or cancel your vote, click the link, click here to change your vote at any time until the poll is closed. Votes may be changed up to the time I declare voting is closed. For shareholders, proxies and corporate representatives attending in person, I'll ask you to vote once you've gone through all items of business today by completing the voting card that has been provided to you upon admission. White cards are for visitors only who cannot vote or ask questions today. Shareholders with a yellow card are not entitled to vote on the items of business. I will provide a warning before I move to close voting at the end of the meeting. Thank you to those shareholders who submitted questions in advance of the meeting today. where appropriate, we have replied directly to shareholders before the meeting. Many questions have been submitted that were on similar topics, and I will respond to the most common themes during my address. For those attending today in person, and they have a question or wish to make a comment, when I call for questions during each relevant item of business, please make your way to the nearest microphone. Then when it is your turn, please give your names to the attendant who will introduce you. There is an attendant at each microphone. And I'll now ask them to stand and identify themselves so they can -- so you can see where they are. Thank you. If you are attending the meeting in person, only shareholders, validly appointed proxies and corporate representatives who have given a blue or yellow voting card upon entry are entitled to vote and to ask questions. When I call for questions, please raise your blue or yellow card and state your name or organization you represent before asking your questions. For those attending the meeting online, who wish to submit a written question, you may do so at any time during the meeting via the speech bubble icon on your screen. Simply type your question in the chat box on the right of the screen and then select send. Confirmation that your message has been received will appear above. Please note, while you can submit written questions from now on, I will not address them until the relevant time in the meeting. While time constraints may prevent us from answering all questions, we'll do our best to address all your questions during the meeting. Today, Michael Evans, our Head of Industrial -- Investor Relations will be helping to moderate any questions by the Computershare platform. Instructions on how to ask a verbal question as shown below the broadcast window on the online platform. If you are asking a verbal question, please state your full name before asking your question. And please limit your questions to only one or two questions at a time and then rejoin the queue to allow others to ask their questions. Joining me today in Melbourne are Nigel Garrard. Debra Goodin, Managing Director and Chief Executive Officer, Neil Salmon; and Company Secretary, Catherine Stribley. And joining us by video link today are the other Board members, Bill Reilly, Christine Yin, Leslie Desjardins, Borton Falkenberg and Christina Stercken. Penny Stragalinos, who was KPMG's audit engagement partner on the Ansell account for fiscal year 2023 is present with us today and available to answer any questions during the meeting regarding the conduct of the audit and the content and preparation of the audit report. Now for my address, as many of you will know this -- as many of you will know, this will be my final address to you as Ansell's Chairman. Having announced in June that after 12 years, I'll be retiring from the Board effective at the conclusion of the Annual General Meeting. It has been a privilege to serve Ansell as a director over this time. And with a history spanning 130 years Ansell is unique in Australia's corporate landscape, and I'm proud to contribute in some small way to that history. I'd like now to offer some commentary on the company's recent performance. and work underway to position it for the future. Clearly, the last year or so has been a challenging time for Ansell for reasons that we have made play into the market. We all know that COVID-19 triggered an unprecedented surge in demand for protective equipment for health care in 2020 and in 2021. And that Ansell and other PPE suppliers stepped up production sharply to meet that demand. As pandemic conditions began to ease in late 2021 and early 2022, the industry then found itself a wash with stock. Not only Ansel, but our distributors and end users were left with much more inventory than they needed as demand eased. These are not easy circumstances to predict or planned for. And today, we are still working through the aftermath of that disruption. Over the past 12 to 18 months, we have seen waves of destocking in firstly, the exam single-use market followed by surgical and Life Sciences, Inevitably, that's been reflected in our 2023 performance. There are signs that the worst of this destocking is behind us. and it is pleasing to note that end-user demand has largely returned to normal. However, the global unwinding of excessive health care PPE inventory at the distributor and the supplier level has a way to go. In his address following our CEO, Neil Salmon will provide more context on the shifting demand picture and what this means for the company's outlook. While the effect of destocking described weighed heavily on our health care business, Ansell's industrial business serving specialist mechanical and chemical markets recorded pleasing growth highlighting the benefit of a diversified portfolio. I want to now turn to Ansell's progress on meeting our commitments on sustainability including labor rights and modern slavery. Ansell is committed to respecting human rights and providing decent work to workers connected with our operations and partnering with third-party suppliers and support them to do the same. We operate in a high-risk industry for labor rights exploitation due to both the type of work and the geographic locations of our operations and value chain. As a market leader in this industry, we have an important role to play in improving the lives of workers across our value chain and we are absolutely aware of our responsibility to ensure these workers are treated fairly and not subject to exploitative conditions. We continue to progress in our ambitions and among other initiatives in the past year, Ansell has introduced a forced labor indicator audits at all our own and third-party sites, designed to further assess and identify the presence of forced labor risks. The results of these audits have shown a consistent improvement in workplace conditions across the supply chain. New independent grievance mechanisms introduced across our manufacturing sites also help us identify, assess and mitigate labor rights risks across the group. There is no easy fix to labor rights and modern slave risks and by no means is Ansell's journey complete. But as I said, we are genuine in our commitment to lead on this issue, and we'll continue to do important ongoing focus for us. The other key pillar of our sustainability commitment is managing Ansell's impact on climate. Our commitment is to reduce Scope 1 and Scope 2 emissions by 42% by 2030. And it will be a net-zero emissions by 2040 against the 2020 baseline. We are making tangible progress against these targets. The reality is that the for a business like Ansel, the best impact we can have on Scope 1 and 2, that is direct and indirect emissions is through reducing our reliance on fossil-based energy sources. Renewables, therefore, play an increasingly important part in this energy mix. Today, renewable electricity accounts for 29% of our energy needs compared to 2% in 2020. More challenging is our Scope 3 emissions profile, which goes to the products and materials we purchase from our suppliers as well as the impact of these products we supply over their life cycle. Ansell is working hard on developing new products using different materials and compounds, ones that carry less embedded energy. We are also strengthening our engagement with customers and suppliers on initiatives to reduce emissions across our value chain. Indeed, the basis of our Scope 3 reduction strategy is a pathway we are developing for collaboration, training and other activities with our suppliers. As well as managing our carbon footprint, Ansell has clear commitments on waste and water, and we have made great progress on these. Pleasingly, we have now achieved Zero waste on landfill at all our operating sites with the exception of the newly purchased Ansell Saremban plant and Ansell's Kovai plant in India which is under development. Elsewhere, Ansel successfully exited Russia during the past year. The company's operations are now in the hands of our local distributor. In managing this process, it was important to us that the bulk of our former employees were able to maintain employment and health care benefits after we exited. We can confirm that this is the case under the new owners. And while we have exited Russia completely, essential medical products may still be exported into Russia by third-party distributors. Looking ahead, as the efforts of the pandemic -- as the effects of the pandemic on our business eventually receed, it will be critical that Ansell is positioned to maintain global leadership in PPV in the new normal for our industry. To this end, in July, Neil announced Ansell's accelerated productivity investment program as our response to the post covered market. This program will see us become more efficient and customer-focused and even more invested in differentiated products. It also maps a path to a unified global ERP platform, which will better position our global business to deliver products to customers in a timely way. As I said, this is my last address to shareholders. I want to thank you for your support during my dozen years on the Board, including his chair for the past 4 years. I'm proud of what Ansell has achieved in that time in some of the most challenging and turbulent business conditions I have seen. Throughout Ansell's history, the company has been guided by a terrific set of values and ethics and I have no doubt these will continue to hold Ansell in good stead in the years to come. You will hear from my replacement Chairman, Nigel shortly. Nigel has made will make an excellent Board Chair as well as experience in strategic and commercial acumen, he will provide continuity of strategy at a critical time for Ansell. I want to thank my fellow directors who have been such wonderful colleagues and the Ansell leadership group led so capably by Neil and [indiscernible] first 2 years as CEO. Finally, on behalf of the Board, I want to extend my gratitude to Ansell's 14,000 employees around the world. Without their dedication and commitment, the company's success simply would not be possible. I would now like to invite Neil to provide more detailed comments on the 2023 results and the outlook for the current year.

Thank you, John, and thank you to all of you for your interest in Ansell today and for joining us in the meeting room and also online. Good day to my fellow shareholders. Today, I want to provide you with a review of the company's performance and key milestones in the 2023 financial year and an update on our outlook for this current financial year. As we have previously described, and John highlighted already, fiscal year '23 was a difficult year for Ansell's Healthcare business as we continue to deal with the aftermath of the pandemic and its effect on our industry. It was important that as we responded to the short-term challenges, we also took steps to position Ansell to build on the improving results seen in our industrial business and to maintain our overall market leadership positions and compete strongly in the post-pandemic environment. The strategic initiative I announced in July accelerated productivity investment program is designed to do just that. I'll explain our goals for this program in my remarks to come. But first, to the company's financial performance in the year just passed. Group revenue was down 11% on an organic basis for the year. And as John noted, this was due to significant destocking across our health care segments and the continued normalization of pricing for our exam single-use products. Health care channel partners and end users had accumulated inventory over the course of the pandemic to ensure against supply chain risk and product availability concerns. Inevitably, they would move to unwind this excess inventory as the requirements of the pandemic eased. This process has not been uniform but rather has occurred in stages across the segments in which we operate. We first experienced it in exam single-use products in fiscal year '22 and before demand in this category began to return and pricing stabilized toward the end of fiscal year '23. Surgical and Life Science sales were then similarly affected in fiscal year '23 masking robust end user demand trends. As you know, Ansell has worked hard in recent years to build a balanced portfolio serving a very wide range of verticals and geographies and this was to our advantage in '23 as growth in industrial markets partially offset the softness in health care described. We had success from new product innovation, particularly in our mechanical SBU, and strong growth in emerging markets. We also saw chemical return to growth after a period of pandemic-induced volatility, with our range of high-end chemical hand and body protection products performing well. The overall reduction in sales in fiscal year '23 was the principal driver of the 6.7% organic decline in earnings before interest and tax which was supported by lower short- and long-term incentive costs than is customary. Growth was lower on a reported basis additionally due to unfavorable currency movements only partially offset by our currency hedging program and no contribution from our Russia business, which we exited in the second half of fiscal year '22. We finished the year with adjusted earnings per share of $0.1153, we excluded a small gain on the sale of our Russia business. This was at the lower end of our original guidance range and just above the midpoint of the updated range I provided in February. Reflecting on our 2023 performance, several positive trends stand out. Margins improved through the year as outsourced finished goods costs fell in Exam/Single Use, and we implemented price increases in Industrial. Industrial growth was strong, particularly in Mechanical despite uneven end market conditions. And towards the back end of the year, volumes in Exam/Single Use strengthened as did end user demand in surgical, an important step in reducing the excess inventory held by customers in this category. In the face of these post-COVID market adjustments, we continue to make strategic investments that are important to Ansell's long-term success. In February, we completed the buyout of our Careplus joint venture and assumed full control of this manufacturing facility. Integration has progressed smoothly, and we are already seeing improvements in plant performance. The Careplus facility gives us new flexibility to boost in-sourcing of key styles and to test new product innovation and will be an important node in our manufacturing network for the future. Construction of our $80 million greenfield facility -- surgical facility in Kovai in Southern India is progressing well. And once completed, will provide us with important new capacity to meet the growing global demand for surgical gloves, including into the rapidly growing Indian market. As ever, we continue to invest in R&D with good results and new product launches and particularly the ultra-lightweight high flex cut protection styles. We devoted significant time and effort into improving our supply chain planning, bearing fruit in the form of a strong improvement in our supply chain metrics and reported customer experience dealing with Ansell. And we continue to invest in improving our systems and digital capabilities. with seamless transition of two of our largest manufacturing entities to modern cloud-based ERP systems. Our track record of successful ERP upgrades provides us with confidence to embark on a larger ERP consolidation program, incorporating our commercial entities. And this is a centerpiece of the productivity investment program we are embarking on in fiscal year '24. Turning now to safety. Ansell's core mission is safety, safety for all, and it is our first priority to provide a safe workplace for our employees. In recent years, we've worked hard to embed safety accountability and competencies across all levels of our operations, and this work is paying off. Against almost all the key safety metrics we monitor we performed strongly in '23. Total injury rates for the full year were down 30%, with medical treatment injuries down 43% to a new record low. Lost time injuries increased slightly albeit off an already very low base. Our leading indicators, the reporting of near misses, unsafe facts and unsafe conditions were up by 29%. Evidence that our employees are highly committed to finding and addressing operational hazards, however, small before they have the potential to translate to injuries. I'd now like to discuss our sustainability commitments and add some details to the comments John made earlier. And as he noted, we made good progress in fiscal year '23. We think of our commitments under the headings of people and planet and being recognized as a leader for safe, respectful and inclusive workplaces in our industry, and keeping to an absolute minimum, the footprint our operations leave on the planet. As John has pointed out, modern slavery is a difficult global challenge but Ansell as a responsible business must face. This has two strands, elevating our own labor practices so that they are at or above world-class standards and doing everything we can to ensure our supply chain is free of conditions associated with forced labor. On the first of these, Ansell advanced several important initiatives in '23. We completed our program to compensate workers who no longer work for us for recruitment fees they paid on starting Ansell employment many years ago. We introduced more intensive forced labor indicator audits across our own sites, and we rolled out independent grievance mechanisms across six of our facilities. Beyond our own operations, we strengthened collaboration with our supply chain partners with a view to aligning them with our modern slavery commitments, and their response has been very positive. By year-end, all our finished goods suppliers in Malaysia had formally declared that they had reimbursed recruitment fees for currently employed migrant workers representing a total reimbursement of $30 million to approximately 19,000 migrant workers. Key Wave one finished goods suppliers had completed forced labor indicator audits and we're making progress in rectifying issues identified. And subsequently, we extended our supply management framework to include smaller wave 2 and 3 suppliers. Now I'd like to talk briefly about progress against our environmental commitments. Our journey towards net-zero Scope 1 and 2 by 2040 is advancing well. We are particularly pleased with the growing role of renewable energy in our energy mix with 29%, as John mentioned, now sourced from renewables and set to increase further, as we build Sri Lanka's largest single-site rooftop solar photovoltaic cell installation at our manufacturing facility in Biogama just outside Colomba. Our water commitment is to reduce our water withdrawals by 35% by 2025 compared to that fiscal year '20 baseline. Although our withdrawals increased moderately by 3% in fiscal year '23, due to decreased plant shutdown days, we see a path to improved performance in 2024 through optimizing recent investments we've made in reverse osmosis technology, including in our Thailand facility, and building on pilots currently underway in Malaysia and Srilanka. These investments will reduce our freshwater consumption through improving water recycling in our manufacturing facilities. And on waste, as John mentioned, I'm particularly pleased to report the company has delivered on its commitment to achieving zero waste to landfill with all our long-standing plants certified as such during 2023. I'm proud to be able to say that of the more than 19,000 metric tons of waste generated in these manufacturing facilities in '23, less than 0.5% went to landfill, a truly exceptional achievement. Our new plants, the recently acquired Careplus facility and the under construction Kovai facility and now embarking on their zero Waste to Landfill journey. I'd now like to speak to our strategy for adapting our organization to post pandemic operating conditions and ensuring we are positioned to begin a new era of growth. Our accelerated productivity investment program announced in July is a 3-year initiative designed to position Ansell for improved earnings growth over the medium term. The implementation of this program follows careful consideration by Ansell's Board and my leadership team of what sets Ansell apart in the market. Now the requirements of PPE customers and end users have evolved, what Ansell needs to do to meet these requirements, leveraging our competitive advantages and the realities of the operating and economic conditions in the markets in which we participate. There are three objectives to the program. first, streamlining our leadership and organizational structure to reduce duplication of responsibilities and better align it to customer needs and growth strategies. Second, improving efficiencies in our manufacturing operations, including automating processes where we can, continuing our strategy of in-sourcing key styles and outsourcing or exiting product categories with limited differentiation. And finally, accelerating and broadening our digitization strategy, transitioning our business to a consolidated global ERP system, building on our recent success with major IT implementations. Our intention is to fund these investments in organization and manufacturing changes from reductions in our inventory. Based on our improved supply chain performance, we are confident we can manage this inventory drawdown without compromising sales revenue growth or customer service. Four months into the year, I can report good progress in implementing the program. My team has worked intensively through the design and implementation of the new organization structure with this work completed by the end of September. We've been reducing head count in our manufacturing facilities as production has slowed affording us time to make investments to automate key production steps, principally in the packaging of our products. Slower production rates have ensured we're on track against our objective to lower in-house inventory. We've also progressed the evaluation of longer-term manufacturing changes to optimize our overall sourcing network, and we expect to begin the implementation of these in fiscal year '25. Overall, we're seeing good results from the initial components of the program with savings from these components at or above the estimates assumed in the targets we communicated in July and that are shown here. and also an expectation of costs to deliver these components being similarly at or moderately above our initial estimates. Other elements of the program are further out and continue to have a range of potential outcomes in benefit and costs. And so we'll look to provide an update to estimated costs and benefits for the total program at the half year result. I'd now like to take a minute to describe the changes I have made to our executive leadership team, reflecting this adjusted organizational structure. I've created a single global product and marketing organization led by Rikard Froberg , which is responsible for managing product innovation, product portfolio management, and marketing activities for both our industrial and health care segments and their component SBUs. We've also made leadership changes in our commercial teams. With Sean Sweeney appointed as Chief Commercial Officer for the Americas team and Augusto Accorsi to the equivalent position for EMEA and APAC. Sean and Augusto have progressed through sales, marketing and product management roles at Ansell, and they both bring significant experience to what is a strengthened CCO responsibility versus the prior structure as I put our focus on developing and executing a more customer-centric growth strategy. These changes simplify and refresh my executive leadership team and I'm confident we have the right structure and team in place to get Ansell growing again and deliver strong results in the years to come. Now let me turn briefly to expectations for the current year. Overall, market conditions are broadly in line with our expectations at this point of the year. As expected, surgical and life science channel partners are still reducing inventory, and we continue to believe these -- the conditions in these market segments will begin to normalize in the second half of this fiscal year. As I've mentioned, we've made good early progress against implementation of our investment program objectives. And with the key changes to our organizational structure now made, we will see SG&A savings from October onwards. As expected, the benefits from manufacturing changes and investments will be offset in fiscal year '24 by increased cost of goods sold as we slow production to reduce inventory. Based on this, we have maintained our guidance for '24 adjusted earnings per share to be in the range of $0.92 to $0.112 and for fiscal year '24 statutory EPS and to be in the range of $0.7 to $0.77. The timing impact of the various revenue and cost factors that I've commented on lead us to anticipate adjusted EPS to have a somewhat greater weighting to the second half than in previous years. In conclusion, Ansell continues to face a challenging operating environment. Our team is working very hard to respond to these challenges and execute on our strategy to create long-term shareholder value. We continue to invest in our future success while taking necessary steps to improve short- and long-term performance, and I'm confident that the plans I have outlined today will position Ansell to do just that. Thank you for your time and continued interest in our company. Thank you for your attention. And now back to you, John.

Thank you, Neil. Ladies and gentlemen, we will now move to the formal items of business set out in the Notice of Meeting. As has been mentioned earlier, the poll is open on all items. The results of the proxy votes already received for each resolution will be displayed after any questions in respect to the resolution has been -- has been dealt with. The final results for each resolution will not be displayed at the meeting but will be lodged at the ASX following the meeting. The first item is to receive and consider the financial report and the report of the directors and auditor of the company for the 2023 financial year. This item gives shareholders the opportunity to ask questions or make any comments in relation to the financial statements, the directors or auditors' reports or the operations of the company. I ask the questions relating to the remuneration report be held until we reach that item later in the morning. There will be sufficient opportunity to address those questions then.

I will now take questions from the floor. For those attending in person, if you have questions on this item, please make your way to the microphone. So we have Mr. [Rongai].

Thank you, John. I'm representing the regional trades or human rights shareholder group and our concerns you have made statements on them which is pleasing to see on a couple of the issues. But I have written down the questions. And so maybe it will double up a little bit about the ethical social governance obligations and procurement with relation to the Modern Slavery. We just been dogging the company for a while, so it's good to see that there is some movement on it. But Bridgeway, was the only Malaysian PPE producer to still be subject to with the holding release orders from U.S. Customs and Border Protection. This year was taken by U.S. customs nearly. So that's been going on for about 2 years now. And you've indicated that you've made some changes and improvements in there. But there's also a litigation case that Ansell -- against the Ansell in the U.S. courts. And I think that was lodged on the 28, [indiscernible] 2023 in regard to spending millions on lawyers and lowering up instead of supply and remediation. So obviously, there's a few things that still need to be resolved there. But the other area that there was the concern for the payment of redundancies for long periods, these workers worked for Ansell is in Thailand and I think they've commenced legal action. So I guess the main issue is that this becomes a costly to the shareholder to Ansell's shareholder future. And so I guess, the quicker that these things are resolved, the better. So there's still a few of these issues that are hanging over and haven't been resolved. So I guess just a little bit of further information to try and see how you're going with those last ones to tidy up. And I guess this is a problem that's happening with a lot of companies now that they've outsourced their -- a lot of their work, et cetera, but they don't seem to follow up on their procurement issues to a lengthy degree and they're satisfied with what they're being told. So I guess, in future whether there's any move for you to be more proactive in making sure and researching that these things aren't going to keep raising their ugly head. And as you know, that is a lot of horrific crimes against people in the world. So.

Look, you've raised a number of issues through your commentary there. Let me just say that at a board level, the issues around modern day slavery are on every board meeting agenda. And we go through all of the items that are happening both within our company and externally. And we see ourselves as a leader in this field. We operate in geographies where modern day slavery, particularly with foreign workers in Malaysia lead to exploitation. And the company has done a lot of work both of its own operations, but also back through its supply chain. We've reduced the number of external suppliers to provide finished product to us because they couldn't meet our standards, what we're aiming for. So we see ourselves as a leader in this field, but we operate in an industry where poor practice is actually quite common. And so from a leadership perspective, you should be comfortable, take comfort that the Board and the management take this area very seriously. It's not about cost, it's about doing the right thing. And we have -- we've [taken] significant steps forward to ensure that we are compliant. There will always be issues in our industry, which will emerge from time to time, and we will respond in the appropriate manner for those. So this is a long journey. We've been on this journey now for 7 or 8 years to try and make sure that we're okay. And that from an industry perspective, we are improving. So I note what your comments are, but let me just say that from a Board and management perspective, we see this as a long term but very important value system.

Next up, we have Mr. Peter [ Art ].

I'm a volunteer from the Australian Shareholders' Association representing retail shareholders. Today, I have proxies from 152 shareholders for approximately 245,000 shares. Your strategic priorities have changed to a more medium term this year. I think Neil has commented in some detail on the changes. But I just wondered when you expect that this will impact the business' performance.

Well, I think it's impacting on our business performance already. I think the organization has now refocused to what is the post pandemic sort of position. We've made a number of organizational changes, and we've committed to slowing down some of our plants for the moment in the short term to ensure that the stocking issue gets sorted through over the next 12 months. And we should start to see as the market improves, our revenues start to grow again in the next 12 months. So you'll see that over the next 12 months, the improvements as they may come through.

And just one other, if you don't mind. I'd like to reason international directors not being present today, but I do wonder whether you can tell us how often the board meets as a complete board face to face. And in those circumstances, where that is actually occurring.

Okay. So obviously, during COVID-19, we all met on Zoom for the entire 2 years. So since that has gone away, we've actually been traveling a lot. So we always visit the United States, which is our largest unit and Europe once a year. And the rest of -- most of the other Board meetings are actually on our operating sites. So we've been to Sri Lanka this year. We've been to Malaysia to Thailand. And the next 12 months will probably include India and Vietnam. So most of the meetings -- well, all of the meetings are held outside of Australia with the exception of the one that occurs today. And this is -- for us, a Board meeting where some of the directors are present and some are on Zoom. But that's the only meeting we have in Australia. Are there any more questions? Okay. There appear to be no further questions from the floor, Michael, have we any written questions from the online poll.

Chairman, we have a question from Ms. Jillian King. The question is, it has been very pleasing to read and hear of Ansell's huge efforts to reduce its damage to the climate. I particularly welcome the company's leadership on reducing Scope 3 greenhouse gas emissions. We are observing accelerating global warming with associated consequences. For example, 2023 is on track to be the warmest year globally at currently 1.4 degrees more than preindustrial times. And 1 in 3 days in 2023 being over 1.5 degrees warmer and September beat the previous September record by 0.5 degrees with many areas of Australia being 3 to 5 degrees Walmart. The increasing urgency for action to stop damage to our climate is clear. Given that, will Ansell move to accelerate its shift to 100% renewable electricity so that it achieves that transition well before 2040?

Okay. Very good question. So the move to renewable energy is determined by two things. One is the degree to which the grid has converted to renewables. So if renewables are available, we will convert to that. We are putting a very substantial amount of money into both building biochar boilers and putting solar on the roofs of all of our sites to ensure we get there as fast as we can, but we will not get there without the grid being -- more renewable energy being available from the grid. Are there any more questions?

Chairman, there are no further written questions.

Okay. So if there are no more written questions from the online participants. I'll now take audio questions. Do we have any audio?

There are no questions on the phone line at this time.

I'll now move to the next item being the election of directors. The first director seeking reelection is Nigel Garrard. Nigel resides in Australia and joined the Board as a Nonexecutive Director in March 2020. He retires in accordance with Rule 33 of the company's constitution and being eligible, he offers himself for reelection. Nigel's experience and Board committee memberships are detailed in the notice of meeting. On the 13th of June, Ansell announced that subject to reelection at the AGM, Nigel will replace me as Chairman effective from the conclusion of this AGM. The Board considers Nigel to be an independent director. Nigel, would you like to say a few words.

Thank you, John, and good morning, ladies and gentlemen, and fellow shareholders. Before I talk about my reelection, I just wanted to take a moment to thank John for his contribution to Ansell over the last 12 years. 8 years as a nonexecutive director and 4 years as Chairman. It has been an exciting but difficult time over the -- particularly over the last 4 years with COVID, and John has led the Board and the company with distinction and leaves behind a positive legacy and his contribution certainly from us around the Board table will be missed. And John, I'd like to thank you on behalf of your fellow Board members and shareholders for everything you've done over the last 12 years. For me, I'm up for reelection today, and I've been a Director of Ansell so far for 3.5 years. As John indicated, the first 2 years of my appointment, I was serving Ansell from my study at home because those who was living in Melbourne know that we weren't allowed more than 5 kilometers from our house for most of those 2 years, but I've had the opportunity over the last 12 months to visit pretty much every site, a major site of Ansell throughout Asia as well as the U.S. and Europe. And from my perspective, the business is an exciting one. It's one with a 130-year history and the opportunities ahead of us are both challenging but also very exciting. And I think Neil and the team have an excellent plan to position the business well as we go forward. From a personal point of view, I have executive experience in different industries and geographies, and I serve on other listed company boards and also some private company boards. I look forward to continuing to serve shareholders as we go forward, subject to your continued support, and thank you for that support to date. Thank you.

I now move that Nigel will be reelected as a Director of the company. I will now take questions from the floor. If you have any questions, please make your way to the microphone.

Chairman, it's Peter Ed.

This is more of a generic question for you that I think the total Board. I note that Ms.Goodin's appointment to the Board, and she is based in Australia. I also note that Ansell required to have a minimum of two directors as Australian residents. However, given that unforeseen circumstances can arise that may affect membership for the Board, what is the thinking behind limiting the local membership to the bare minimum? And what contingency do you have in place if such an occurrence happens.

Okay. Well, let's hope that doesn't happen. We used to have three Australian-based directors, but some years ago, we made the decision to go down to two. The reason for that is that of this that 96% Australian company's sales are actually made outside of Australia. And we operate in markets which are diverse, and we have made a diverse board with international experience to cover that off. So for all of our directors, that international experience is important. And really, two directors here who have a good understanding of ASX requirements and so forth and governance in this particular area with Nigel and Debbie we're well covered. Should anything happen to them, Glenn Barnes who's sitting in the front row here, who used to be the Chairman of the company is on standby, as is Peter Day, another former director. And once I finish this, I'll probably go into that same group. So should something urgently happen, and you have to have two directors to continue to operate. One of us would be asked back in before a selection process move forward. So we do have a contingency plan should that happen. Are there any more questions from the floor? Okay. Michael, are there any written questions?

Chairman, we have a question from Mr. Stephen Mayne. The question is, shareholders rarely get any insight into chair succession matters. Could Nigel Garrard provide his perspective on how the chair succession was handled. Was a headhunter or external party involved in the process? Or was it all done just with the assistance of the company's Secretary, like what happened at Macquarie Group. Were there multiple candidates for chair? And was there a ballot? Did we look outside the existing directors for a new chair, similar to what Westpac announced last week. Also, given that John Bevan is about to exit, wouldn't it have made more sense for Nigel to chair this meeting, given that he is the future.

There's about 20 questions in there from Stephen. So let me say you would hope that your Board actually has a process around succession and succession both for Chief Executive and Chairman of the Board and all of those activities is a thing that runs constantly through the year's agenda. My stepping down as Chair was clear to the Board nearly 12 months ago. We went through an internal process where we had multiple candidates and Nigel was selected by the Board to take on that role. And the decision was at the time that I would run the -- as Chairman of the Board through to the end of the AGM. And then Nigel would take over thereafter. So that was the decision of the Board. So that's the answer for those questions. I'm sorry, we got another question from the floor.

Another question from the floor from Mr. [Rongai].

Nigel seeing you are the man that will be fronting up to next year to ask questions. I was just after -- you can have my votes of support, but I was after a commitment that we're not asking the same questions about the -- well, the workers at risk at Modern Slavery and the workers in Thailand that are from [ Myanmar ] and in many cases, are unable to return home, have difficulties with their immigration status due in part to their unexpected termination and are in poverty due to the lack of redundancy pay. So I'm hoping that you will take that personally to try and resolve that issue for the Ansell factory so that we don't have to ask you those embarrassing questions next year.

Can I just say you'll probably have opportunities to ask those questions every year because this is an ongoing risk to the industry that we operate in. And I hope that you'll hear year-on-year improvements on what we have done. So Nigel takes over as the chair, but there's no change in strategy, and this will remain a commitment for the organization to go forward.

I have got faith in Nigel.

Okay. So if there are no more questions from you, Michael. Are there any audio questions.

There are no audio questions at this time.

Okay. So no further questions, I'll now move on to the proxy results. Proxy results in respect to the reelection of Nigel as a director are now displayed on the screen. The next director seeking reelection is Christina Stercken. Christina resides in Germany and joined the Board as a Non-Executive Director in October 2017. She retires in accordance with Rule 33 of the company's constitution and being eligible, she offers herself for reelection. Christina's experience and Board committee memberships are detailed in the notice of meeting. The Board considers Christina to be an independent director. Christina, would you like to say a few words.

Dear shareholders, my name is Christina Stercken, and I stand for reelection today. I'm a member of the Ansell Board since the AGM 2017 and chaired the Sustainability and Risk Committee since 2021. I have spent most of my executive career with BMW and Siemens. Within Siemens, I had various management positions, for example, in finance and M&A as Head of a global business unit in the IT services sector and as Head of Task Force China, supporting business setup and strategy in China. I started my career with BMW in marketing and sales in South Africa. After my executive career, I had my own consulting company, advising numerous companies in industries such as health care, chemicals, automotive and machinery. With my management responsibilities in large companies and my functional focus on internationalization strategy and M&A, I bring a range of competencies which are relevant to Ansell. Since I joined the Ansell Board, the company has been exposed to numerous challenges. COVID-19 and the unprecedented demand surge, supply chain disruptions, increased ESG requirements, now destocking of distributors and customers, just to mention a few. The management team has achieved a lot, improved manufacturing footprint to support and further strengthen Ansell's market position. The company's commitment to environmental leadership and respecting human rights. The recently announced productivity program will drive EPS growth and improve returns on capital employed. I'm highly motivated to continue my service with the Ansell Board. Ansell is a safety company, which has a clear purpose, protecting people at home and at work. I enjoy working in a diverse global and value-based business environment with an extent team at Ansell. I'm looking forward to serving on the Ansell Board, alongside with my Board colleagues contributing to the company's future. Thank you.

Thank you, Christina. I now move that Christina be reelected as a Director of the company. I'll now take questions from the floor. If you have a question, please make your way to the microphone. Michael, are there any written questions?

Chairman, there are no written questions at this time.

Okay. Are there any audio questions?

There are no audio questions at this time.

As there are no further questions, I will now I'll move on to the proxy results. Proxy results in respect to the reelection of Christina as a director are now displayed on the screen. The next director seeking reelection is Bill Reilly. Bill resides in the United States of America and joined the Board as a Nonexecutive Director in October 2017. He retires in accordance with Rule 33 of the company's constitution and being eligible, he offers himself for reelection. Bill's experience and Board committee memberships are detailed in the notice of meeting. The Board considers Bill to be an independent director. Bill, would you like to say a few words?

Thank you, Chairman. Ladies and gentlemen, fellow shareholders and honored guests. I'm pleased to speak to you today and to have once again been nominated for another term on the Ansell Limited Board of Directors. This will mark my third turn on the Ansell Board. As many of you know, I served as Ansell's General Counsel for over 17 years. Unquestionably, the crowning role as my legal career. I retired from my full-time executive role in 2017 and believe my 6-year service as an Ansell Director, in addition to my 37-plus years of legal experience render me uniquely qualified to continue my service to the company and to Ansell's shareholders. Today, as we say goodbye to and congratulate John Bevan on his years of service as a Director, Deputy Chair and Chairman. And indeed, we are all grateful for his many noteworthy contributions to Ansell over that time, we also welcome Nigel Garrard as our new Chairman and formally welcome Debbie Goodin to the Board. While we are grateful to have such incredible talent added to our ranks, I believe I'm well positioned to assure retention of a solid working knowledge of Ansell's corporate history, a rich and complex one to the benefit of this new generation of directors. Moreover, I bring a rather strong legal, regulatory and compliance skill set to round out the many skills of this incredibly talented Board. I note that in my time as an Ansell Director, I'm proud of all that we have managed to accomplish, including, among other things, the successful CEO succession and transition process. We have continued to make meaningful investments and progress to delivery on our sustainability, labor rights and diversity and inclusion agendas. We successfully navigated the perils and aftershocks of the global pandemic, all the while maintaining our fundamental commitment to Ansell shareholders, customers and employees. That is the trust and integrity of the Ansell brand and all it stands for. I am honored to continue my service. I look forward to the challenges and opportunities over the next few years. And thank you.

Thank you, Bill. I will now move that Bill be reelected as a Director of the company. I will now take any questions from the floor on his reelection. Michael, any questions -- written questions.

Chairman, there are no written questions at this time.