Dyno Nobel Limited (DNL) Earnings Call Transcript & Summary

[Audio Gap] All such proxies in favor of the resolutions. Any directed proxies that are not voted at the meeting will automatically default to me as Chairman of the meeting, and I'm required to vote those properties as directed. At the conclusion of the meeting, a red bar with a countdown time will appear at the top of the webcast and slide screen, advising the remaining voting time. Voting will close 5 minutes after the closure of this meeting. The final results of the poll will be available later today on the ASX website and the company's website. Your Board recommends that you vote in favor of all resolutions, subject to any voting exclusion that may apply to you. If there are any aspects regarding the voting that you're uncertain about, please don't hesitate to contact Link Market Services whose contact details are provided at the top of the screen in the virtual AGM platform. Before continuing with the formal business of the meeting, I'd like to provide an update on the performance of the company and developments during the year. I'll then invite our Managing Director and CEO, Jeanne Johns, to address the meeting. There's no doubt that 2020 has been a very challenging year due to COVID-19, which, as we all know too well, has had an unprecedented impact on businesses and communities around the world. I'm incredibly proud of our response, which puts the safety of our people, customers and communities first. We were proactive in our response, adapted to changing circumstances and we worked hard to continue to service our customers across the essential resources and agricultural sectors without interruption. In the face of the pandemic, our business performance has proven to be resilient. However, we were impacted by a number of factors outside our control, including global commodity pricing. There was also a softening in demand in North America, which was due to COVID-related temporary shutdown of some of our customers' mining operations in the first half of the year. We decided to take early and decisive actions to improve our financial position through our equity raising in May. We received strong support from both institutional investors and retail shareholders, successfully completing a $600 million institutional placement and raising almost $58 million from our share purchase plan. The equity raising has significantly strengthened our balance sheet, making our business more resilient and giving us the financial flexibility to continue to deliver our strategic agenda. Overall, our company reported earnings before interest and tax, excluding individual material items, of $374.5 million, an increase of 23% compared to fiscal '19. The standout in the result is the solid performance from our Dyno Nobel explosives business. Operating in 2 of the best mining markets in the world, the business provides our customers with premium technology that's improves productivity, safety and environmental impacts at their mine sites. Our Incitec Pivot Fertilizer business also saw a significant improvement in earnings. Thanks to much better weather conditions for farmers on Australia's East Coast during the last 8 months of the year. The business also benefited from the advent of one-off weather and other events that occurred in fiscal '19. Our net debt-to-EBITDA ratio is now 1.4x, down from 2.8x, largely reflecting the proceeds of the capital raising as well as strong operating cash flows. No dividends were declared in fiscal '20, reflecting the unprecedented nature of COVID-19 and the focus of your Board on retaining balance sheet strength in these very uncertain and volatile times. We are committed to the resumption of dividend payments in fiscal '21, in line with our normal dividend policy. We've seen improvements in our return on invested capital despite considerable commodity price headwinds. There's more work to do, and progress on return on invested capital will be driven from improving the earnings and cash generation of our existing assets and from the investment decisions we make in the future. Despite the challenging year, the team has made significant progress on our strategic agenda, with improvements in manufacturing performance and the continued adoption of our premium technology by customers. In April, we concluded the strategic review of the fertilizer business, which looked at possible outcomes, the sale, a demerger or a decision to retain and invest in the business. Given the extraordinary market uncertainty caused by COVID halfway through the review process, we determined that retaining the fertilizer business was the best outcome for our shareholders. The business has a clear strategic agenda for the future, which is focused on delivering stable distribution earnings and driving growth from new value-added products and soil health services and solutions. This brings me to executive remuneration. Consistent with last year, no payments have been made under the short-term incentive program, because of the Zero Harm performance condition and the financial short-term incentive gate were not achieved. For next year, the financial short-term incentive gate has been modified to cap the payment in case of the significant financial shortfall, rather than reduce it to 0. This is to motivate executives on their controllable performance in times when external factors significantly impact the ability to achieve our financial goals. Turning to the long-term incentive plan. There was partial vesting of performance rights emanating from achievements against strategic initiatives. We've retained the return on invested capital metric in our long-term plan for the 2020 to 2023 performance period, which, along with other performance measures under the long-term and short-term incentives, provides good alignment between shareholder value and the need to retain and motivate key talent. I'll make some further comments on remuneration when we come to that item of business. Turning now to progress on our commitment to manage climate change. Since 2015, we've been focused on reducing our emissions intensity. And we've achieved a 10% reduction in emissions intensity per tonne of ammonia against the 2015 baseline. This year, the Board endorsed an absolute production target of 5% in our global greenhouse gas emissions by 2026 from our 2020 baseline. This medium-term target is the equivalent of 200,000 tonnes of CO2 or the equivalent of more than 43,000 passenger vehicles being driven in a single year. Our absolute emissions reduction target follows the adoption of our climate change policy last year, which reaffirms our support for the international Paris Climate Agreement and sets out how the management of climate-related issues is integrated into our company's overall strategy. We're very conscious of the need to address longer-term ambitions for a decarbonized future. As part of our investigation into emerging and future technology breakthroughs required to address this, during the past year, we completed the solar hydrogen feasibility study, which Jeanne will talk more about later. We continue to engage with a wide range of stakeholders as we continue to progress our commitment to decarbonization pathways, including those of our customers. Further work will occur in 2021, and we're committed to ensuring our business is sustainable and competitive as we work towards decarbonization solutions. We're also progressing our commitment to increase the diversity of our workforce, so our workforce can better reflect the communities in which we operate. We have a stretched target to increase gender diversity by 10% year-on-year to reach 25% by fiscal '22. In fiscal 2020, women made up 18% of our global workforce, a slight improvement on last year. Our commitment to indigenous employment continues, with indigenous Australians now making up around 3% of our workforce. During the year, we've made a number of changes to our Board. I'm delighted that George Biltz has agreed to join our Board as a Non-Executive Director. George brings to our company extensive experience in the industrial chemicals sector, particularly in North America, which will be a significant benefit to our company. You'll hear from George later in the meeting. Our 2 other most recent Non-Executive Director appointments, Xiaoling Liu and Greg Robinson, spent their first full year on the Board in 2020. They've made considerable commercial -- sorry, they've added considerable commercial and operational experience, as well as deep knowledge of the energy and mining sectors that are obviously very relevant to our company. I also want to take this opportunity to thank 2 of our Board members, Joe Breunig, who stepped off from the Board during the year; and Rebecca McGrath, who will be retiring from our Board at the end of this AGM after serving as a Director for 9 years. I thank both Joe and Rebecca for their outstanding contributions to our Board during their tenures, and wish them all the very best for the future. In closing, I want to thank Jeanne, the executive team and the many dedicated people across our global operations for their hard work and commitment during these extraordinary times. The team has worked tirelessly to put safety first, while continuing to deliver for our customers. The Board is optimistic for the future and confident your company is well positioned to deliver improved performance in 2021 and beyond. I'm now pleased to hand over to Jeanne Johns, our Managing Director and CEO, who'll speak in more detail on the company's performance over the past financial year and our strategic agenda moving forward.

Thank you, Brian. Good morning, and welcome to our shareholders and others joining us virtually via today's webcast. Before I start, I'd like to acknowledge the traditional owners and custodians of the land, sea and waters from where I am joining you today. For me, that is the people of the Kulin Nation. I also acknowledge the traditional owners and custodians of the various lands from which you're all joining this meeting today, and I wish to pay my respects to the elders, past, present and emerging. I would also like to acknowledge Chairman, Brian Kruger, my fellow Director, the executive leadership team and all our employees. I'm delighted to be here this morning to talk with you as Managing Director and CEO about our business, its performance and strategy for the future at our first virtual AGM. It's just one of the many firsts during this unprecedented year, which has seen us respond to the challenges of the global pandemic. Our business has been incredibly resilient. And we've kept our people and our customers safe while continuing to operate. As we responded to COVID, we've used our embedded safety focus and strong risk management capability to our advantage. We quickly implemented COVID controls across our global operations, which ensured our ongoing support and supply to the essential resources and agricultural industry, both here in Australia and in the U.S. and the other markets that we serve. There's never been a more important time to live our #1 value and priority throughout our business, Zero Harm. We have a clear commitment to Zero Harm for our people, our communities and all our stakeholders. I want to start by acknowledging a tragic incident in April. Two people, including 1 of our employees, died in a multi-motor vehicle accident on a public road. It happened in South Carolina and the tragic loss of life was a stark reminder of the ongoing importance of embedding Zero Harm as our #1 priority across our global business. When we look at the broader safety metrics, we delivered significant improvement in key safety metrics. Two years ago, we refocused our efforts on Zero Harm and set ourselves a total recordable injury frequency rate target of 0.7 by fiscal '21. I'm really pleased that not only have we delivered this target a year early, but we've exceeded it with a recordable rate of 0.57. This is our lowest on record. We've also seen a significant reduction in process safety incidents, down to 24 compared to 33 last year. And Zero Harm applies as much to our impact on the environment as it does to safety. And this has continued to be a focus in fiscal '20, with a reduction in notifiable environmental incidents from 3 last year to 1 this year. I'll turn now to sustainability more broadly. We continue to progress our important sustainability agenda and our commitment to being a good corporate citizen, in line with societal expectations. I am pleased to share that since our fiscal '20 results, we have improved our score to A level in the MSCI's environmental, social and governance grades. We were also again included in this year as a constituent of the FTSE4Good Index Series, recognizing our strong environmental, social and governance practices. As Brian mentioned, we have committed to a medium-term 5% absolute reduction in our global greenhouse gas emissions by 2026 from our 2020 baseline. This is an actionable and accountable goal, and is included in key executives' remuneration incentives to ensure that the projects required to achieve this target are progressed. We have a longer-term aspiration to find decarbonization solutions in our hard-to-abate industries. It's an exciting opportunity to use our core skills to help find solutions to combat climate change, one of the biggest challenges facing the world today. We have recently completed a $2.7 million study, looking at the feasibility of ammonia production from industrial scale solar hydrogen, at our Moranbah plant. This study is an important contribution to building valuable knowledge for the development of renewable hydrogen in Australia. The report is currently being reviewed by the Australian Renewable Energy Agency, ARENA. And while there's a lot more work to be done to make it a commercial reality, we will continue to investigate potential partnerships and pathways towards its use. We will also continue to develop premium technology solutions to help our customers reduce emissions from their use of our products, reducing our Scope 3 emissions. Our premium technology, Delta E, delivers up to a 20% reduction in the product being used for any given blast, avoiding entirely the emissions required to produce this excess product. In November, I became a founding CEO of the Climate Leaders Coalition to help drive progress in creating a low-carbon future for Australia. As part of this important coalition, I will work with other CEOs to share and learn from each other as we progress our own business initiatives to reduce emissions. The coalition will play an important role towards a low emissions future for Australia, while also ensuring long-term economic sustainability. Now I'd like to turn to our business performance for fiscal '20. Our business has proven to be resilient, with earnings before interest and tax increasing 23% from last year to $375 million, despite the net negative $100 million impact from commodity prices and currency. Our manufacturing performance was significantly improved following some major interruptions last year, with underlying improvements being driven by our manufacturing excellence strategy. Our explosives business has strategically located assets in 2 of the best mining markets in the world, the U.S. and Australia. Earnings before interest and tax from Dyno Nobel Americas was down 1% to $231 million, reflecting the structural declines in the coal market as well as the temporary impact of COVID on some of our customer mining operations. Margins in the U.S. business continue to be strong, reflecting the value of our premium technology. Dyno Nobel Asia Pacific delivered earnings before interest and tax of $149 million, down 17% on last year. Volumes in our Australian business held up well. Earnings were impacted by the previously announced re-contracting of our Moranbah Foundation customer as well as the lower earnings from Indonesia. Pleasingly, we're seeing good momentum from technology as our sophisticated mining customers here in Australia are increasingly adopting our technology into their mining operations. Turning now to our fertilizer business. And as Brian mentioned, during the year, we made the decision to retain and invest in the business following a strategic review. Pleasingly, the fertilizer business returned to a profit this year reporting earnings before interest and tax of $26 million, with improved weather conditions from February resulting in strong sales volumes, offset by the impact of historically low commodity prices. As we move into fiscal '21, we are continuing to see favorable agricultural conditions and are focusing on value-add products and services to increase our distribution margins. On the manufacturing side of the business, we are looking to build on the record fiscal '20 second half performance at Phosphate Hill where the plant -- with the plant expected to benefit from the firming of the commodity cycle. Turning now to our strategy and the future. Despite the challenges of COVID, we've made very good progress on our broader strategic agenda. We remain focused on our key strategic growth initiatives that have the potential to deliver significant upside in earnings. Our end markets are resilient. And we are well positioned to benefit from a recovery in commodity pricing from their long-term lows. Given the low commodity prices as well as the impact of COVID, we took decisive action during the year to reduce our cost base. Our response plan delivered $20 million in fiscal '20, and we expect it to deliver a total benefit of $60 million by fiscal '22. We continue to leverage our premium technology offerings to support our customers and grow market share. Our technology is designed to be easy for our customers to adopt in their mining operations as well as deliver meaningful improvements in mining productivity, safety and environmental impact. Our generation 4 electronic detonator system, combined with our Delta E technology, has underpinned our market-leading position in the U.S. and in Australia, and continues to enable us to attract the highest quality customers. Our business growth will come from the acceleration of technology adoption and upgrades among new and existing customers. We are focused on pursuing low capital, high-return opportunities that leverage our technology platform. And a good example of this is the successful commissioning of our -- an emulsion plant in Chile, the largest copper market in the world. Initial customer trials have been very favorably received and we're confident that our technologies will deliver blasting results superior to any other in the marketplace. Setting ourselves up for improved manufacturing performance, our manufacturing excellence strategy is on track to deliver our target uplift in earnings of up to $50 million by fiscal 2022. We have already successfully completed 2 of the 4 turnarounds in fiscal '21 in a COVID-safe way, with the Waggaman plant scheduled to be brought down in January of 2021 to commence its turnaround. Our fertilizer business is well placed to benefit from any firming of the commodity cycle, and the growth of new value-add products and services in precision agriculture. Our focus will be on executing against these priorities to position us for significant earnings upside in the future. Now I'd like to turn to our leadership team and acknowledge Frank Micallef, whose retirement as our CFO after 10 years in the role was announced in June. I would like to sincerely thank Frank for his contribution, leadership and support. As we go into fiscal '21, I'm really pleased with the strong leadership team we have in place. With a strong financial background, CFO Nick Stratford brings significant business operating experience and strong commercial acumen to the role. Dr. Braden Lusk, to step into Nick's previous role as DNA President, has extensive on-the-ground experience and network from his time working in and advising the U.S. mining industry, combined with a deep understanding of our differentiated technology offering. We also welcome Michelle Mauger to the executive team as our Chief People Officer, bringing with her more than 25 years of international experience. Before closing, I would like to thank Brian Kruger and the Board for their continued support, wise counsel and leadership during this unprecedented year. Finally, I'd like to thank our team around the world for their incredible hard work, adaptability and resilience during the past year. Our team has navigated significant change while continuing to provide exceptional service to our customers and all our stakeholders. We've taken decisive action in response to the pandemic, and your company is well positioned to be stronger and more competitive in the future. Thank you. And I'll now hand back to Brian.

Thank you, Jeanne. I'll now proceed with the formal business of the meeting. Firstly, the company's financial statements and reports for the year ended September 30, 2020, will be received. Secondly, 2 resolutions relating to the election and reelection of Directors will be put to the meeting. Thirdly, a resolution relating to the adoption of the remuneration report will be put to the meeting. And finally, a resolution will be put to the meeting in relation to the grant of performance rights to our Managing Director and CEO, Jeanne Johns, under the company's long-term incentive plan. The first item of business is to receive and consider the consolidated financial report of the company, as well as the reports of the directors and the auditor for the year ended September 30, 2020. This item does not require a resolution to be put to the meeting, but does provide an opportunity for shareholders to ask questions or make comment on the financial report. As I mentioned earlier, the company's auditor is available to answer any questions in relation to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. Any questions to our auditor should be directed to me as Chairman in the first instance. I now invite shareholders to ask questions or make comments on the financial report. There'll be sufficient time for shareholders to ask questions regarding the other items of business later in the meeting. Any questions relating to the remuneration report will be held over until we come to that item. Are there any questions on item 1?

Chairman, your first question comes from Peter Aird. Peter Aird, from the Australian Shareholders' Association, which represents retail shareholders, today represents 54 shareholders holding 639,000 shares. Whilst earnings per share have increased slightly over 2019, it is still well short of the average in the 5 years from 2014, and you have issued a significant number of new shares. What needs to be done to improve this position, and is the reduction in borrowings and interest payments part of the plan?

Thank you, Peter. Look, as you'd be aware, one of the factors that impacted our performance in 2020 was significant headwinds from low commodity prices. So that certainly had an impact on our earnings in the current year. Jeanne in her presentation just spoke to a number of the key earnings drivers that we expect in future years. Things like our COVID response plan and manufacturing excellence strategy, the work we're doing to leverage our premium technology and the -- our end markets in fertilizers and the mining sector are very resilient, and we would hope that we also get some support from improving commodity prices. So that's -- they're really the things that we expect will drive that improved earnings per share. In relation to the reduction in borrowings and interest payments, look, the primary driver of the equity raising and the subsequent reduction in debt was more to improve the strength and the flexibility in our balance sheet. But obviously, it will also result in lower interest costs, and that will have a contribution towards that improved earnings per share result as well. Thank you.

Chairman, your next question comes from Peter Aird from the Australian Shareholders' Association. I note the conclusions in your sustainability report on reusing renewable hydrogen to make ammonia. Origin Energy announced on 17th of November that it would undertake a feasibility study to make around 420,000 tonnes per annum of zero-emission ammonia in conjunction with the Tasmania government. Will IPL pursue any partnership with Origin Energy or any other interested party on this project?

Again, thank you for that question. I might ask Jeanne to deal with that one, please.

Very good. Thanks, Brian, and thanks for the question. And clearly, climate change continues to be an area that we're spending a lot of our time looking at both the opportunities and the threats. I talked in my speech around the study we did with ARENA, the $2.7 million feasibility study at Moranbah. And through that, we actually found a lot of good ideas as well as some of the technical hurdles that would need to be overcome in order to make it a commercially feasible option. But that really looked at the electrolysis of water to make green hydrogen and moving into green ammonia and eventually, ammonium nitrate. So we'll continue to be scanning the horizon for opportunities to put our unique skill set in both hydrogen and ammonia to use in tackling one of the world's biggest challenges, which is the decarbonization and deal with climate change.

Chairman, your next question comes from Peter Aird from the Australian Shareholders' Association. When can shareholders expect the company to resume paying dividends?

Yes, Peter, actually, again, I referred to this item during my speech, but I'll just make a couple of additional comments. So in November of this year, we did determine not to pay a dividend for the end of 2020. Main driver of that, as I said, was about maintaining that strength and flexibility in our balance sheet. But we did note that that was an exception to our dividend policy. Our dividend policy, which is normally to pay between 30% and 60% of our net profit after tax as dividends. And really, all things being equal, we would expect that we will be returning back to that dividend policy in 2021.

Chairman, your next question comes from Peter Aird from the Australian Shareholders' Association. Noting the sales of the coal industry in the U.S. were down due to lower demand, what is the outlook in the medium to long-term seat sales, both in the U.S. and Asia? Do you expect a significant impact in FY '21 from China's current reluctance to import coal?

Okay. So 2 separate questions there. Look, in relation to U.S. coal, probably 2 things impacting demand in the most recent year. One is the fact that there has been a structural decline in the demand for thermal coal in North America as they move to alternative energy sources. But we also had an impact from COVID-19 as well, no doubt, having some effect on demand in the most recent year. COVID-19, not sure how long that will continue, but certainly, the structural decline in the demand for thermal coal in the U.S. we would expect to continue. Having said that, you look at all of the analyst analysis done of how long thermal coal demand will continue in the U.S., and it will be a slow decline over a number of years. So we do expect demand to be there, but it will continue to decline. We've obviously -- that's not been a surprise to us at all. We've known that's been coming for a while and so we have mitigation and plans in place to deal with that structural decline, particularly in relation to looking at growing our exposure to other non-coal markets in the U.S. The second question in relation to the impact of China and what's happening there with their relationship with Australia and coal exports from Australia to China. I'd just point out that for us, we, in Australia, are exposed primarily to metallurgical coal or coking coal. And whilst that has been impacted to a small extent in terms of exports to China, we've got every confidence that given the quality and where our customers sit on the cost curve, the quality of their product, where they sit on the cost curve. But if there are any short-term hiccups, we would expect them to be able to find alternative markets in a relatively short period of time. That's obviously an evolving situation that we'll continue to monitor, and Jeanne and the team will be taking the actions that we need to take.

Chairman, your next question comes from [ Ronald Dye ]. Will Incitec Pivot publicize the ethical position that they have taken on not importing phosphate from Western Sahara over the last 3 years so they can take advantage of an expanding shareholder base of ethical investor superannuation funds, such as the Norwegian Government Pension Fund; National Employment Savings Trust, United Kingdom; and the AP Fund, Sweden and many more.

Thank you for the question. And obviously, a question I know that's near and dear to the heart of those that ask it. The company does source phosphate rock from multiple sources, and we are dependent on a secured supply of phosphate rock to support the Geelong manufacturing plant. Shareholders may be aware that we closed our Portland plant in 2019. So the user of that phosphate rock is our manufacturing plant in Geelong. In fiscal '20, we've secured phosphate rock from Togo and Vietnam. We'll continue to prioritize those sources of supply due to both location and quality, which meets our needs. At this point out, IPL has not sourced phosphate rock from Western Sahara since December 2016. We do continue to monitor what's obviously a complex situation, including the proceedings in the New Zealand High Court, and we'll keep an open dialogue with interested parties such as the Australian Western Sahara Association. Any future decision to procure phosphate rock will be based on full -- where we source that from here based on full consideration of relevant international legal principles, which includes consideration of international case law development.

Chairman, there are no further questions at this time.

Thanks, Matt. As there are no further questions, the next item of business is the election and reelection of Directors. Today, we have Mr. George Biltz standing for election, and I'll also be standing for reelection. Item 2a relates to the election of George Biltz as a Non-Executive Director. The notice of Annual General Meeting includes details of George's qualifications and experience. George has recorded a brief address for the meeting, which will now be played.

Thank you, Brian. Good morning, ladies and gentlemen. I'm honored to be seeking election to the Board of your company following my appointment as a non-Executive Director on December 1, 2020. As a U.S. resident, I'm excited to be joining a global company with a strong U.S. presence that is renowned for delivering practical, on-the-ground solutions for its resources and agricultural customers. The strength of the Board and the management team and their vision and commitment to a stronger, more valuable future attracted me to your great company. Being new to the Board, I thought it would be helpful to provide you a brief summary of my relevant background and experience. I hold a degree in chemical engineering from the University of Detroit. And after graduating, I joined the Dow Chemical Company, where I enjoyed more than 30 years working around the world while living in the U.S. and Switzerland. I worked my way up from engineering and operational team-based roles to be an executive and managing a variety of global businesses. During this time, I also earned an MBA degree. My time at Dow also exposed me to the Australian manufacturing sector, and I visited Dow's Australian sites on a number of occasions. I retired from Dow in 2013 and joined the Axiall Corporation as an Executive Vice President responsible for operations and strategy. In 2015, I was offered and accepted an opportunity to become a President and CEO of the PQ Corporation, a global producer of industrial chemicals and catalysts. My main mission was to prepare the company for an IPO in 2017. More recently, I've enjoyed serving on Boards and had a significant amount of experience as a Director. I am currently the executive Chair of the Board at Kymera International, a leading global manufacturer of metal powders, pastes and specialty materials. I've also previously been a Director of PQ Corporation, Zeolyst International, the American Chemistry Council and the Army Aviation Heritage Foundation. I bring to the Incitec Pivot Board more than 35 years of professional experience and knowledge in the global industrial chemicals manufacturing sector, not only in North America but across the globe. Thank you for the opportunity to be part of your company. I trust that I will have your support in joining Incitec Pivot as a Non-Executive Director and I look forward to making a meaningful contribution to your company.

Thank you, George. The Directors other than George Biltz unanimously recommend that shareholders vote in favor of this resolution. Are there any questions on George Biltz's election?

Chairman, there are no questions.

Thank you, Matt. As there are no questions, I'll now put the resolution displayed on the screen to the meeting. That is that Mr. George Biltz, who was appointed the Director since the last Annual General Meeting and being eligible, is elected as a Director of the company. Details of the proxies received on George Biltz's election are shown on the screen. Please now record your vote on Item 2a on your voting card if you've not already done so. [Voting]

As the next resolution relates to my retirement as a Director and proposed reelection, I'll pass the chair to Bruce Brook to conduct this resolution.

Thank you, Brian. I will now move to Item 2b, which is the election of Brian Kruger as a Non-Executive Director. The Notice of Annual General Meeting includes details of Brian's qualifications and experience, and I'll now ask Brian to give a brief address to the meeting.

Thanks, Bruce. Ladies and gentlemen, thank you once again for the opportunity to address you today as I seek your support for reelection to the Board of your company. When I was first approached to join the Board back in 2017, I was impressed with not only the strategy that was being pursued, but also the financial strength, the culture and the values of the organization. Having now served for over 3 years as a Non-Executive Director, and the past 18 months as Chairman, I'm proud of the achievements that we, as a company, have accomplished during my time on the Board. Notably, our continued commitment to Zero Harm and the safety of our employees, which has resulted in a year-on-year reduction in our total recordable injury frequency rate, the continued strengthening of the balance sheet and our commitment to the long-term sustainability of our business, the environment and the communities in which we operate. Further, I've been pleased to see the continued progress that has been made towards your company being recognized as a world leader in the resources and agricultural sector. My career to date has provided me with experience in a broad range of senior financial and operational roles in the resources and industrial sectors, in both Australia and the United States, as well as executive and non-executive leadership experience in the Australian listed company environment. This industry and executive leadership experience, which will allow me to continue to provide a valuable contribution to your company now and into the future. I seek your endorsement for reelection as a Non-Executive Director, and I thank you for your continued support.

Thank you, Brian. The Directors, other than Brian Kruger, unanimously recommend that shareholders vote in favor of this resolution. Are there any questions on Brian Kruger's reelection?

There are no questions on this item.

Thank you, Matt. As there are no questions, I will now put the resolution displayed on the screen to the meeting. Mr. Brian Kruger, who retires as a Director in accordance with the company's constitution, and being eligible, is reelected as a Director of the company. Details of the proxies received on Brian Kruger's election are now shown on the screen. And please now record your vote on Item 2b of your voting card if you have not already done so. [Voting]

Thank you, Brian. Back to you. Congratulations.

Thanks, Bruce. And again, thanks to our shareholders for your ongoing support. Item 3 on the agenda today is the nonbinding advisory vote for the adoption of the remuneration report for the financial year ended September 30, 2020. The remuneration report is contained in the annual report, which is available on the company's website. It includes details of the company's policy on the remuneration of directors and executives, a discussion of the relationship between that policy and company performance and details of the performance conditions associated with the remuneration of the Managing Director and CEO and other executives. As stated in the Notice of Meeting, the vote on this resolution is advisory only, and does not bind the Directors or the company although the Board and the Remuneration Committee will take discussion on this resolution into account when they're considering the future remuneration arrangements of the company. The Directors recommend that shareholders vote in favor of this resolution. Before taking questions, and noting that I was Chairman of the Remuneration Committee for the majority of the financial year, I'll give a brief address on the remuneration matters considered by the committee during the year. The Remuneration Committee aims to ensure our remuneration framework aligns outcomes between company and individual performance, as well as Incitec Pivot's long-term strategy and values. The 2020 financial year has been a challenging one, with company results reflected in the remuneration outcomes for executives. I'd now like to talk about the remuneration outcomes for 2020. In relation to the short-term incentive program, or our STI program, our 2020 STI program contained a condition that no payments are made for the financial component and strategic and customer component if the group financial gate is not achieved. In addition, the Board retains the discretion to forfeit all or part of the short-term incentive award payable for the Zero Harm performance condition in the event of a fatality or a major safety incident. For the 2020 financial year, the group Financial Gate and the Zero Harm performance conditions were not met. This resulted in no payments being made under the short-term incentive. In relation to the long-term incentive program for the 3-year performance period, which ended on the 30th of September 2020, there were 3 performance conditions. Firstly, relative total shareholder return, weighted at 50%. Secondly, growth in return on equity, weighted at 35%. Finally, the delivery of strategic initiatives, weighted at 15%. There was no vesting of performance rights under the total shareholder return component. This is because the company delivered relative total shareholder return below the median performance of ASX 100 companies. There was also no vesting of the performance rights related to the return on equity component. This is because the minimum level of return on equity wasn't achieved. There was, however, partial vesting of 2/3 of the performance rights relating to achievements pertaining to the strategic initiatives component. Overall, this resulted in 10% of the granted performance rights vesting under the long-term incentive plan. Separate to the short-term and long-term incentives, Stephan Titze received a strategic review performance bonus of $487,500. The structure of that bonus was designed to incentivize Stephan to deliver the best possible outcomes for the company during the very significant distraction and uncertainty caused by the strategic review process. The bonus paid equates to 75% of the total bonus opportunity available, and was driven by a performance criteria related to Stephan's ongoing role as President of Incitec Pivot Fertilizers as well as criteria related to the successful running of the strategic review of the fertilizers business. 50% of the performance criteria relates to Stephan's ongoing roles during the strategic review process and included consideration of the continued operation of the fertilizer business and keeping his team motivated and engaged during the uncertain period of the strategic review. The remaining 50% of the bonus opportunity related to conditions specific to the strategic review itself. And these conditions were both quantitative and qualitative in nature, assessed under 3 broad categories, relating to the objectives of the review, the quality of information input into the review and the actions resulting from the review. The final bonus awarded recognizes Stephan's outstanding performance throughout the strategic review process and his contribution to the review process up until the time we made the decision to retain the fertilizers business. I'll now move on to changes for the 2021 financial year. We continue to review market trends to ensure our remuneration framework supports the execution of our strategy to increase shareholder value as well as the retention and motivation of our key talent. No major structural changes are planned for the 2021 financial year. However, we have made some adjustments to the components of both our long-term incentive and short-term incentive programs. In terms of the long-term incentive plan for 2020 to 2023, we've increased the weighting of the return on invested capital measure, we call ROIC, from 30% to 40% of the total opportunity available. The Notice of Meeting provides details of the return on invested capital targets to be achieved for performance rights to vest under this component of the long-term incentive. Those targets represent significant improvement in the company's ROIC performance. In relation to the other performance conditions of the long-term incentive plan, the total shareholder return component continues to be weighted at 40%. The long-term value metrics replaced the strategic initiatives condition and will be weighted at 20%. The Board's view is that these long-term value metrics have a direct impact on financial performance and that management's delivery on these metrics will add considerable, sustainable value to our shareholders. The performance calls for these metrics involve quantitative and measurable targets. In relation to the 2021 short-term incentive program, we've introduced a modified headline net profit after tax gate that will cap all non-safety related metrics at a maximum of target opportunity if that impact gate is not met. This is instead of reducing them to 0. The Board believes that this approach will strike a better balance between rewarding and motivating our key talent and shareholder value. Important to note that if the impact gate is not met, if executives meet or exceed their targets for all other objectives, only 43% of the maximum opportunity can be received by the MD and CEO, and only 35% of the maximum opportunity can be received by other executives. Turning now to our Directors. The minimum shareholder requirement for Non-Executive Directors came into operation for the 2020 financial year, and all Directors satisfied their requirements. In terms of Directors' fees, there'll be no change for 2021, noting that the last increase in Directors' fees was in October 2014. With that, I now look forward to answering any questions on the remuneration report. Are there any questions on the remuneration report?

Chairman, I have a statement from Peter Aird from the Australian Shareholders' Association. Statement, peter Aird from the Australian Shareholders' Association. We have a number of concerns about the decision to award -- to participate a substantial strategic review cash bonus. In particular, it is outside the published remuneration plan. There was no revelation as to the assessment of performance if only 75% of the opportunity is awarded. The lack of deferred components and reported focus on leadership, motivation and engagement, purely part of this normal role. On this basis, ASA will vote its proxies against this report.

Thank you for that. I might just -- I know there's not a question there, but I might -- I might just respond. Look, I obviously mentioned and went through a lot of detail on this issue during my comments there on the rem report that, look, there's no question in our mind that the level of effort, the level of distraction and uncertainty and the level of additional work that was required by the strategic review process, absolutely warranted the sort of bonus structure that we put in place. I've outlined how we assessed the performance against those conditions that we put in place. But it was really important for us that we have Stephan and his team absolutely motivated to deliver the best possible outcome for shareholders. And I note your comments, but I would reiterate that the Board was satisfied that both the bonus structure and the bonus outcome were appropriate and in the best interest of our shareholders. Are there any other questions?

There are no further questions, Chairman.

Thank you. If there are no further questions, I now put the resolution displayed on the screen to the meeting. The remuneration report of the company for the year ended September 30, 2020, as adopted. Details of the proxies received on this resolution are now shown on the screen. Please record your vote on item 3 on your voting card if you haven't already done so. [Voting]

The final item for today is Item 4, which is the grant of performance rights under the company's long-term incentive plan for the Managing Director and CEO, Jeanne Johns. The summary of the proposed grant, including the performance criteria, and measures for each performance conditions are set out in the Notice of Meeting. The number of rights being granted is 1,164,111. It's based on the calculation provided in the Notice of Meeting. Jeanne, who has a personal interest in the subject of this resolution has abstained from making a recommendation to shareholders on this resolution. The other Directors unanimously recommend shareholders vote in favor of this resolution. Are there any questions on this item?

There are no questions on this item, Chairman.

Thank you, Matt. If there are no questions, I'll put the resolution that is displayed on the screen to the meeting. Grant of performance rights to the Managing Director and CEO, Ms. Jeanne Johns under the company's long-term incentive plan on the terms described in the explanatory notes is approved for all purposes, including ASX Listing Rule 10.14. Details of the proxies received for this resolution are now shown on the screen. Please record your vote on Item 4 on your voting card if you haven't already done so. [Voting]

Matthew, are there any further questions from shareholders?

Chairman, we have 1 question from Catherine Margaret Lewis. The question is, this company is now regarding ethical procurement, paramount in establishing their company's good name. Could IPL not take advantage of the decision not to source phosphate from Western Sahara? On November 13, Morocco broke the long-held ceasefire putting Western Sahara and Morocco back to war. A clear statement that IPL no longer wishes to obtain phosphate from Western Sahara would reassure shareholders that IPL is a good global citizen.

Thanks, Matt. Look, I do think I've already answered that question based on the question that was asked earlier on this matter. So I think there's no need to repeat the response. I would say generally, our sourcing practices are absolutely about doing the right thing, so we have a lot of processes in place to make sure that we are working with the right sort of suppliers. So that's a general comment. And as I said, the specific question around sourcing from the Western Sahara I've dealt with earlier.

Chairman, there are no further questions.

Thank you. As there are no further questions, that now covers all of the business for the Annual General Meeting. I'd like to thank our Board, the executive leadership team and all our employees for their ongoing commitment to Incitec Pivot. I also want to thank you for your attendance and participation today. I hope today has given you an opportunity to learn more about your company and its exciting future. At the conclusion of the meeting, a red bar with a countdown time will appear at the top of the webcast and slide screen, advising you of the remaining voting time. If you've not submitted your vote, you should do so now. Voting will actually close 5 minutes after the closure of this meeting. The Returning Officer will count the votes and advise the Company Secretary of the poll results. The results of the poll will be notified to the market via the ASX, and will be available on the company's website as soon as they're finalized. Ladies and gentlemen, I now declare this annual General meeting closed, subject to the finalization of the poll. I'll take the opportunity with you and your families a happy festive season and all the best for 2021. Thank you.