EBOS Group Limited (EBO) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Liz Coutts, and I am the Chair of EBOS Group Limited. I'm very pleased to welcome you here today for my first annual meeting as you chair. I'd also like to welcome those viewing today's proceeding via our webcast. Just a matter of housekeeping, for those here in the room, in the event of an emergency, please remain calm. If you are told to evacuate, please proceed to the nearest exit leading to the stairways. These are situated at the back and both sides of the room. Please gather in the carpark area in front of the main entrance. I know that our annual meeting looks a little different this year. We have in place some measures to ensure that we hold this meeting as safely as we can. Whilst we are now at Stage 1 restrictions, we are still encouraging adherence to social distancing protocols. You will see that we have spaced the seating apart, and unfortunately, we won't be able to invite those in attendance for refreshments post this meeting. We do have some takeaway refreshments located in the foyer on departing. Now to the business of the meeting. I am advised that a quorum is present. I, therefore, declare the meeting open. My first duty today is to introduce your directors and executives. Today, we have some of our Board and executives here with us, and some are joining us from Australia due to travel restrictions. With me in Christchurch today are Sarah Ottrey, Stuart McLaughlan, Peter Williams, and acting Chief Financial Officer, Leonard Hansen. Joining us from Melbourne are Stuart McGregor, and Chief Executive Officer, John Cullity. Also joining us remotely today from Sydney is Nick Dowling. Sarah, Stuart and Nick are seeking reelection today and will be addressing the meeting later. John will also be providing an outline of the group's activities in the past year. Stuart, Nick and John are able to answer questions today via the live link. Today's meeting is comprised in 3 parts. First, I will provide shareholders with a brief summary of the financial highlights for the past year and the strategic positioning of the group today. Then, as I mentioned, John Cullity, your CEO, will provide you with further details on the group's activities over the last year. And that will be followed by the formal business, where we have 4 resolutions for shareholder approval. The voting on resolutions will be conducted by poll. I'll open the polling later at the meeting. But you can fill in your voting cards now, if you wish, and they will be collected later. There are no apologies today. As the Notice of the Meeting has been circulated to all shareholders, I propose that the notice convening the meeting is taken as read. I have pleasure in reporting on the 2020 financial year at this 98th Annual Meeting of EBOS Group and providing an update on the latest developments occurring within EBOS. The past 9 months have been dominated by the COVID-19 pandemic, the effects of which will continue to be fought for some time to come. The global health crisis has had a significant economic consequences for many countries and communities. And in these unprecedented times, EBOS was fortunate to be in an industry leader of scale, operating in markets where the majority of our products and services are essential items. Our businesses, despite these challenges, have been able to continue to operate largely unimpeded during the pandemic, reflecting the strength of our business model and the commitment we have to serve our customers and communities, while at the same time, generating strong growth. EBOS has, for many years, including 2020, operated under a disciplined strategy of investing for growth, both organic and acquisitions through disciplined investments in health care and animal care; continuing to protect, build and acquire leading market positions in a range of health care, animal care and sectors so as to maximize revenue growth; and thirdly, focusing on generating strong operating cash flows to allow further investment and improve returns to shareholders. The strategic direction of EBOS is proven and sound. It has driven significant returns for shareholders over many years, and we are confident that the business will continue to deliver future growth. Throughout this COVID-19 pandemic, the safety, employment and well-being of our employees has been our priority. And in the emerging stage of this crisis, EBOS formed a pandemic response team, consisting of the CEO and key executives. The team has the structures in place to rapidly identify and evaluate issues and the authority to make decisions to minimize the risks related to COVID-19 and provide guidance and support to all our employees. Following the advice and direction of the local health authorities, the team has and will continue to implement all required measures and responses to developing situations. To date, these measures have included the introduction of travel restrictions for all employees, banning external visitors to EBOS' offices, locking down all critical warehouse sites with only employees and essential contractors allowed on site and the introduction of additional hygiene, social distancing, health monitoring and cleaning practices across all sites and offices. Specific protocols were also developed for the management of a confirmed case of COVID-19 at a site or office, and backup plans were developed should a senior executive of EBOS be unable to work due to COVID-19. Regular internal communications for all employees, updating them on developments, issuing personal safety and protection messages and providing advice around mental health and well-being to both employees and their families were also implemented. With the introduction of working from home, EBOS ensured that all impacted -- all those impacted had the resources and equipment required for their home office. In addition, support was provided to employees on how to manage their daily working life as best as possible. In New Zealand and Australia, many businesses have been faced with very challenging decisions regarding workforce. We have been fortunate that we have not had to implement any workforce reductions in either country. As the largest health care and animal care company in New Zealand and Australia, EBOS acknowledges that we have significant responsibilities as a leading corporate citizen to manage our business in a manner that reflects the expectations of our communities. During the year, EBOS commenced the implementation of a formal environmental, social and governance program. It sets up EBOS' standards for responsible corporate practice and formalize the measures we have that ensure we maintain our social license to operate. More so than at any time in the past, corporate organizations need to be acutely aware of the responsibilities they have to the community. Equally, there was a growing expectation that organizations will adopt a formal approach to delivering and managing these responsibilities. EBOS already undertakes a wide variety of initiatives that fall within the ESG framework. However, the purpose of undertaking a formal structured ESG program is to ensure all of this activity is consolidated and can be accurately reported on. This will help ensure our approach remains aligned to the objectives set out in the framework, and that we continue to meet the expectations of our stakeholders in being responsible corporate citizens. Under the ESG framework, the Board sets 3 areas of focus. Three areas are environmental, EBOS' performance as a steward of nature; social, management of relationships with stakeholders and the community; and governance, how EBOS is governed. The ESG framework will be guided by an ESG Steering Committee, which will work to identify and assess our current performance across these areas and set out recommended targets that are measurable and achievable. In Australia operations, EBOS has also recently launched its first Reconciliation Action Plan as we seek to embed greater organizational understanding and awareness of Australia's First Peoples. John will cover this important initiative in his presentation to follow. In our most recent Employee Engagement Survey, we were particularly pleased to see strong results in the area of safety in the workplace, care for the well-being of our employees and pride in working for EBOS. This year, we also asked for more specific feedback on the senior leadership team and the direction of the business was 78%, which is 17% above benchmark, of our employees having a high degree of confidence in the leadership and direction of EBOS. It is rewarding to have this endorsement and the direction that we are taking in our leadership team. Acting on feedback from our employees in February this year, EBOS invited employees to participate in an employee share plan. Over 1,650 or 52% of eligible employees accepted the invitation to become EBOS shareholders and benefit from the success of our company. We will continue to offer this initiative to all existing and future employees. The challenges of 2020 have brought out the very best in our employees, and the Board could not be prouder of the unwavering commitment displayed in the face of exceptional circumstances and often restrictive conditions. Importantly, the work of our employees over the past 12 months has further highlighted the critical role we play as an integral part of the health care systems in both New Zealand and Australia. We are fortunate to have a very strong leadership team, and I would like to thank John and his executive team with outstanding leadership they have shown throughout this most extraordinary year. To each and every one of our employees, on behalf of the Board, I would like to convey our sincere appreciation for their commitment and drive to achieve our operational and financial goals and showcase the strength of this great company. We continue to maintain a very stable and diverse Board. And during the year, the Board appointed Nick Dowling as a new independent non-executive director. Nick's appointment took effect from 1st of February 2020, and he is seeking reelection by shareholders today. This continued the Board's renewal process, and we had intended to make further progress by adding another independent director during the year. However, the outbreak of COVID-19 made this task very difficult. We are anticipating that as the situation stabilizes, we will be in a position to continue with this Board renewal process. We acknowledge that many of our directors, including myself, have significant periods of tenure as directors of the company. In our view, it is the stability of the Board that has been a significant factor in the company's successful growth over many years. In relation to gender diversity, the EBOS Board consists of 33% female representation, including myself as chair. The current EBOS executive leadership team also has 33% female representation, whilst across the wider organization, females make up 58% of total employees. We are pleased with our record financial performance in 2020. And in line with our strategy, we will continue to look for investment opportunities that will contribute to our ongoing growth and expansion. The directors announced a final dividend of NZD 0.41 (sic) [ NZD 0.40 ] per share, which takes full year dividends to $0.775 per share, an increase of 8.4% on the prior year. While I acknowledge that there will be ongoing uncertainty in the world for some time to come, we do have confidence that our robust business model and the appetite for growth will allow us to continue to take sensible commercial risks in line with our stated strategies and provide continued improved returns for shareholders. We look forward to the challenges of the future and thank all of our shareholders for your ongoing support and trust in the Board, executive and employees of EBOS. I will now hand over to John Cullity for more in-depth view of the operational performance of the business. Thank you. I will hand over to John who will join us from Melbourne.

Thank you, Chair. And good afternoon, ladies and gentlemen. Whilst it is disappointing that I cannot be with you in Christchurch, it's very pleasing to be able to report to you on the performance of our company for the 2020 financial year as well as update you on current trading conditions. The strong results recorded by EBOS in FY '20 are particularly pleasing in that as a provider of essential health care and consumer products and part of the region's critical medical supply chain, we have remained operational throughout the COVID-19 pandemic and have continued to serve our customers and provide continued employment to our employees. Looking at the financial results. EBOS' revenue increased to $8.8 billion, up 26.5% on the prior year, benefiting from growth across both of our primary segments. Underlying earnings before net finance costs, tax, depreciation and amortization, or EBITDA, of $296.6 million grew by $34.9 million, representing an increase of 13.4%. Reported EBITDA of $333.6 million was significantly higher than last year by $83.2 million, although this included a $39.6 million benefit from the introduction of a new accounting standard for leases. Underlying net profit after tax, or NPAT, attributable to shareholders increased by 16.5% to $168.3 million. Reported NPAT increased by $24.8 million or 18% from the prior year to $162.5 million. Each business contributed to the substantial growth in revenue, which again reinforces the strength of our diverse portfolio of businesses. We hold market-leading positions in stable, defensive industries and have a very strong balance sheet. These attributes have held us in very good stead during these unpredictable times. Our Community Pharmacy business recorded a very strong performance, reflecting the benefits from increased scale as we successfully commenced wholesale distribution of medicines to the Chemist Warehouse Group of stores. Our Healthcare business was supported by strong performances in our Institutional Healthcare and Contract Logistics businesses. The Animal Care business also delivered another year of strong performance. We were pleased to see the growth achieved within our Terry White Chemmart network, and we are confident we can build upon this growth in the current financial year. The TWC business has now reestablished itself as the leading brand within the premium channel for community pharmacy health services. I'm also pleased to report that TWC has accelerated its network growth with an additional 16 pharmacies signed in just the first 3 months of this financial year. What is also pleasing to note is the number of unprompted requests we are receiving to join the TWC network as its broad range of customer and value initiatives are being recognized by pharmacy owners. EBOS' Healthcare experience experienced unprecedented demand during March 2020 in response to the COVID-19 developments. To put this in some context, during this time, our Australian wholesaling business, Symbion, along with other members of the National Pharmaceutical Services Association, distributed more than 70 million PBS medicines across Australia, which was up by 70% when compared with the same time last year. EBOS' significant investment over recent years in its Australian wholesale distribution network positioned us very well to meet this increased demand. And during the same period, the Animal Care business also continued to make a strong contribution to our financial performance. Following this surge in demand, our businesses generally experienced lower levels of trading activity during the final quarter of 2020 as a consequence of government COVID-19 control measures. However, given the essential nature of our product offering, our sales volumes remained relatively resilient and trading conditions generally returned to normal levels in June. Overall, the net financial impact from COVID-19 was broadly neutral to EBOS in FY '20. I'd now like to provide you with a closer look at the financial performance of both our Healthcare and Animal Care businesses. The Healthcare business reported a 27.4% increase in revenue above last year, which contributed to a 14.8% increase in underlying EBITDA. In Australia, Healthcare revenues increased by $1.7 billion or 33%, and underlying EBITDA increased 19.6%, underpinned by the performances of our Community Pharmacy, Institutional Healthcare and Contract Logistics businesses. New Zealand's Healthcare revenue grew by 8.5%. However, underlying EBITDA was affected by cost increases in labor and freight and softer overseas demand for our consumer products portfolio, which was negatively impacted by the regulatory changes related to the daigou export channel. Looking at Animal Care. This business recorded an increase of 8.3% in underlying EBITDA for the year, continuing its momentum of solid growth. Animal Care revenue of $425.1 million represented an increase of $43.1 million or 11.3%, and was attributable to sales growth from our branded products and higher sales volumes within our Australian veterinary wholesale business. Lyppard's sales growth was due to both customer growth and gains in market share. The strong increase in sales of our key brands, Black Hawk, up 12.3%, and Vitapet, 15.1%, was achieved on the back of continued investment in brand awareness across both Australia and New Zealand. In line with EBOS' strategy of generating strong cash flows, we have again been able to continue investing for growth whilst also increasing dividends to shareholders. The benefits of our capital expenditure initiatives will also reinforce with our Contract Logistics business continuing to grow and attract new customers, thanks to recently opened facilities in both Sydney and Auckland. In 2020, we continued with our acquisition strategy. And in October 2019, we announced the acquisition of LMT/National Surgical Group for $34 million. This acquisition represented a beachhead investment into the $8 billion Australia and New Zealand medical devices sector. In its first year operating within EBOS, LMT contributed to our strong performance despite the temporary cessation of elective surgeries from late March as a result of COVID-19. We are very confident of building our devices business into a market leader in the years to come. And today, we are announcing a further addition to this business unit with our agreement to acquire Cryomed Aesthetics for an initial purchase price of $14.1 million. Cryomed is the leading independent distributor of aesthetic device and consumable products in Australia, and it is a market that has a high -- very high-growth rates. The acquisition is expected to be completed by the end of October and will add another important product category to our growing devices business. Shareholders can expect to see EBOS undertake further acquisitions in the devices market as we target those therapeutic areas we believe will provide the best returns for our investment. Due to prudent capital management and our focus on generating operating cash flow, EBOS has a very strong balance sheet with significant gearing headroom of approximately $400 million to $450 million. EBOS intends to continue to pursue value-accretive acquisitions and investments aligned to our growth strategy as we continue to build upon our Healthcare and Animal Care businesses. As I stated at last year's annual meeting, we operate in highly competitive and regulated markets. Therefore, it was pleasing that in June of 2020, the 7th Australian Community Pharmacy Agreement was finalized. This agreement provides regulatory certainty for our Healthcare business in Australia, with additional investment in the Community Service Obligation Funding Pool and a restructured wholesale markup for Pharmaceutical Benefits Scheme medicines. We are pleased that through this agreement, the Australian government has recognized both the vital role of retail pharmacy in meeting the community's health needs as well as the critical role CSO wholesalers play in ensuring the timely distribution of medicines across Australia. As Australia's leading pharmaceutical wholesaler, we are very grateful to the Australian Federal Minister for Health, the Honorable Greg Hunt, and his department for their recognition of the importance of our industry to Australia's medicine supply chain and their careful consideration of the many issues leading to this agreement. EBOS is committed to ensuring its behavior and actions have a positive impact on the communities where it operates. With the significant challenges facing New Zealand and Australia, EBOS has been active in supporting communities locally and abroad as they dealt with major crises. In December 2019, the volcanic island Whakaari erupted, tragically claiming the lives of 21 people and injuring 26 others. As a key partner in New Zealand's health care supply chain, EBOS' hospital distribution business, Onelink, had a critical role to play in responding to this disaster. Onelink worked in conjunction with local health authorities to provide emergency specialized burns dressings and theater supplies required to treat the injured. Just a few months prior to the Whakaari eruption, EBOS was called on to support the fight against a measles outbreak in New Zealand that also affected communities in Samoa. In New Zealand, EBOS played a key role in assisting the Ministry of Health with the supply of measles vaccinations to help combat the outbreak, with our Healthcare Logistics and ProPharma businesses distributing more than 114,000 doses of the measles vaccine. EBOS International also assisted the Samoan medical authorities in managing that country's measles outbreak. In 2019 and through the first 2 months of this year, Australia had to deal with a major bushfire emergency that significantly impacted almost every state and territory. Throughout the crisis, EBOS played a critical role in supporting communities as they battle these fires. Our teams coordinated with federal, state and local authorities to provide vital medicines and emergency health care products to the worst impacted areas. EBOS also provided significant financial assistance for recovery efforts in addition to donating products to those in need. The financial aid included donations to BlazeAid, which focuses on replacing burnt fencing; injured wildlife care organization WIRES; and support for independent pharmacies impacted by the fires. Further, Terry White Chemmart, together with its network partners and EBOS, made a significant donation to the Australian Red Cross Bushfire Appeal. Our Animal Care business also had a key role to play to support the care of wildlife injured in the bushfires. Working with support agencies, including the RSPCA and Animal Aid, EBOS coordinated the delivery of many items, including pet food and veterinary products into fire-affected communities. In addition, EBOS donated more than $100,000 worth of goods to support animals and pet owners impacted by the fires. The support EBOS was able to provide communities would not have been possible without the dedication of our teams across Australia, who worked as one in response to ever-changing conditions and challenges to support our customers during this time. Following the Chair's earlier comments regarding EBOS' increased focus on environment, social and governance matters, I am pleased to report that through our continued association with Greenfleet, we were again able to offset 100% or over 11,000 tonnes of carbon emissions associated with our contracted fleet of vehicles across both New Zealand and Australia. Furthermore, we increased our investment in solar panel systems with our most recent installation at Symbion's South Australian warehouse, offsetting approximately 60% of the site's daytime energy usage. In the last 18 months, we have installed over 7,000 square meters of solar panel systems. We have continued where possible the annual activities under our ECHO program. Many of the activities such as our Be Well at Work Day were adapted to be presented virtually, allowing our employees working from home to participate. [Technical Difficulty]

Coming back on? All right. I will continue with John's presentation. Programs included sessions on mental health and well-being, physical exercise and delivery of wellness packages to employees in prolonged lockdown. Our match funding program also continued throughout the year with EBOS matching the donations and funds raised by employees for many charity-based events and activities. As also raised by me earlier in my chair address, EBOS has recently implemented its first Reconciliation Action Plan, RAP, as an initiative designed to understand and embrace reconciliation at EBOS and develop a greater understanding of Australia's aboriginal and Torres Strait Islander peoples and their cultures. Whilst the RAP is specific to Australia, it does underline EBOS' growing commitment to building a more diverse and inclusive culture across EBOS' New Zealand and Australian businesses, progress on which will be reported on in future annual reports to shareholders. In closing, I would like to provide some brief commentary on our current trading performance. Trading for the first quarter of FY '21 has seen the group continue to record impressive growth, with group revenue for the first quarter above last year by 6.5%. Growth in underlying EBITDA and NPAT for the first quarter is above last year by 9% and 15%, respectively. We are very aware of the unpredictable environment we are all experiencing, so it's pleasing that our first quarter results are positive and exceeded our internal expectations. However, there can be no certainty that growth will continue at these levels for the remainder of the year. It is just too early in the year to provide full guidance in this environment. The group, though, through a significant scale and leading market positions as well as a strong balance sheet, mean that we are well placed to respond to any challenges that may emerge. We again reiterate our policy of declaring dividends of not less than 60% of net profit after tax. Finally, I would like to sincerely thank the executive team and all of our employees who've shown incredible dedication, strength and resilience in managing all that has been put before them during these unprecedented times. John would also like to thank me as Chair and the directors for their guidance and support during the last 12 months. And thank you for your attention, ladies and gentlemen, and for your ongoing support as shareholders. So a thank you from John. And I will now resume my role at chairing the meeting. It is -- we will now move -- we will now proceed with the formal part of the business. The first item of business is to consider and receive the annual report. The annual report contains the financial statements, the directors' report and auditor's report for the year ended 30th of June 2020. A formal resolution is not required. We will then move on to the other matters to be put to vote. We have 4 ordinary resolutions to deal with today. The first resolution is the reelection of Nick Dowling as a director. Nick was appointed as a director with effect from 1st of February 2020 and is now required to be put forward for election by shareholders at the annual meeting. Second resolution is the reelection of Sarah Ottrey as a director. Sarah is required to retire by rotation, is now required to be put forward for reelection by shareholders at the annual meeting. The third resolution is the reelection of Stuart McGregor as a director. Stuart is required to retire by rotation and is now required to be put forward for reelection by shareholders at this annual meeting. Finally, Resolution 4 is to authorize the directors to fix the fees and expenses of the auditor. As required, under the NZX existing rules, voting will be conducted by poll in respect of each resolution. Shareholders will have the opportunity to ask questions as each resolution is proposed. If you wish to ask a question or make a comment, I ask that you stand and state your name before proceeding with a question. We have 2 people with microphones on the floor today. Please wait for them -- to be handed a microphone so our directors and CEO in Australia, assume he's back online, and those of you on today's webcast can clearly hear the question. At the end of the discussion of the resolutions, we will ask you to remain in your seats and complete your voting cards. Representatives from our share registry, Computershare, will then come and collect your cards. I remind you that visitors are not permitted to vote or ask questions. Today, the directors hold proxies, and this is a long number, 97,488,651 shares. Where a director holds an undirected or discretionary proxy, they intend to vote those proxies in favor of the resolutions. First item, the annual report and the financial statements was subject to audit by Deloitte, who have given us an unqualified audit opinion. The annual report and financial statements are required to be audited and lodged prior to the annual meeting, and therefore, there is no formal resolution required to be put to the meeting. I will, however, take questions on the annual report and financial statements and any other aspects of the business you may want to discuss. The auditors Deloitte are here with us today. Mr. Mike Hawken, where is Mike? There he is, down there. The signing audit partner. So I will now open up for questions on the annual report. Financial ones will be handled by Leonard now if John's not back online. Any questions on the annual report? No, there do not appear to be any questions, so Leonard, you've been let off. All right. He's back online. Welcome back, John.

Thank you. Good to be back again.

Item 2, the reelection of Nick Dowling as a director. As Nick was appointed a director by the Board since the last annual meeting, Nick Dowling is required to be put forward for election by shareholders at this annual meeting. The resolution is it is hereby resolved that Nicholas Dowling be reelected as a director of the company. I now invite Nick to make a statement to the meeting. So Nick will join -- Nick is based in Sydney. He is a Kiwi by birth, and he now resides in Sydney. And hopefully, he's now -- yes, he's here. Welcome, Nick.

Thank you, Chair. And good afternoon, ladies and gentlemen. As said, my name is Nick Dowling, and I'm delighted to offer myself for election to your Board. I bring to your Board more than 25 years of experience as a corporate adviser, executive, investor and director. During the course of my career, I have worked in New Zealand, Australia and extensively across Asia. I've also worked variously in the United States. I've worked for organizations, including UBS, Goldman Sachs, JPMorgan, Morgan Stanley and the New Hope Group of China. I began my career as a corporate adviser at South Bank Corporation in Wellington in 1993. As an adviser and an investor, I have experience that spans a wide range of industries and high-performing organizations. My industry experience of direct relevance to EBOS includes advising boards and management teams of a number of listed and unlisted companies in the Australian health care services sector; providing capital markets advice to medical device companies listed in both Australia and New Zealand; acting as a mergers and acquisitions and equity capital markets adviser to pharma and biopharma companies in Australia; and acting in a principal capacity as the acquirer and, subsequently, a director of EBOS' largest independent animal care -- Australia animal care competitor. Indeed, my experience with the predecessors of today's EBOS extends back to 2001 when I advised the then Mayne Group on its $1 billion acquisition of FH Faulding. This business was subsequently split into Symbion Health and Mayne Pharma in 2005. And in 2007, I advised U.S. pharmaceutical company, Hospira, on their acquisition of Mayne Pharma. Today, I serve as the Chief Operating Officer of the Balmoral Australia Group. Balmoral Australia is the family office of Australia's Oatley family and has significant businesses in tourism, wine and maritime services. Balmoral also has a wide-ranging portfolio of investments, and we employ over 1,000 people. In my executive capacity, I serve as a director of various Balmoral group entities, and I'm secretary of both the Balmoral Australian Board of Directors and the Balmoral Australia investment committee. In these roles, I have direct responsibility for management and oversight of governance, risk management and compliance across the group. I bring this experience to the EBOS Board. Outside of Balmoral, I serve on the advisory Board of the AEH Group, which is a family-owned real estate company, and I also provide pro bono advice to Australia's largest independent wool broker, Australian Wool Network. I've been a member of the Institute of Finance Professionals New Zealand since 1992, and I'm a member of the Institute of Directors New Zealand. As mentioned, I reside in Sydney, and I have dual citizenship with New Zealand and Australia. What I therefore believe that I bring to your Board is a breadth of skills, knowledge and experience and a wide range of governance, financial, strategic and capital markets areas directly applicable to the complex and dynamic environment in which EBOS operates. I consider it as a privilege to have the opportunity to serve you, and I would greatly appreciate your support for my election. Thank you.

Thank you, Nick. Are there any questions on this resolution? I now move the adoption of resolution 1. May I please have a seconder?

[indiscernible]

Thank you. So you have your voting cards with you, so you can vote now or later in the meeting. I'll provide further opportunity. I'll now move to the second resolution. Sarah was last reelected as a director in October 2017. Under the NZX and ASX listing rules, a director must not hold office without reelection past the third annual meeting following the director's appointment or 3 years, whichever is longer. Accordingly, Sarah is seeking reelection at today's meeting. The resolution is it is hereby resolved that Sarah Ottrey be reelected as a director of the company. I now invite Sarah to make a statement to the meeting.

Thank you, Liz. Good afternoon to our shareholders present here and also those coming in through their screens. Last week, my 25-year-old nephew advised me that he had purchased some EBOS shares through the digital platform, Sharesies, a company that he felt confident and he said because EBOS is in the health industry and, of course, had known EBOS existed through my tenure as a director. He was purchasing at about $24 a share. And when I first bought my shares on joining the EBOS Board, they were at $4.10. And may the next decade hold as much growth for him as the last one did for you and me. EBOS is a brilliant company, and I stand again for reelection in what will be my final term as despite our best efforts as a Board, COVID-19 has prevented us from completing our director succession plan. Never has EBOS' brand statement been more true and more important. And it is with my deep knowledge of the company and its fantastic people that I have been able to add value and support to the growth of this organization. That brand statement is life matters. Yes, we are, at heart, a health logistics organization. But if we don't do our job 100% on time and in full, people's lives are at risk. I'm a marketer by trade. And whilst, as a director, my responsibility is to look after the best interest of your company and its health, that is only possible through looking after our customers' best interests and that means a portfolio of market-leading products and brands delivered on time, in full and at a respectable margin jaw. I'm a member of the EBOS Board Remuneration Committee. And in addition to EBOS, I'm a director on the Board of Christchurch International Airport, Skyline Enterprises Limited and Mount Cook Alpine Salmon. And I'm Chairperson of Whitestone Cheese. I also serve on the branch committee of the New Zealand Institute of Directors in the southern region of New Zealand. My 20-year executive career was spent with 2 companies, Unilever and Heineken, both in New Zealand and internationally. I do hope that you find my skill set of use. And I, in turn, thank you for your support over the last decade.

Thank you, Sarah. Are there any questions on this resolution? I now move the adoption of resolution 2. May I have a seconder, please?

[indiscernible]

Thank you. Our fourth item. Stuart was last reelected as a director in October 2017. Under both the NZX and ASX listing rules, a director must not hold office without reelection past the third annual meeting following the director's appointment or 3 years, whichever is longer. Accordingly, Stuart is seeking reelection at today's meeting. The resolution is it is hereby resolved that Stuart McGregor be reelected as a director of the company. I now invite Stuart to make a statement to the meeting. Welcome, Stuart.

Thank you, Chair. First of all, I'd like to start by saying I'm very disappointed I can't be in Christchurch. It's a magnificent city, and I certainly enjoy my visits and my work there. I'd like to start, though, by thanking you for the support that I've had from the shareholders during my time on the EBOS Board, now over 7 years, following my stint as the Chairman of Symbion prior to the acquisition. In that time, over those last 7 years has been unprecedented growth and profitability, which is represented by -- which has been represented by a return on capital employed on average approaching 15%, which is quite remarkable. And of course, in this last year, we've had a return on capital employed in excess of 17%. Just to remind you, earnings per share have gone, in the last 4 years, from $0.774 a share to $1.042. That's a 35% increase. So it's been quite a stellar performance over the period. There's been also, of course, you'll be aware, there's been significant uplift in dividends to you, our shareholders. More specifically, I'm based in Melbourne, I think, provide an important link. And as such, I'm in a position to support the management based here as required. I think you will see that my qualifications have been mentioned in the Notice of Meeting and cover accounting, legal, economics, finance and business. All of this, of course, contributing to my role as a director of EBOS. I've had Australian and international experience running publicly listed businesses in both environments. And this has had a very strong local as well as Asian component. It's very relevant, I think, in the expanding business opportunities that we continue to investigate and seek new opportunities. I've also served on a number of publicly listed bodies, both here and in Asia. As well as that, I've had service at senior levels in state and federal governments in Australia. And as you know, governments have a very major influence on our industry. I'm hoping, of course, that my experience will continue to be valuable in navigating these influences in what is a very highly competitive and regulated marketplace. I'd also like to comment that the EBOS team, both the Board and the management, is united and focused under the effective and competent leadership of our Chair, Liz Coutts, and of course, our CEO, John Cullity. We work well together. And with your support, I look forward to continuing to contribute to the success in the development of your company. Thank you.

Thank you, Stuart. Are there any questions on this resolution? Does not appear to be. So I now move the adoption of resolution 3. May I please have a seconder?

[indiscernible]

Thank you. We now move to the final resolution, the appointment of the auditor's remuneration. Deloitte is the current auditor of the company and is automatically reappointed in accordance with the Companies Act. It is proposed that the directors be authorized to fix the fees and the expenses of the auditor. The resolution is it is hereby resolved that the directors of the company be authorized to fix the fees and expenses of Deloitte as auditor of the company. Are there any questions from the floor on this resolution? There does not appear to be. So I now move the adoption of resolution 4. May I please have a seconder?

[indiscernible]

Thank you very much. We now move to any other business. So just to remind you that we have -- that we now move on to conduct the poll. So I will give you some time now to fill out your polling forms before we move to other business. So shareholders and proxy holders would have received on registration a voting card, and that provides for the holding of a poll on each of the resolutions put the shareholders at this meeting. So I'll just go through those procedures of the poll. So we hold the poll on each resolution. I note that on each of these resolutions have been moved and seconded earlier in the meeting. I will firstly refer to the shareholders and then the proxy holders. So first for the shareholders. If you wish to vote for a resolution, please mark beside that resolution in the for box on your voting card. If you wish to vote against, please mark the against box on your card. If you wish to abstain from voting, please mark abstain box on your voting card. Second, if you are a proxy holder, you must comply with the direction of the shareholder if you wish to lodge a valid vote. The for, against, abstain votes are shown on the schedule attached to the poll paper. The shareholder has given you the discretion on how to vote. You should include that number of votes and the number you write in the for, against or abstain boxes. The company's auditors, Deloitte, have been engaged to conduct a review of the poll papers before a determination of results is made. After votes have been counted and reviewed by Deloitte, the results of the poll will be released to the NZX and ASX and will be displayed on the company's websites. So if I could ask you to complete your voting cards and raise your hand if you've still got a voting card that you'd like the Computershare staff to come and collect. Now I hope that wasn't too confusing for you. [Voting]

Now before we conclude the meeting, I'll invite questions on anything else that you would like to ask us about the company. And with that, is John online?

Yes. I'm here.

He's online? Great. Great. So any other questions that you would like to put to the Board or to -- or John is available here to answer for you. There's a question down the front here.

Why is only aid being given -- I'm [ Allison Downs ]. Why has aid only being given to Australian fire victims when New Zealand has things that need aid? Do you not look at providing aid to New Zealand disasters?

We do. John, you might want to -- because we talked about the White Island, Whakaari. So John, you might like to answer that. But it's not only Australia. But John might give you some examples.

Well, our aid consists of numerous forms. It could be aid in the sister financial aid or aid in -- consistent of donated products or aid in the -- a form of our employees assisting in terms of natural disasters. So in my speech, I covered off the aid and -- that we provided in the Whakaari eruption that happened on the South Island. And that is aid in form of our staff providing, basically working over time, working through day and night, et cetera, to provide those essential medicines and consumables and wound items required to treat the injured. And then also in terms of the measles outbreak, we're contributing aid in various forms in the way that we handle those. So it's not just one method of aid. What we try to communicate is that we see ourselves as essential to our communities that we operate in. And that when we are called on to do so, that we contribute as a way as a respectable organization would in many forms. So you shouldn't take it, it just comes in terms of financial aid in terms of our contribution.

There's also in New Zealand, we -- Black Hawk also sponsor -- do aid to search and rescue.

Yes, the land search and rescue. That's correct.

So [indiscernible] that as well. So our policy is across Australia and New Zealand.

Thank you.

It's a question down the back here. Sorry, another one. Yes?

I noted the payment of imputation credits at 25% for New Zealand and...

Sorry, if you could just hold the microphone. It's just a little faint. Thank you.

The imputation credits in New Zealand is at 25%. And in Australia, 100% franked. Are you able to explain, not too technically, but why that would be?

So -- well, in a very simple sense, and Leonard will correct me if I'm wrong, it's to do with the earnings that we generate in New Zealand can apply to New Zealand shareholders, and the earnings in Australia can be applied to Australian shareholders. So it's our relative earnings that we earn in each country. Is that a simple explanation, Leonard?

[ Yes ].

Yes. We'd like to get our earnings up in New Zealand so that we can have more imputation credits, but that's just to do with the earnings we generate here.

[indiscernible] source of earnings.

Yes, the source of -- the country's source of earnings. Now there was a question at the back, there is.

Hello, I'm [ Barbara ]. My question is about packaging. In Christchurch at the moment, we can only recycle numbers 1, 2 and 5. And in some areas in New Zealand, #4 as well. I'd like to know what EBOS is doing about changing from some of these higher numbers that we are seeing on packaging and getting down to the ones that we can actually recycle. Or if not that, getting rid of plastic altogether as a packaging format. Thank you.

I think we've been asked that question before, John. You've got...

We have. So it came up previously in respect of our Red Seal Toothpaste tubings and the recycle, what we can do in respect of that. And we have investigated alliances with an organization called TerraCycle to do that. However, that has proved difficult to be because they have a global alliance with Colgate. But we continue to pursue that. Rest assured that we are very conscious of what we do in terms of all form of packaging. So the Red Seal Toothpaste's packaging, basically a recyclable cardboard. We limit the amount of cardboard, et cetera, in respect of those containers. Our Red Seal teas are unbleached. So we take whatever measures we possibly can in respect of that. There are, though, items or I should say also the Red Seal supplements are produced in glass rather than plastics. There are some items, though, at this point in time that we don't have solutions to replace plastic. So for instance, our Black Hawk pet food products and Vitapet, they're in plastics. When technologies develop and allow to pursue more eco-friendly packaging, then certainly rest assured that we will invest into those technologies and do what we can to limit our footprint on the environment. We've been very successful what we do in respect of offsetting the carbon footprint from our fleet of vehicles, contracted fleet of vehicles across both Australia and New Zealand, which is becoming an investment for the company. So we're very conscious of what we need to do. And what we need to do, not just now, but into the future. So it's not an area that we don't focus on. It does -- we do focus on. It's limited. It's only limited by the amount and the availability of, say, technologies or the relationship we can form with organizations that provide those type of services.

Thank you, John. There was a question -- gentlemen.

I'd like to ask the Board's policy on private placement of shares where existing shareholders who are the owners of the company have their holdings diluted.

So the question is there hasn't been any dilution this year apart from the dividend reinvestment plan, and it's not intending to be at this stage. Do we have any other questions? Yes, gentleman here, the green shirt.

My name is [ Donald May ]. I noticed from the accounts there that Symbion had reduced their shareholding by about 50% during the year. I wonder, did that have any implications there as far as that reduced support. Does it have any future effect on the operations of the company?

No. [ Sybus ], who's the investor in EBOS, they are not involved in the running or governance of the company. So it will have no effect. Yes, gentleman over here.

[ Carl Matthison ]. Could New Zealand EBOS apply for subsidy during the COVID period in New Zealand?

No, EBOS...

Can you take that one, Liz?

Did we apply for -- did EBOS apply for government subsidy in New Zealand? You announced that, John?

Yes, there was one limited part of our business that did apply for a subsidy for about $30,000 and subsequently repaid that amount. There was an entity that EBOS does not control, and it is not part of EBOS Group being the Animates pet food retail chain of stores, and that did apply for some subsidy from the government. And that's when these stores, about, say, 700 stores or so -- or 46 stores, sorry, were basically closed during the pandemic. So it did receive subsidy. It has subsequently repaid over half of that subsidy. But that is a business that is not controlled by EBOS and does not have EBOS management running that business. It's like a passive investment we have in that Animates chain of stores.

Okay. Thank you. Any further questions? Yes. Other question?

I'm not convinced. I'm able to buy flour in a paper bag, like 20 kg of flour comes from Ashburton. And it's in brown paper bag and another white paper bag on the outside of it. Why can't you investigate this for dog food? I'm fed up with empty dog food biscuit bags, which are quite large, and I've got to do something with them. I can do something with the paper on my flour, but the plastic things are a piece.

Plastic bag for the -- John, do you want to take that one on board?

Yes, yes. No, we take it on board. As I said before, we continue to investigate what we can do in respect of packaging for pet food. We're not alone in terms of our packaging for pet food. One of the reasons, I believe, we can't immediately change to cardboard is that we need to maintain the product quality of the pet food and the shelf life of the pet food. And therefore, that is one of the reasons -- key reasons for maintaining us packaging in the plastic. But as I said before, we continue our search for more environmentally friendly forms of packaging, and we will continue to do so. So you have our commitment to do that.

Thank you, John. Are there any other questions? No? Well, that concludes the formal business of the meeting. So I now declare the meeting closed. And thank you very much for your attendance. I know it's been a very difficult year for everyone, and thank you for coming out and joining us. And apologies, we cannot host you for afternoon tea today. But thank you for coming.