Orica Limited (ORI) Earnings Call Transcript & Summary

Good morning, shareholders, and welcome to Orica's 2020 Annual General Meeting. I'm Delphine Cassidy, Chief Communications Officer, and I will act as your moderator of today's meeting. As discussed at our AGM, I'd like to begin by acknowledging the Traditional Owners and Custodians of the land on which we present from today, the Wurundjeri people of the Kulin nation. I pay my respects to the elders, both past, present and emerging, and the elders from other communities who may be attending the meeting today. As the AGM is being conducted entirely online for the first time this year, I want to cover some important procedural and technical matters before I hand over to you Chairman, Mr. Malcolm Broomhead. The virtual meeting online guide, available for download below, includes all the information you need to know about how to vote and ask questions at today's meeting. If you have any trouble using the online platform, please refer to the guide or call the telephone number shown on the screen for assistance. To register to vote and obtain your voting card, click the Get a Voting Card button at the top of your screen, enter your shareholder number and pass code or your country if your registered address is outside Australia. To vote, click on the For, Against or Abstain button for each resolution and then click the Submit Vote button. You may change your vote as many times as you like during the meeting, and voting will remain open for 5 minutes at the conclusion of the meeting. Written shareholder questions to the Chairman are now open. If you would like to ask a question relevant to any resolution, I encourage you to do so as soon as possible by clicking the Ask a Question button at the top of the screen. In terms of how I intend to manage questions today, I will read out each question for the Chairman, and these will be dealt with under the relevant items of business. If your question is asked on behalf of a particular group or organization and you would like to make that known, please include that in your question. We have some guidelines to assist with the efficient conduct of today's meeting. If a number of questions on a similar topic are submitted, I won't read all of them, but we will endeavor to make sure we broadly cover the issues that shareholders have raised. Any question or comments submitted that we consider to be defamatory or contains offensive language will not be read out or responded to. In the event, we experience technical difficulties during the meeting, we may need to take a short break. If there are significant difficulties, that means the meeting can no longer proceed and an adjournment is necessary. Details of the time and date when the meeting will be reconvened will be notified to the ASX. With the procedural matters out of the way, I will now hand over to your Chairman, Mr. Malcolm Broomhead.

Thank you, Delphine. Good morning, ladies and gentlemen, and welcome to Orica's 2020 Virtual Annual General Meeting. My name is Malcolm Broomhead, and I am your Chairman. We do have a quorum present, so I declare the meeting open. And with your permission, I propose to take the Notice of Meeting as read. In attendance today, on my left is Alberto Calderon, your Managing Director and Chief Executive Officer, who will address the meeting shortly. On my right is Erin O’Connor, your Company Secretary. Joining us remotely from various locations, both interstate and overseas, are my fellow Board members. Our auditor, KPMG, is also in attendance, represented by our audit partner, Penny Stragalinos. Before we move on to the resolutions as outlined in the Notice of Meeting, I'd like to take some time to make some comments on areas that are important to Orica and to you, our valued shareholders. First, our performance over the year, then a little about the work we've done this year in relation to governance and sustainability, and then I would like to talk more broadly about productivity, an issue I believe is of national importance. 2020 has been a uniquely challenging year with the COVID-19 pandemic disrupting our operations, and those of our customers, all over the world. The Board and I have been so proud of how our people around the globe responded. They kept health and safety their highest priority while upholding their commitment to keeping our operations running safely and delivering reliably for our customers. Under these testing circumstances, I'm extremely pleased to report that once again, we had no fatalities this year and that our Serious Injury Case Rate declined by 29% over the year, our lowest level in the past 4 years. Before coronavirus struck, we set ourselves an ambitious agenda, and it is testament to our people's resilience and creativity that we have delivered all the key initiatives that were in our control, including the strategic acquisition of Exsa in Peru, the commencement of operations at the Burrup plant, the completion of the final phase of SAP and achieving our global technology adoption targets. Alberto will talk in more detail about these initiatives shortly. Statutory net profit after tax was $168 million, which compared with $245 million in 2019. And earnings before interest and tax were $605 million, a decrease of 9% from the prior year. Given the unprecedented operating environment we found ourselves in, this was a strong performance, and we were able to maintain a dividend prudently reduced to reflect the continuing operating environment uncertainty. The final ordinary dividend of $0.165 per share, unfranked, brings the total dividend to $0.33 per year or -- per share, rather, down $0.22, which reflects a payout ratio of 45% of underlying earnings. Underpinning this pleasing operational and financial performance was our strong balance sheet. This year, we completed both an equity capital raise and a long-term U.S. private placement bond issue, which have further strengthened our capital structure and increased the average maturity of our debt facilities. The fact that both were oversubscribed represents the resilience of the business and the market's strong confidence in our capital structure and strategy for growth. As you know, the company is focused on a high degree of alignment between executive and Board remuneration and the value delivered to shareholders. The impact of COVID-19 on the group's performance and our excellent safety performance were considered carefully when determining the award of this year's short-term incentive outcomes. The final outcome for the CEO was 45.2% of his target opportunity. And outcomes from other key executive management personnel range between 37.6% and 82.6%. There was partial vesting of long-term incentive awards granted under the 2017 plan, with the performance period ending on the 30th of September 2019 and tested in November 2019. The Relative Total Shareholder Return metric was achieved at upper quartile vesting and the average Return on Capital performance was achieved between target and maximum. It is expected that the decline in earnings due to the impact of COVID-19 will have a detrimental effect on the 2019 financial year and 2020 LTI grants, which are solely based on return on net asset performance. The Board will continue to review the appropriateness of the LTI targets within these plans in the context of COVID-19. We continue to show restraint in fixed remuneration, and our Chief Executive's fixed pay has been maintained at the same level for the fifth successive year. Moving to governance and sustainability. The Board and I are very aware that the best way to protect and enhance long-term shareholder value is by ensuring that we have robust and effective corporate governance. This year, your Board had 6 key focus areas: strategy and business performance, organizational performance and culture, risk management, capital management, sustainability and our response to the COVID-19 pandemic. You can read more about our work in these areas in our Annual Report. I would like to highlight the tremendous progress we've made this year in addressing climate change, which is a material governance and strategic risk for Orica. During the year, your Board endorsed a revised Climate Change Policy; considered a range of macroeconomic scenarios, which will underpin quantitative scenario analysis to be performed this financial year; and considered an update on climate change and long-term manufacturing and decarbonization opportunities. And last month, the Board endorsed recommendations from the Safety, Health, Environment, Community and Security Committee to establish new climate change targets, including an ambitious goal of reducing our Scope 1 and Scope 2 operational emissions by at least 40% from 2019 levels by 2030. To ensure we achieve our new targets, the Board also endorsed the recommendation to strengthen links between climate change and executive remuneration. Decarbonization measures are now included in our executive remuneration incentive plan. The skills, experience and diversity of your Board are reviewed regularly to ensure they are aligned to achieving our strategic objectives, and we undertake Board renewal appropriately. In October last year, 2019, Lim Chee Onn retired after 9 years of service to the Orica Board, and we thank Chee Onn for his valuable contribution to the Board and to Orica's shareholders during his tenure. You may remember that at last year's AGM, I announced that John Beevers would be joining the Board, which he did in February. John knows our business intimately, having worked at Orica for 27 years, and as CEO of GroundProbe in the 5.5 years before we acquired it. John is already proving a very valuable addition to our company's Board. I would now like to speak for a few minutes on our country's economic recovery and the central role that I believe productivity must play. Looking at the year ahead, I see 3 key sources of optimism for us to rally around. The first is a promise of a vaccine. Both Britain and the United States have begun administering vaccinations, which will hopefully reach our shores early next year. Assuming it is as effective as the trial suggests and enough people agree to be vaccinated, this will mark the beginning of the end of the pandemic. The second is the incoming Biden administration in the United States, and I hope this will act as a circuit breaker and lead to a rebalancing of international relations, particularly with China, that Australia can then leverage. And the third is the opportunity that stimulus packages around the world present to kick start the global economy. Governments now have the political license to spend unprecedented allocations of public funding and can take advantage of low interest rates. But if we are to go into such levels of debt, we must not squander the opportunity, and we urge governments to focus on initiatives that will deliver both medium and long-term returns in higher standards of living and in sustainable growth. An obvious example is major infrastructure projects that will enable companies to get their goods to market quickly and that ease congestion so that workers spend less time commuting. At the same time that federal and state governments continue to invest public money sensibly, it will also be helpful to deliver both policy certainty on the fundamentals and regulatory reform that together will drive business confidence and boost multifactor productivity. This is critical because, as the Productivity Commission's latest report notes, almost all of Australia's long-term increases in income have been due to labor productivity growth, and while terms of trade or our labor utilization can make a difference, it's ultimately productivity growth that will determine our future living standards. In terms of policy certainty, energy is the most obvious area as it impacts so much of what we do and what we will be able to do. On this front, I commend the government for recognizing the critical role that gas will play in both Australia's post-COVID recovery and as a firming technology that will support investment in, and adoption of, new technology and the decarbonization of our society. It's a good example of long-term vision that will provide certainty for domestic manufacturing and provide the platform for climate-resilient economic growth. Orica is ready to step up on this front. We see great opportunity in the world's move to a low-carbon economy, not just in playing our part to help global goals, but also in transforming our own operations and driving long-term sustainability. As I mentioned earlier, we have committed to a 40% reduction in our Scope 1 and 2 operational emissions within this decade, which is a market-leading position. Alongside ongoing industrial relations reform, we need significant regulatory reform in areas such as corporate tax and research and development. Together with prudent deregulation, this will encourage capital deepening and the investment in innovation that will drive productivity. As Alberto noted in a recent editorial in the Australian Financial Review, private investment over GDP is at its lowest point in 60 years. This just has to be addressed. And again, Orica is ready to step up. We are willing and able to play our part, and our history demonstrates how our enduring commitment to innovation and technology has led to substantial improvements in mining productivity over many decades. Today, our products such as WebGen, BlastIQ and FRAGTrack are helping our customers find new ways of working that deliver significant increases in both productivity and safety. The investment we've made in digitizing data and workflows is now enabling us to automate workflows, further radically improving reliability, timeliness and cost. To its credit, the current Federal Government in Australia is trying. It reduced the tax rates for small and medium-sized businesses, expanded its instant asset write-off initiative and launched a new modern manufacturing strategy. I hope that this will go some way towards reversing the way in which we've deconstructed manufacturing over the past decades. We have become regional powerhouses when it comes to tourism, education and mineral exports, but we're not competitive when it comes to niche manufacturing, and we need to find a way to reignite it, particularly given the challenges in our trade relationship with China. Underpinning all of this, we need a healthy and skilled workforce. So we also need the government to invest in education, training and national health, including mental health, an important topic which has come to the forefront during COVID-19. When you put it all together, it's a significant challenge. But we have a rare opportunity for government and business to come together to develop and drive the significant reform that will provide the platform for the productivity growth that will raise the standards of living for our children and our grandchildren. My wish is that COVID-19 is a once-in-a-lifetime event. It's been a deeply challenging and distressing period for countless millions around the world. And we owe it to ourselves to recover as quickly, and as strongly, as we possibly can and take the chance to set ourselves up for a new era of health and prosperity. Before I invite Alberto to take the stage to talk to you about our financial and operational performance in more detail, I'd like to sincerely thank on behalf of the entire Board, the men and women of Orica for their remarkable achievements this year. From our employees in manufacturing facilities and on partner sites, to our support staff and our executive team, each have gone above and beyond the call of duty to ensure our operations run safely and that we continue to deliver reliably for our customers. I also thank you, our shareholders, for your ongoing support through these times. The Board and I are confident that Orica's underlying business and growth trajectory remain positive, and we look forward to the return of business as usual so we can continue to deliver even more long-term sustainable value in the years ahead. I now welcome your Managing Director and Chief Executive Officer, Alberto.

Thank you, Chairman, and thank you to our shareholders for joining us today after an extraordinary year, a year in which all of our lives and livelihoods were turned upside down. I hope that you all are keeping safe and well. This morning, I will talk about our performance over the past year, including the effect COVID has had on our business, and the outlook for the year ahead. Throughout the pandemic, as always, health and safety remained our #1 priority. I am pleased to report that, once again, we had no fatalities and our Serious Injury Case Rate declined by 29% to our lowest level in 4 years. Conscious of the stress and concern caused by the pandemic, we also provided online support seminars and programs for our people and increased communication to teams working remotely to ensure they felt connected. Operationally, the 2020 financial year was a year of 2 very different halves. In the first half, we are very successful building upon the strategic momentum we developed in the 2019 financial year and delivered a first half result in line with our expectations. We believed that we were on track to maintain that growth in the second half and then COVID hit, temporarily disrupting that momentum. However, despite the challenges of the pandemic, I am very pleased to say that we delivered all the major initiatives and key strategic milestones that we set ourselves for the year. We successfully completed the acquisition of Exsa in Peru, bringing with it strategic growth, greater commodity diversification and a reduction in our exposure to thermal coal. The integration of Exsa into our Latin American business is progressing well, and we remain on track to deliver the synergies identified at the time of the acquisition in February of this year. Burrup commenced operations in May and is producing good quality ammonium nitrate. In July, we rolled out the final phase of our SAP project, a historic game-changing milestone for Orica. We now have a cloud-based, standardized and integrated single enterprise system supporting the entire organization. We have moved from literally thousands of spreadsheets and process variations to one standard set of integrated and optimized end-to-end processes. This enables real-time data-driven insights based on a single source of the truth. Now this is in place, we can begin realizing the myriad benefits from improved agility, product security, customer outcomes and global competitiveness. Technology continues to be a cornerstone of Orica's differentiated offering, and I'm pleased to report that despite COVID restrictions, we achieved our global adoption targets. This could not have been done without the great ingenuity our team showed in using augmented reality to enable remote installation, training and support. It is this commitment to delivering for our customers that saw our Net Promoter Score increase by 21% over the year. Our traditional technologies, such as electronic blasting systems and premium bulk emulsions, continue to show strong growth profiles and hold market leading positions. But we are most excited by the continued growth in adoption and market penetration of our game-changing suites of new technologies. The number of sites using BlastIQ, that's our digital platform, increased threefold over the prior year with several global customers adopting multi-site application. And FRAGTrack, our award-winning fragmentation measurement technology, expanded sevenfold. We have now completed over 1,000 blasts of WebGen, our proprietary, fully wireless, initiating system, and volumes more than doubled during the year despite COVID. Importantly, trial sites in both Underground and Open Cut have increased significantly in advance of the release of our second-generation WebGen 200, which is currently in alpha trials. Overall, we expect a 15% return on investments for these technologies in the coming year, with significant growth projected in future years as we achieve critical mass in our portfolio. The importance of our technology solutions was underlined recently when we won the 5-year explosives technology and service contract for Glencore's Australian copper and zinc operations. The agreement hanged on 2 key elements: first, our ability to deeply collaborate with Glencore at all levels to identify and provide how our technology can solve their most complex operational needs at each site; and second, Glencore's confidence in our future technology road map and its close alignment with their vision for how technology can deliver additional value to their operations. We were extremely proud to win the contract and the show of support it represents for our innovation. Our strong operational performance across the year has been underpinned by our balance sheet, which we further strengthened this year through a very timely capital raising and U.S. private placement, both of which were oversubscribed. Volumes in the first half were up 4%, in line with our expectations. However, as COVID took a hold in the second half, they reduced and we ended up 4% down across the year, excluding Exsa. In addition, increased supply chain costs due to COVID-19 continued into the second half, impacting our earnings. To counteract these headwinds, we implemented several cost reduction measures, enabling us to offset around 40% of that impact. In the end, we delivered underlying EBIT of $605 million, a strong result against the COVID-19 backdrop, demonstrating the resilience of our business. Gearing at 36.4%, excluding the effect of the new lease accounting standard, is comfortably within our target range of 30% to 40%. Our strong earnings results and confidence in the future has enabled us to maintain a dividend prudently reduced to reflect continuing operating environment uncertainty. We have also worked hard this year to make Orica an even safer and more responsible company. As Malcolm mentioned earlier, we had 0 fatalities, and our Serious Injury Case declined by 29%. I'm also proud to report that we have no significant environmental incidents this year. I'd like to highlight that our acquisition of Exsa, with its exposure to copper and gold, along with Orica's continuing diversification strategy, has reduced our coal exposure to 16% from 17% last year, and we expect this to drop by a further 1% in the medium term. This is a substantial reduction from 22% in 2015. We made good progress to reduce our impact on the environment, in particular reducing our operational Scope 1 and Scope 2 emissions by 9%. As mentioned by our Chairman earlier, we announced a new industry-leading target to reduce these emissions by at least 40% by 2030. It is very important to note that this is not an aspirational goal. It is an evidence-based, credible and achievable target. It has been gratifying to see the very positive response to this announcement. The Climate Council's Chief Executive, Amanda McKenzie, commended us, noting our leadership in this space. Moving now to the outlook. While COVID means the year ahead cannot be predicted with any great certainty, the impacts are temporary, and we are in the best possible position to navigate through the coming financial year. The solid operational platform that we built pre-COVID positions us well to deliver earnings growth. Our balance sheet remains healthy, and we have the flexibility to pursue value-creating outcomes for you, our shareholders. We are beginning to see some of our customers' operations in developing countries returning to pre-COVID levels, and this is evident in the run rate of volumes over the past 2 months. Hopefully, we will see the global rollout of a vaccine before too long, and more and more countries will begin to normalize. We are, however, very concerned that all Australian exports of thermal and metallurgical coal to China are currently stopped. We hope that the government can quickly re-establish constructive dialogue, build understanding of the issues on both sides and begin the process of normalizing relations. Our focus will remain on delivering on what we can control and continuing to make Orica a leaner, more efficient company. We have 5 key drivers: the first is the full integration of Exsa and the realization of the synergy benefits; the second is our program to rationalize our product portfolio and optimize our initiating system plant network; the third, improving manufacturing reliability and efficiency. Our aims are to maintain Overall Equipment Effectiveness above 80%, increase our cyanide production and realize the benefits of Burrup commencing production; the fourth is embedding our refreshed operating model across the business, which is possible following the completion of the SAP rollout; and finally, the fifth is continuing to drive customer adoption of our world-class technology portfolio while investing and innovating to extend our market-leading position. Putting all of this together, we expect to see a return to EBIT growth in the 2021 financial year, weighted towards the second half. In summary, 2020 has been an extremely difficult year, but I could not have been prouder of the way our people responded with resilience and unwavering commitment. In particular, I want to thank our workers on the frontline in our plants and operations around the world, who kept going to work every day in the most challenging of circumstances. The spirt of Orica has shone brightly this year. Looking ahead, we have established a solid platform to support underlying growth, and we remain cautiously optimistic that we will recover the majority of the COVID impact over the next 18 to 24 months. I would also like to thank you, our investors and shareholders, for your continued support throughout this uniquely challenging period.

Before opening the formal part of the meeting, I'd like to make some brief comments about procedure. This is a shareholders' meeting and only shareholders, their proxies, attorneys and authorized corporate representatives may participate in this meeting. As Delphine mentioned, questions on all items of business will be filtered through me as Chairman of the meeting. If you wish to submit a question or comment, please ensure that they're relevant to the matters before the meeting and to shareholders as a whole. If a shareholder has a detailed question about the operations of the company or a question which appears to be more relevant to the shareholders' own circumstances, that question can be dealt with by management following the meeting. I thank you for adhering to these procedures. A number of our shareholders are not able to join the virtual meeting today but have taken the time to send us their direct or proxy votes in advance of the meeting. And so as not to preempt the views of shareholders attending today's webcast and, at the same time, to ensure that all shareholders, who have voted directly or lodged proxy votes in advance of the meeting, have their views known, I'll provide a summation of the direct and proxy votes received after questions on each item of business but before the resolutions are actually put to the vote. In relation to open proxies received for the Chairman, they have all been voted in favor of all resolutions. As indicated in the Notice of Meeting, each resolution will be decided on a poll. After question time on each resolution, I'll invite you to cast your vote by making the appropriate selection on your voting card. And I appoint Julie Stokes of Link Market Services Limited, the company's share registrar, who have examined and prepared summaries of the direct and proxy votes received, to act as returning officer for the poll. Please also note that if you are a proxyholder, attorney or nominee and your appointor has directed how you should vote on any item, you must follow that direction. I now move to the formal business of the meeting. The first item of ordinary business in the Notice of Meeting is to receive and consider the Financial Report, Directors' Report and Auditor's Report for the year ended 30th of September 2020. I now declare these reports open for questions and invite you to submit a question using the Ask a Question button. Delphine, are there any questions from shareholders on this item of business?

Chairman, we have a question from the Australian Shareholders' Association. What pressure from retail and institutional investors is Orica under to meet and exceed the emission reduction targets? What will Orica do to ensure that it exceeds these reduction targets and avoids further public criticism?

Stakeholder interest in Orica's environment, social and climate change performance centers around embedding strong governance and risk management, establishing meaningful targets, improving our performance and transparently disclosing our progress against these targets. Orica's approach to setting our emissions reduction target is bottom-up and evidence-based, prioritizing what we can control, and it's not just an aspirational target, as Alberto mentioned. In terms of emission reductions, as you will have seen in our results presentation, we've committed to reducing our Scope 1 and Scope 2 greenhouse gas emissions by at least 40, 4-0, climate resilient economic growth going forward, and it's been welcomed by our investors. The plan is backed by a credible, achievable... [Audio Gap]

And by -- just to quote, Amanda McKenzie from the Climate Council has said that our 40% reduction target in this decade is a leader in the field -- in all big companies in the field. So I'd probably say we're quite proud of what we have announced.

Thank you, Alberto. Delphine, do we have any further questions?

Chairman, we have a further question from the Australian Shareholders' Association. The current strained relationship between Australia and China has had an impact on many exports, but most relevant to Orica is coal. To give a snapshot of how this impact is occurring, can you please compare the FY '20 first half with second half figures for AN demand in Queensland?

Thank you. The impact of the Australia-China tensions commenced towards the end of the 2020 financial year. And so really, it had a minimal impact on coal, in particular, in the second half. We've seen impacts, though, continue into the start of this financial year. And given the constantly evolving situation, it's difficult to predict at this point the extent of that impact. But we're continuing to closely monitor the situation and are regularly maintaining communication with our customers. Alberto?

Again, just to add, at this stage, for the next month, we're anticipating about a 10,000 tonnes impact in the East Coast of ammonium nitrate demand per month. So every month, [ I think if it's ] not sold, it's going to be about that 10,000 tonnes. So that's why we are urging the government and, again, Board to just do what it can to normalize the situation.

Thank you, Alberto. Delphine, any further questions?

Chairman, we have a final question from the Australian Shareholders' Association in regard to the recent capital raising. It states Orica is to be congratulated for its achievement -- of achieving its capital raising. However, this capital raising caused the dilution of retail shareholders' capital in the company, particularly those who did not invest further capital. How did Orica calculate the amount detail shareholders could -- retail shareholders could invest in this capital raising? And what steps will Orica take to protect retail shareholders from further erosion of their investment?

Good question. We value our retail shareholders greatly, of course, and carefully consider the implications for them through the capital raising process. The share purchase plan mitigated the dilution of retail shareholdings with eligible shareholders able to apply for up to a maximum of AUD 30,000 of new shares at the placement issue price and free of any brokerage, commission and transaction costs. Assuming each retail shareholder elected to take up their pro rata entitlement of shares under the plan, only around 1% of shareholders would have seen any dilution in their holdings. Furthermore, any dilution for that small cohort of shareholders would have been minimal. Any further questions, Delphine?

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

Thank you, Delphine. I'll now move on to Item 2 of the business of the meeting. We now come to the election of directors. There are 2 directors standing for election today, being the election of Mr. John Beevers as a Director of the company and my re-election for a further a 3-year term. Resolution 2.1 in the Notice of Meeting deals with my re-election as a Director. And before the resolution is put to the vote, I'll hand over to our Managing Director, Alberto, to assume the role of Chair of the meeting for that resolution. But just before I do that, I'd like to say a few words in support of my re-election. My executive life started as a civil engineer, and I worked in both the U.K. and the Middle East before returning to join the mining industry here in Australia. Over this time, I held a range of senior executive positions, including Chief Financial Officer and Executive Director of Operations, and then Chief Executive Officer of North Limited, which was an international diversified mining company, before coming here to Orica as CEO from 2001 to 2005. So I have a good understanding of both the mining and the mining services sectors globally. In recent years, I've pursued career as a Non-Executive Director as well as returning here to Orica as a Non-Executive Director in December 2015 and appointed as your Chair in January 2016. I'm currently a Director of BHP Group and was the former Chairman of Asciano Limited. I'm also a Director of the Walter and Eliza Hall Institute, Australia's leading not-for-profit medical research organization. I seek your support today for my re-election as Director and to continue as Chairman of your Board. Alberto?

Resolution 2.1 in the Notice of Meeting seeks the re-election of Malcolm Broomhead as Director. Malcolm was appointed as an Independent Non-Executive Director in December 2015 and has been Chairman of the company since 1st January 2017. In accordance with the Constitution of the company, Malcolm retires and, being eligible, offers himself for re-election. Malcolm is one of Australia's most experienced chairman and non-executive directors and has extensive experience in industrial and mining companies globally. He brings to the Board a deep understanding of the mining and mining services sectors in which Orica operates, having been a former CEO of Orica and as a Non-Executive Director of BHP Group, a position he has held since 2010. My fellow directors and I believe that Malcolm continues to provide strong leadership of the Orica Board and unanimously support his re-election. Malcolm abstains from voting his own shares on this resolution. The resolution is now open for questions, and I invite shareholders to submit a question using the Ask a Question button. Delphine, are there any questions from shareholders on this item of business?

There are no questions on this resolution, Alberto?

If there are no questions or further questions -- thank you, Delphine. Before I ask you to vote on this resolution, results of direct and proxy voters received in respect of the resolution are displayed on the screen. I now put the motion that Malcolm Broomhead be re-elected as a Director of the company and ask that you cast your vote by making the appropriate selection on your voting card. [Voting]

I will now hand back to Mr. Broomhead, who will continue to chair the meeting.

Thank you, Alberto, and thank you, shareholders, for your faith in my directorship. Resolution 2.2 in the Notice of Meeting seeks the election of John Beevers as a Director. John was appointed as a Non-Executive Director of the company on the 1st of February 2020. And in accordance with the Constitution of the company, John retires and, being eligible, offers himself for election. John is a member of the Safety, Health, Environment, Community and Security Committee, the Innovation and Technology Committee and the Nominations Committee. Having worked for the Orica group over the course of 27 years, including a number of senior executive positions, John's deep insights and operational expertise in Orica's core business are of tremendous value to the company. More recently, John was the Chief Executive of GroundProbe, a global technology leader in the mining industry prior to its acquisition by Orica, and his strong expertise in this area of technology will be highly beneficial in executing Orica's technology solution strategy in the years ahead. The Board, with John Beevers abstaining, unanimously supports John's election. And I now invite John to say a few words in support of his election.

Thank you, Malcolm, and good morning, everyone. I'm honored to have had the opportunity to join the Orica Board over the past 9 months or so and to work with a talented and experienced group of directors and executives. Personally, I've worked in the mining resources, mining services and chemicals industries internationally and for over 30 years, both as an executive and as a director on boards. I have experience in many of the functional and business roles in a large company like Orica as well as having led mid-tier company turnarounds and involvement in a variety of start-ups. I worked extensively in what was ICI and then later Orica, and so I have a broad understanding of Orica's operations overall and detailed knowledge in some areas, including technology, marketing, operations and customer intimacy, combining to bring significant growth through commercializing innovation. My time at Orica culminated in the role of CEO for Orica Mining Services. Post Orica, I ran GroundProbe for a little over 5 years, implementing a turnaround. For those who might not be aware, GroundProbe started out as an Australian technology-led services company in the mining services industry, with value propositions around safety and productivity. During my time there, we rebuilt the product portfolio through technology innovation, enabling GroundProbe to grow significantly in its existing market and then to leverage its technology to enter into new markets. In 2018, the entrepreneurialism of the company was heralded and awarded by the Australian Financial Review as the most innovative company across Australia and New Zealand. During my time there, we expanded internationally into some 24 or 25 countries, and the combined efforts of all the initiatives delivered earnings growth of over 5x. I currently serve as an Independent Director on the Board of Syrah Resources as well as some privately held companies. If I'm successful in gaining your support to continue on the Board, I will work hard to support Orica in the first instance with my broad experience of Orica's global operations and then also with ideas, in particular, in the area of bringing innovation and technology that customers are looking for to market to aid Orica in executing its growth program. Thank you for the opportunity to address you today.

Thank you, John. The resolution is now open for questions and I invite shareholders to submit a question using the Ask a Question button. Delphine, are there any questions from shareholders on this item of business?

Chairman, there are no questions on this item.

Thank you, Delphine. Before I ask you to vote on this resolution, results of direct and proxy votes received in respect of the resolution are displayed on the screen. I'll now ask you to vote on this item of business by making the appropriate selection on your voting card. [Voting]

That completes the election of directors at this meeting. So on to Resolution 3 of the Notice of Meeting, which is to adopt the Remuneration Report. The Remuneration Report is found on Pages 50 to 70 of the Annual Report. As you'll be aware, the vote on this item is advisory only and does not bind the company or the directors who remain responsible for the remuneration policy of the group. However, the Board takes into account feedback from our shareholders, including the discussion and vote on this resolution, when considering future remuneration strategy. By casting your vote in favor of the remuneration report, you'll be indicating your support for the remuneration strategy the Board has adopted for its most senior executives, including the Managing Director. The Board sets the remuneration strategy with a view to retaining as well as attracting the best executives possible to grow the company in a manner that best benefits shareholders. The 3 elements of remuneration at Orica are fixed pay, a bonus for short-term incentive objectives and the long-term incentive plan. Full details of our remuneration framework and a summary of the company's performance and the effect that has on remuneration outcomes for the 2020 financial year can be found in the Remuneration Report. I'd be pleased to take any comments or questions you may have in relation to the company's remuneration strategy. The resolution is now open for questions. And if you wish to submit a question, please click the Ask a Question button. Delphine, are there any questions from shareholders on this item of business?

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

Thank you, Delphine. There being no further questions, I'll now put the motion that the Remuneration Report be adopted. I wish to highlight that none of your directors nor any of the senior executives listed in the Remuneration Report may vote their own shares in relation to this resolution. Before I ask you to vote on this resolution, results of the direct and proxy votes received in respect of the resolution are displayed on the screen. I'll now ask you to vote on this item of business by making the appropriate selection on your voting card. [Voting]

We now come to the proposed grant of performance rights to the Managing Director under the long-term incentive plan as a long-term element of his remuneration for the 2021 financial year. The actual number of rights to be granted will be calculated as set out in the Explanatory Notes of the Notice of Meeting. Under the ASX listing rules, shareholder approval is required for a director to be issued securities under an employee incentive scheme. And this resolution is now open for questions. If you wish to ask a question, please click the Ask a Question button. Delphine, are there any questions from shareholders on this item of business?

Chairman, there are no questions on this item.

Thank you, Delphine. Before I ask you to vote this resolution, results of direct and proxy votes received in respect of the resolution are displayed on the screen. I'll now put the motion that approval be given to the grant of performance rights under Orica's long-term incentive plan to the Managing Director on the terms summarized in the Explanatory Notes of the Notice of Meeting. Any votes cast in favor of this resolution by the Managing Director or an associate will be disregarded in accordance with the ASX listing rules. I now ask you to vote on this item of business by making the appropriate selection on your voting card. [Voting]

Shareholders, that concludes today's business. Delphine, are there any final questions or comments from shareholders before we close the meeting?

Chairman, none have been received.

Thank you, Delphine. I now formally close the meeting. Voting will remain open for a further 5 minutes to enable shareholders to submit their votes. And following the close of voting, the results of the poll will be announced to the ASX as soon as they are finalized. Thank you for your attendance today. And on behalf of my fellow directors, I thank you, our shareholders, for your continued support during the year. Normally, we'd be joining our shareholders attending in Melbourne for post-meeting refreshments, but all being well, I look forward to welcoming you back in person at the next year's AGM. Thank you.