Clover Corporation Limited (CLV) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Rupert Harrington, and I'm the Chairman of Clover Corporation Limited. I welcome shareholders and visitors to the 2022 Hybrid Annual General Meeting of the company. The meeting is being webcast. At the same time, we are holding a physical meeting from the offices of our auditors, PKF in Melbourne, as advised in the notice of meeting. We're not recording using a visual medium at the AGM today. The company secretary has informed me that a quorum is present, and therefore, I formally declare the meeting open. I acknowledge the traditional owners of the land on which we are meeting. I pay my respects to the elders past and present and the aboriginal elders of other communities who may be here today. Thank you for attending in person and online. We're again using the Computershare platform to host meeting. This platform allows shareholders, proxies and guests to attend the meeting virtually. All meetings -- all attendees can watch a live webcast of the meeting, only shareholders and proxies have the ability to ask questions and submit votes. Before we proceed, I'd like to introduce you to the other members of your Board. With me today are Mr. Peter Davey, MD and CEO.

Hi.

Dr. Simon Green. Mr. Graeme Billings.

Good afternoon.

Ms. Toni Brendish.

Hello.

And Mr. Ian Glasson.

Good afternoon.

Also present is Mr. Andrew Allibon, the company's Secretary and CFO; and Mr. Ken Weldin, representing our auditors, PKF. Ken will be available to answer questions on the accounts at the appropriate time. To attend this meeting, you will have downloaded the links as supplied from the notice of meeting and enter the credentials provided to you that recognize you as a shareholder or proxy. Alternatively, you may have entered as a visitor or as a guest. I propose that the final notice of meeting dated the 19th of October 2022, which was mailed to shareholders to be taken as read. I would like to address general housekeeping around questions and voting before we proceed further. Questions can be submitted at any time. To ask a question on the app, press on the Q&A bubble icon. On the screen, there is a section for you to type your question. Select the topic from the top drop-down list. Once you have finished typing, please tap send. 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 business before the close of the voting polls. I ask that in the interest of time and to allow as many questions as possible to be addressed, please try to keep your questions to a moderate length. Also, please note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. If you wish to ask a question by phone, please note the number and follow the directions of asterisk 1 to join the verbal question queue. Please mute your webcast if you choose to use this method to avoid any audio feedback. Finally, due to time constraints, we may run out of time to answer all questions. If this happens, we will answer them in due course via e-mail or by posting responses on our website. In accordance with the current practice, voting today will be conducted by way of a poll on all items of business. I will shortly open voting for all resolutions. And if you are eligible to vote at this meeting, a vote 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. You have the ability to change your vote up until the time I declare the voting closed. This is shown at the bottom of the vote page as noted on the slide. In the unlikely event that we experience a loss of signal with the webcast, please do not log out of the application. We have a backup webcast stream running, which will automatically appear in the Computershare application within about 30 seconds after the initial loss of signal. Finally, voting on every resolution is held today until the end of the meeting. That concludes the housekeeping on questions of voting. Before we move to the formal business of the meeting, I would like to present my Chairman's address. Following my address, Peter Davey, will give a presentation on the business. The past financial year has been a challenging but positive one for Clover. As COVID restrictions eased, it became possible to better engage with customers and rebuild our sales pipeline. This resulted in good sales growth in the second half of the financial year as we trend back towards pre-COVID levels. As a result, we reported improved year-on-year revenue and net profit after tax, and this result was consistent with the top end of the guidance that we provided at the half year announcement in March of this year. The Board and management continue to have a strong focus on driving growth by accelerating the commercialization of R&D, expanding international business development and sales support, identifying adjacent market opportunities, including licensing and possible strategic acquisitions. Some key milestones achieved in the past year include The New England Journal of Medicine recently reported on the positive outcome of the 5-year clinical trials with pre-term infants being fed with Clover's unique Omega 3 emulsion. The result of the clinical trial shows an improved IQ amongst babies fed with this emulsion. Clover has branded the product Premneo and is now evaluating opportunities to commercialize it through a new specialized operating division. As previously reported, the Chinese government has legislated that infant formula sold in China from February 2023 must contain certain defined minimum levels of Omega 3 and Omega 6. Approved parties are provided with SAMR license. Clover has been working with European and Chinese companies to have its encapsulated products included in their SAMR license applications. We are pleased to report that we recently received initial orders from some of these Chinese infant formula manufacturers. The company has continued to develop unique products targeting the medical foods and nutraceutical markets, including Gelphorm, a product that allows customers to fortify UHT milk drinks with Omega 3, high concentration Omega 3 for gummies, tablets and vegan powder products. The commercialization lead time for products developed by Clover remains lengthy due to the accreditation process and shelf life testing. However, our experience is that these products generally have a strong sustainable competitive position once in use. I'm also pleased that we have successfully concluded our legal defense of IP infringement against Pharmamark. The 3-year action resulted with the court awarding compensation and party to party costs as well as orders to ensure that the company's IP remains protected. On behalf of the Board of Directors, I would like to thank you, our shareholders, for your continued support. I would also like to acknowledge the extraordinary effort of our employees and management team on another busy and challenging year. I would now like to hand to Peter to give an update on the business.

Thanks very much, Rupert. So the Managing Director's report for the 12 months at the end of the year. I will start with the vision, values and purpose of the business, which I think is really extremely important because that puts a peg in the ground before we begin. Our vision is to optimize the health and development of adults, infants and children. We do nothing but good, which is a wonderful thing that we do in this business, which is great. We live by 3 key values, we call the 3 Rs, respect response and responsibility. They're key to the culture of our business, and I'm very proud of the way our entire business adopts and lives by them. And then the purpose of our business is in collaboration with key market participants, our customers. Clover develops customized high-value nutritional ingredients that enhance the well-being and dietary needs of their customers. We support our customers in growing their own companies and solving problems for them. The full year performance highlights. Our total year revenue was $70.7 million, that's up 16.9% on the prior year of $60.5 million. We saw an increase in our demand profile for the business. Net profit after tax was $7.1 million. That was up 18.8% on the prior year of $6 million. Our operating expenses were $10.4 million, up 11.8% on the prior year of $9.3 million. We had inflationary costs, legal costs. We started to travel again coming out of COVID and our marketing costs improved relative to that. We added new customers to the business and we launched new products, which I'll go into some detail. Our inventory position is quite high $36 million, an increase of $5.2 million is really a reflection of constraints within the marketplace. Our balance sheet is strong. We had -- we finished the year at $10.1 million worth of cash puts us in a good position to continue to operate and pay down debtors. And we pleasingly declared a final dividend of $0.01 per share, bringing the full year to $0.05 per share. Update on the FY '22 year for you. Clover's employees have continued to work through COVID. I'm really proud of the way the business has operated. We haven't had to close our business. We operate in the food market, the infant formula market. So an incident would have been detrimental to the running of the company and our employees have been wonderful the way they've continued to live by the rules and they've self-isolated whenever they've had COVID. Our revenue in the first half was quite stable for the year at $29.7 million, but we really saw an improvement in orders in the second half of the year where we were seeing a return to pre-COVID numbers of $40.9 million. So a very good second half for the company. As I said, we remain very high in our inventory position with the supply chain issues of getting inventory, some of that stock now goes from a 2-month supply chain out to a 9-month supply chain and hence, we've had to hold more inventory to ensure that we have the product to turn into a finished product for customer orders. Pleasingly, we've met more customer orders where a lot of people haven't been able to achieve that. Inflationary pressures across the business, raw materials, energy, freight, people have all impacted our gross margin of the business and getting improvements in pricing where we have long-term contracts with customers is very difficult to recover those prices. We have been able to do it to some extent. We've got a new -- a lot of new projects that have come back into our stable that started pre-COVID and customers are coming back to work, so we're seeing them come back into the business. And really in the second half, we were able to start doing international travel again. So we've been reengaging with the customers and actually a lot of new people into the marketplace, which is really pleasing to show that we've got people interested in our products and our solutions. Sales by geography. Overall, the year was very good because we saw an improvement in all marketplaces. EU slight improvement year-on-year as the market in Europe started to recover coming out of COVID. Australia and New Zealand, while the graph may look less, it's actually quite significant when you look at the scale, and it was over a $10 million improvement in that marketplace, where we've lost significantly going into COVID. So we've got some really good recovery across those markets. And then in the U.S., only a slight improvement, probably the slowest market come out of COVID, I just came back from there last week and it's still quite dormant. A lot of people aren't working from home and a lot of businesses are still quite dormant. So just turning to the P&L, the full year '22 results. Revenue improved, as said 16.8% year-on-year and all regions showing some of the growth. We really recovered from a lot of the pantry stacking that occurred going into COVID-19. So people bought up a lot of especially baby infant formula, put it on their shelf. Obviously, it's got a long shelf life. So they used that during the last year. They didn't have to buy more. So we saw a decrease in overall volumes. That started to improve. We had price increases and cost reductions that we're applying across our whole customer base and that mix has partially offset the inflationary pressures that we've had. Our GM was down 0.5% on the year, which is a pretty good effort considering some of the increases that we've seen. And the recovery from Pharmamark was quite offset by other legal costs and losses through Melody Dairies, which I'll talk to. NPAT to the result was $7.2 million, a good improvement on the prior year at $6 million. The balance sheet continues to be strong. $10.1 million in cash, puts us in a very stable strong position and up $1 million on the prior year. Our trade receivables finished up, especially with the strong finish that we had. Our inventory levels are maintaining that buffer against supply constraints. And then our payables increased with a strong second half that we had as well. We've had to buy in more stock and to meet the customer orders that we've had. Bit about Melody Dairies. So you understand that we are a 42% shareholder in a spray dryer, which is in Hamilton, New Zealand that's part of our vertical integration strategy. It allows us to have some control over our finished product and in supply and quality. There was long delays. This was a greenfield site that we started manufacturing and as soon as we started breaking ground COVID hit. So there were significant delays in terms of the build and getting it up and running. It's now completely operational. But New Zealand remained locked down during last year. So we weren't allowed into the country to actually operate the facility. So it basically sat dormant for the manufacture of our products for quite some time. So it slowed. As a result of that, there was underutilization of the plant. So we shared in the loss that it made, so it's $700,000 we listed in the P&L. But pleasingly, all of our customers have now gone through audits of their factory and all their products can be made on the factory, which is quite a lengthy process to be able qualify our products on any business. And with the improvement in customer demand, we're now seeing full utilization of that facility. In fact, it's now getting hard to actually get manufacturing on the facility at the moment in New Zealand. So overall, we talk about the growth platforms that we run through the business. One is them is about new product development. The other is our focus on infant formula and then new market development as well. So I'll just update you on those 3 key platforms that we have for growth. Market development is really about for us is diversification. You know that we are extremely strong in the infant formula market. And what we've turned our attention to is broadening our base and diversifying the base of business. So we're doing quite well in general foods. We've introduced products that go into sports nutrition. So we're in powders. We recently launched a new EPA powder. EPA is an element of Omega 3 that helps reduce inflammation in people. So we produce that. We now have it in a fish-based form and a vegan form, which is the only one available in the marketplace just recently introduced. Pharmaceutical, we've talked now to the marketplace about Premneo. It's an exciting opportunity for us that we look forward to capitalizing on. We're really getting strong in supplements, especially across the U.S. market, we have tablets, we have powders and the gummy market. We're selling gummies into both the U.S. and into the European market. And then plant-based drinks, we'll talk a little bit about Gelphorm that product is going into some plant-based drinks as we speak today. So some of the new products was Premneo, we talked about it. It's a unique product where we've announced the successful clinical trial results, where we've been able to show that we can improve the IQ of pre-term infants. There is no other product in the world that's capable of doing this. So it's for very premature babies that are born less than 32 weeks. So there are very tiny babies that don't get the brain development that would normally get being in the mother's womb through the placenta. So we're feeding them a unique product an emulsion product that goes through a nasogastric feeding tube that goes directly to their stomach and allows that brain development to occur, and now we've proven that. It's a wonderful result. And we've got a lot of work to do to now understand the commercialization path of it, we've only known about it for 3 weeks like you have. So it's got a path to go. Gelphorm, again, another unique product we launched in America 2 weeks ago. So we've been doing some trials on this product. It is a liquid emulsion product that allows Omega 3 to be put into UHT products. So if a customer wants to have like a milk product, generally our target sort of an intelligence market, children, maybe adults, seniors. It allows them to put Omega 3 through a UHT product, which is effectively the process would normally destroy any sort of product at all. That's what it's set up to do. We've been able to protect it. We've gone through trials. We've got trials going across multiple markets and we're starting to achieve some orders of it, which is wonderful. And we've invested heavily into our R&D business. We're effectively quite much an R&D company. We've gone into new facilities in Brisbane, which have doubled the size of the previous facility. We've added people into that business, and we've now added new equipment that allows us to fast track our R&D projects. We internalized a lot of the equipment to do commercialization of our products, where we would have outsourced in the past. Turning to the other growth platform of infant formula which is a key plank in our business, and it always will be. We've worked really closely with Chinese and Western customers to get our products incorporated into their SAMR applications. A SAMR license will be required from February next year. to be able to sell an infant formula product through the retail channel in China. They will still be able to sell a product through the gray market being cross-border people sending products through mails or coming out of bonded warehouses. But if you want to sell through the retail market, [ number of ] baby stores, pharmacies, supermarkets, you have to have one of these SAMR licenses. We've been successful in getting our products incorporated into the license applications of different people, and it means a significant increase in the demand for our style of products. We are one of old multiple suppliers of this product into the marketplace. A Chinese product after February, will have to have 15 milligrams per 100kcal of DHA, which is an Omega 3 and ARA, which is Omega 6 and you have to go through a licensing process to do it, which includes audits as well. That has been severely hampered, you're probably aware that China has got difficulty in terms of COVID and they've had significant lockdowns. And to get auditors out to other countries has been almost impossible. So it is delayed. So February looks like a very challenging deadline, especially for Western infant formula manufacturers. And we've added new infant formula businesses in both China and Europe. And as Rupert said, we have actually achieved orders out of China, which is wonderful to see the rubber hit the road in terms of revenue. That's very pleasing. And in our second half, you saw our results rebound, and that was mainly a reflection of an improvement or a recovery in the infant formula marketplace and that was globally. We saw that growth in every single marketplace in the second half. The third growth platform is about new market development. We're always trying to expand the marketplace where we service and so grow our opportunities there. We've been able to achieve a gummy of 125 milligrams of DHA into a small 3 gram gummy. So it's a tiny gummy. The daily recommended intake DHA for a human generally across most markets is 250 milligrams of DHA per day. So now we can produce a gummy for a child or an adult that with 2 gummies, you can achieve your daily recommended intake. It's an unheard of. We're up against competition that market a 20 or 30 milligrams. So it's a wonderful outcome but we're starting to get some traction with in Europe and in the U.S.A. But it means a parent can now give the child 2 gummies instead of giving them a handful, which is a much more salable product to a parent because most of these products do contain some level sugar content. We've added new employees and warehousing in Europe. So we've moved our warehousing in Europe and we've added additional people. Certainly, COVID highlighted to us the importance of having people on the ground to be in contact with customers. Trying to service customers from Australia is quite difficult. And so we've added more resources, and that's continued on into this year as well. So we'll make announcements about the additions as we move on. And we've grown our customer base across our food and nutraceutical and that's really where we see those growth platforms. Infant formula, we're very strong, and we see the nutraceutical's marketplace opening up for us. People are looking for more concentrated, high-quality products. And then in the food market, we're seeing people rather than taking a tablet, they're trying to get food that has fortification, so they get their DHA within that rather than having to take a tablet addition to it, which is a great opportunity for our technology. And we've recently launched this vegan EPA powder targeting medical and nutraceuticals market. So it's unique. There is no other product in the world that can achieve it. It's very recent. So we've only got it on trials at this stage. But again, it's another platform for us to grow a market segment that effectively doesn't exist today. And so, I turn to the first half outlook and priorities. A while ago now we've moved on significantly, and so we have -- we've made some updates to this page. We're still going to manage the risk to our employees, to our customers and to our suppliers COVID is still with us. And I'm reminded of it every single day, we wake on it every single morning to remind our business that COVID, we need to protect ourselves and each other from it. As supply chain challenges continue accessing raw materials that come from overseas, the extension of those time lines has been significant and getting our product to customers has also been significant. The addition of something like a warehouse in Europe has allowed us to stage our products closer to a customer and therefore remove risk for them and which helps us get sales and retain our business. We've reengaged with customers and new opportunities. We've done in market visits and trade shows. In the last few months, we've attended a trade show in Europe -- sorry, in North America, which was massive and wonderful to see people back out there looking for new opportunities. And we also did a trade show, which is in Bangkok, which is a massive trade show for the Asian market. So reengaging with the marketplaces where we've always won our business, and we expect that we'll get some seasoned good growth with those sort of visits again. Commercializing Premneo and Gelphorm are 2 wonderful opportunities for the business. I've often looked at this business and said, we're really good at this, but where are the next stages of growth and now they're sitting in front of us. Now we've got to really work out how we commercialize those 2 opportunities and get traction and generate revenue for the company going forward. We will continue to increase our vertical integration into the business. Like Melody Dairies, it's given us more control over our supply chain and more understanding of it. So we will continue to look at those opportunities. In logistics partners and warehousing, how we get our products to marketplace and where we buy our raw materials. And we will -- as Rupert pointed to, we will look at strategic acquisitions and partnerships and that's been fairly challenging during a COVID period, but certainly something that we are keen on getting a step change in the business to be able to grow the company. And pleasingly, we can report that the first quarter of FY '23 has continued revenue momentum that we achieved in the second half of FY '22, which is a great outcome for the business going forward. There are ongoing uncertainties, including geopolitical pressures and requirements to meet these Chinese licenses, which may impact the second half of FY '23. And that's our report on the marketplace for last year. Thank you very much.

Thank you, Peter. We now move to the formal business as set out in the notice of meeting. Each of the resolutions will be taken in turn. I will introduce each item and resolution. Shareholders will have a chance to ask questions on the resolution, and I will display the proxy results received for the resolution on the screen before we move to the next resolution. Voting is now open. I will now go to the first item of formal business. As required by the Corporations Act the financial reports for the company for the year ending the 31st of July 2022, comprising the company's financial statements, the directors' declaration together with the directors' report and the auditor's report will be considered, and I present a copy of them to the meeting which is signed by me for the purpose of identification. I invite you to ask any questions about these reports. I remind you that there are no -- there is no resolution required for this item. Please limit your questions at this time to matters related to the financial statements and other reports. There will also be time for general questions at the conclusion of the meeting. Questions may be addressed to me or to Mr. Ken Weldin, of PKF, the company's auditor through me. Are there any questions regarding the reports?

Mr. Chairman, we have 5 questions online regarding the annual accounts. So if I start with the first question, Mr. and Mrs. [ Sablack ] would like to know, are you able to comment on the current utilization of the Melody Dairies spray dryer whether it is now profitable?

Peter, would you like to take that question?

I can inform the shareholders that the Melody Dairies is currently being fully utilized. New Zealand is actually going through what's called the spring flush. It's when cows, goats and sheep give significantly higher milk and therefore, there's excess milk, which is then sent to the spray dryer. So it's being utilized about 80% of every single month at the moment. So it is running profitably currently.

The next question comes from Mr. and Mrs. Jack, again. Apologies. With new contracts, are you incorporating an ability to recover any material cost increases with recovery in price charged to customers?

Well, management of gross margins is an ongoing challenge for any business and particularly where we've come through significant inflationary pressures and supply chain. And so this is a constant focus, and we seek to recover our margins to traditional levels progressively as we can through cost reductions efficiencies and so forth. So the answer is yes, it's a focus and it's an ongoing focus of the business.

The next 3 questions come from Mr. Gary Ellis. And the first question is in relation to the Pharmamark. Have all funds now been settled in relation to the recent legal action?

Yes.

Next question from Gary again. Given recent announcements, by Bob in a2 Milk regarding their entry into the U.S. infant formula market, is there a significant flow-on benefit to Clover?

Peter, would you like to take that question?

Yes. Look, first of all, I put it, I can't comment on individual customers and I never would. But any entrant -- new entrant into the U.S. market it's going to take some time to get traction. So I wish those companies all the best, and it would be pleasing for us to get some potential increases in business from it.

So the next question again comes from Gary in relation to Premneo. And Gary is asking what is the estimated market potential per annum?

Well, as Peter referred to, it's only relatively recently that we got confirmation of where the veracity of that product is. And so until we had those results, we haven't been able to speak fully to the medical practitioners and so forth who will decide whether to use this product in practice and therefore, to do our works in relation to scoping the size of the market opportunity and therefore, the economics. There are about globally, I think the number -- Peter, you're correct me if I'm wrong, about 15,000 babies born in less than 29 weeks gestation that are some potential recipients of this product. And so the researchers are very keen for us to progress this, and we're very keen to understand the opportunity. But I'm afraid at this stage, we can't quantify the market in that respect.

That ends the questions online in respect of online questions.

Are there any questions from the floor? Can you please state your name?

[indiscernible] shareholder for about 14 years, [indiscernible] with Clover and you've been very responsive to some of our questions. So the question I have today is that pre-2020, the return on equity for Clover has been running around about 23%. In the last 2 years, it's running at 11%. And obviously, the same has been reflected in the share price of the company and also the EBITDA returns to shareholders.

Excuse me, this sounds like a general question rather a question on the financial statements.

I would like the Board and management, obviously there has been management refresh and Board refresh as well as a strategic move to replenish Clover with new [ IDs ] and new infant initiatives. But what I'd like to ask is what is the Board and management doing to return Clover to at least back to a 22% to 23% return on equity?

I don't think that is a question on the financial statements. I'm happy to take that question in general business at the end of the meeting. So can we reserve that question for general business, please?

I think financial statements talks about...

With respect, can I...

Okay. My second question is in relation to remuneration report as I think shareholders' returns is quite obvious. How is your current management and the directors of the company, ensuring that the remuneration report, at least somehow recognizes the fact that shareholders are also diminished. That is point one.

Again, the next resolution is in relation to remuneration, and I'm happy to take that question at the end of that and answer at that time. Are there any other questions in relation to the financial reports? Thank you. So I'm now going to move to item 2, which is resolution 1, set out in the notice of meeting, which relates to the adoption of the remuneration report for the year ending the 31st of July 2022. The remuneration report is in the Directors' Report section of the published company's annual report, pages 12 to 17. By way of summary, the remuneration report explains the company's remuneration policy and the process of determining the remuneration of directors and executive officers and sets out the remuneration details of each director and each of the company's executives named in the remuneration report for the financial year ending the 31st of July 2022. Section 250 R2 of the Corporations Act requires companies to put a resolution to their members that the remuneration report be adopted. Please note that the resolution is advisory only and does not bind the Board of Directors. I move that the resolution for adoption of the remuneration report for the year ending 31st of July 2022, be put to the meeting in the form of resolution 1, as set out in the notice of meeting. Details of the proxy votes in respect of this proposed resolution are shown on the screen. Are there any questions regarding the remuneration report?

I have 2 questions, Mr. Chairman.

I'll come back to you.

The first question is in relation to the STI remuneration. It's probably, in part, a little bit of a statement but a question, to ensure alignment with shareholders, will the Board consider the installation of a financial gateway that needs to be met before any STI payments are triggered. I would suggest that for FY '23, that should be 7% earnings per share growth with inflation tracking up over 7%?

I thank you for your suggestion, whoever that person was. But yes, there is a financial gateway for the payment of STIs. And unless we get through that gateway, which is a profit gateway then the other STI opportunities are not paid. And typically, that gateway allocates about 50% of the applicable STI earning capacity of the individual.

So the next question comes from the same gentleman, Mr. Chris Lloyd, in regards to LTI remuneration. A little bit, let me start by saying they support the use of earnings per share. The Rem report lists the target LTI hurdle as a 5% earnings per share growth with the maximum LTI payment being achieved with 15% with inflation tracking at 7%. Again, 5% earnings per share represents a 2% fall in real terms. In FY '23, will the Board consider making these hurdles real or inflation adjusted?

Well, we will -- when it comes to allocating and dealing with STIs in relation to future years, we will deal with that appropriately. I think we're trying to always trying to align the outcome for management in relation to an outcome for shareholders. And we're cognizant of a balance between all of it. And so I think the issues of inflation and other things would be part of how we consider that. And but I'm not going to commit to any particular numbers at this stage. But the purpose of an LTI is to ensure alignment between an outcome and an improved outcome from shareholders in relation to payment of LTIs to management.

There are no further questions on resolution 1, Mr. Chairman.

Back to you, sir. Would you like to ask your question on remuneration again, please?

Thank you, Mr. Chairman. As I said earlier, the remuneration report, it's -- I don't have any issue with it expect for the fact that there is a lack of alignment with return on equity, return to shareholders and the share price of the company, which are all interlinked. And I wouldn't like to say that we [indiscernible] our current position. So what is the Board and management doing to make sure there is alignment?

Well, the drive on the Board is to continue to improve the performance of the business in relation to key metrics of ultimately, earnings per share. And obviously, as we put investment in, return on investment performance is an important criteria also. So growth is an important driver to all of that. The outcome of what the stock market does to share price is something that the Board has if it does those things, is an outcome rather than we can influence it. And I suspect somewhere in all of that, the route of free float in relation to of the shares, it has an impact on it. And I think the drivers for growth and earnings per share growth consistently is where the focus of the Board and management is in the endeavor to get ultimately an outcome that is share price driven. Are there any more questions on remuneration report? If not, I'll now move to the next item. The third item being the second resolution relates to the election of Dr. Simon Green. Simon has elected to retire by rotation 1 year ahead of his 3-year term. This is due to address future rotations where we would have had 3 of the 6 directors seeking reelection at the next AGM of 2023. So pursuant to the constitution and being eligible, Simon offers himself for re-election. Simon has been a Non-Executive Director of the company since the 20th of October 2020. I would like Simon to say a few words to the meeting to discuss his background and credentials that he brings as a Director to the Board.

Thanks very much, Mr. Chairman. So I'm Simon Green. I have a background in science, research and development, PhD from Melbourne University, a honors degree and science degree from Monash University here in Melbourne. I worked in the United States at Genentech and also Novartis before being recruited to CSL, which you all know, I worked at CSL for 17 years, where I was involved in the global expansion of our Australian-based business to where it is today. And I led the research and development group there in plasma research and development. I was also the General Manager of our European operations and General Manager of our facilities and operations here in Broadmeadows in Melbourne. I left CSL about 6 years ago to found my own biotech start-up company. So I'm an entrepreneur and founder, as well as a manager in science. And that's a genetic-based diagnostics company. And I'm also a venture partner of BioScience Managers, which is a healthcare investment firm. So through that portfolio of activities, keeps me fairly busy. I confirm that I have the available time to be able to contribute through my direct activities at Clover Corporation and I bring the knowledge and spirit of research and development of commercializing innovative products and bringing them to markets globally.

Thank you, Simon. The Board, with Simon abstaining, unanimously supports the reelection of Dr. Green as a Director of the company and recommends that you vote in favor of the resolution. Details of the proxy votes in respect of this proposed resolution are shown on the screen. Are there any questions regarding this resolution?

No questions online, Mr. Chairman.

Any questions from the floor? If there are no questions, I now put the motion that resolution 2 be adopted. That concludes item 3 and resolution 2. The fourth item being resolution 3 set out in the notice of meeting relates to the reelection of Mr. Graeme Billings. Graeme's required to retire by rotation pursuant to the constitution and, being eligible, offer himself for reelection. Graeme has been an Non-Executive Director of the company since the 14th of May 2013. He was appointed to the Chair of the Audit Risk Committee of the company in the same year. Graeme, would you like to say a few words to the meeting?

Thanks, Rupert, and good afternoon, everyone. Details of my executive experience and current directorships, so I think are listed both in the notice of meeting and the annual report. What I want to talk about today is what I bring to the Board and a little -- some insights into how the Board operates and how we've been on a growth path the company as well as the Board over the last 9 years that I've been on the Board. During that time, I've also been Chair of the Audit and Risk Committee for that entire time. I bring to the Board deep financial, assurance, accounting, corporate governance, strategy and M&A skills as part of my role as Audit Committee Chair. I also demonstrate a high degree of commercial and business acumen as well as good old-fashioned common sense. I do confirm that I continue to have the capacity time-wise, to perform my role with Clover with diligence and certainly motivation. The Board continues to operate effectively in guiding senior management in a strategic and challenging way. The company has gone through a major change in growth over the last 9 years, and it's now a very different company now to what it was when I first joined the Board. The Board has a strong understanding of the markets. The company plays in based on the relevant skills and experience which each director has. This enables the Board to challenge management on various issues, always with the objective of achieving the best possible outcomes. The relationship between the Board and senior management, particularly the MD, is strong. I continue to enjoy serving on the Clover Board as a Non-Executive Director. I believe the company is at a point where opportunities are many and key decisions will need to be made. The Board will make these decisions in the best interest of all stakeholders, including you, our shareholders. I present myself before you for re-election to the Board of Clover. I thank you for your support. Back to you, Rupert.

Thank you, Graeme. The Board with Graeme abstaining, unanimously recommends re-election of Mr. Billings as a Director of the company and recommend that you vote in favor of the resolution. Details of the proxy votes in respect of this proposed resolution are shown on the screen. Are there any questions regarding resolution 3?

There are no questions online, Mr. Chairman.

Any questions from the floor? If there are no questions, I now put the motion that resolution 3 be adopted. Item 5 being resolution 4 is set out in the notice of meeting relates to the approval of the issue of financial year '23 performance rights granted to the Managing Director under the company's long-term incentive plan. Approval of this resolution will permit the company to issue the performance rights to Mr. Davey with a vesting date, subject to the performance of the 31st of July 2025 accounts. The Managing Director has 249,637 outstanding performance rights yet to vest. Inclusive of the 255,199 performance rights to the subject of the resolution 4, Mr. Davey will hold 504,836 performance rights vesting over the next 3 years. In terms of these performance rights are summarized in the notice of meeting. I'll move that the resolution for the approval of the acquisition of the Managing Director's performance rights and issue or other provisions of shares and satisfaction of the performance rights be put to the meeting in the form of resolution 4 set out in the notice of meeting. Details of the proxy votes in respect of this proposed resolution are shown on the screen. Are there any questions regarding resolution 4?

There are no questions online, Mr. Chairman.

Any questions from the floor? If there are no questions, I move that approval will be given for the granting of the performance rights to Mr. Peter Davey on the terms described in the explanatory memorandum accompanying this notice of meeting. I now turn to item 6, being resolution 5 set out at the notice of meeting relates to a special resolution on seeking shareholder approval to hold virtual meetings. Section 136(2) of the Corporations Act provides that a company may modify or repeal its constitution or a provision of its constitution by special resolution of shareholders. Resolution 5 being a special resolution requires approval of 75% of the votes cast by shareholders present and eligible to vote in person by proxy, by attorney or in the case of a corporate shareholder, by a corporate representative. Shareholder approval is given -- is being sought under section 249R of the Corporations Act allowing the company the potential to hold virtual meetings for any future AGMs if circumstances make it impossible to hold a physical meeting. This may be due to ongoing risk with COVID-19 pandemic infections, for example. I move that the resolution for approval for the amendment of the company's constitution to permit virtual meetings to be put to the meeting in the form of resolution 5 as set out in the notice of meeting. Details of the proxy votes in respect of this proposed resolution are shown on the screen. Are there any questions regarding this resolution?

There are no questions online, Mr. Chairman.

Any questions from the floor? If there are no questions, I now put the motion that resolution 3 be adopted. This concludes the formal part of the 2022 AGM. With the formal business of the meeting having been completed, I now open the floor for questions from shareholders to the Board. Any questions online?

There is a question online, fairly lengthy one. It's in relation to Pharmamark and I might just try and paraphrase the question, that's been put forward, Mr. Chairman. The question comes from Chris Lloyd. Can you please comment on the fact that the court case appears to have had no impact on Pharmamark, and that's in relation to information that he has included in his question relating to what they are publishing on their website.

The resolution and the commitments given by Pharmamark is not to use our intellectual property. And our intellectual property includes knowledge and processes which are proprietary to us. That undertaking has been given and consistent with that and all things have been paid. Consistent with that, we have the right to inspect their operations, which includes their processes, and we intend to utilize that as a matter, of course, and we've got the right to do that over the next 3 years on an annual basis.

There are no other questions online, Mr. Chairman.

Would you like to reiterate your question, please?

[indiscernible]. As I said earlier, I've been a shareholder for a long time. And I thoroughly enjoyed the progression of the company throughout that time until sometime just around COVID. And prior to that, the company embarked on a number of other things like producing, developing new products, doing R&D and also getting involved in Melody Dairies and so forth. So these are investment decisions, risk decisions, which the Board always said that they're going to do. And always said they're going to look at M&A activities and corporate activities as well. But none of those are eventuated, which would in a positive sense will allow the company to grow. The result has been there behind it, I thought the Board should be fully invigorated in getting out there and doing things and give it a go. But it seems like it hasn't occurred. And I wanted to know why that is so, and what's holding the Board and management back in giving Clover the potential that I always believe it has.

Well, there is no doubt that Clover was heavily restricted in many of its potential endeavors through COVID because inability to travel and inability to do things dealing with internal issues by supply chain, customer disruption. And you would have seen we had a shrinking of our revenues over that period of time for a variety of reasons. But I think we have maintained focus on a variety of those things, but we need to physically engage. I don't think there are -- if you look at the size of Clover, the things that we will do by way of M&A would be very strategic and very targeted. But we're not interested in just doing an acquisition for acquisitions sake. It's got to be something that allows us to leverage the smarts that we have and it does add value over time. And so we would love to have opportunities to do that. But at this stage, we haven't found something that makes sense. I think in relation to commercialization of product and working with customers, we found that many of our clients became inward focused in relation to dealing with COVID in their own environments rather than progressing with new developments through COVID, and our inability to physically interact with them didn't help that process. And they had challenges in relation to their own revenue base. But what we're seeing is that as the company and his executives begin to travel that the reinvigoration of those activities is underway. I'm happy handing to Peter to comment on how you're seeing the changes in just a high level in relation to engagement at customer level for projects, new developments and engagement on new activities as you travel and see customers.

So we've started that process again. So I think, what I said during the presentation was that we have a significant pipeline of new opportunities that we were pursuing pre-COVID. Most of those opportunities went fairly dormant. I've just done, just come off 5 weeks of travel. So 2 in Asia and 3 in America. And I leave tomorrow for Europe, I'm losing track of where I am at the moment because really, the doors have just opened up again. And by being [indiscernible] for customers, those opportunities start again. We've certainly looked at opportunities for mergers and acquisitions. Many of them just don't stack up. So there's no use adding something that's going to be detrimental to our business. We'd certainly love to grow the business by acquisition but we haven't found that opportunity yet. But we've got an active search program, we'll always be looking.

Thank you. Any other questions? If there are no further questions, I would like to thank you for your attendance today. Please ensure that you cast your vote on all resolutions. I will now pause to allow you time to finalize those votes and for those present to put your votes into the ballot box. [Voting]

Voting is now closed. The results of the poll will be announced via the ASX later today. As the business of the meeting has been concluded, I declare the meeting closed. I would like to thank you all for your attendance today and for your continued support of Clover Corporation Limited. I look forward to updating you on our half year results in the new year. Thank you all.