Orora Limited (ORA) Earnings Call Transcript & Summary

[Presentation] [indiscernible] today. On behalf of the Board of Directors, I'm pleased to welcome you to the Seventh Annual General Meeting of the company. Nearly, for us all, the meeting is being held by webcast due to the continuing restrictions on large physical gatherings. A few procedural matters. It is recommended that you use -- the slides being presented online are also available on the ASX and the company's website. Online participation constitutes shareholders being present at the AGM for all purposes. Accordingly, as we have a quorum, I now declare the AGM open. All Orora directors have joined the webcast and can respond verbally to questions posed online during the meeting. Due to current travel restrictions, directors, senior management and Orora's auditors are joining the webcast from different locations. I'm joining in person in Sydney, and I'm joined by Sam Lewis, our Chair of the -- Chair of Orora's Audit Risk and Compliance Committee; and Jeremy Sutcliffe, a director of Orora since demerger. Joining us from Melbourne are Brian Lowe, Managing Director and CEO; Stuart Hutton, our inaugural CFO at Orora; and our newly appointed Chief Financial Officer, Shaun Hughes. I will talk to Stuart's terrific contribution to Orora later in the meeting. Ann Stubbings, Group General Counsel and Company Secretary; and Genevieve Ryan from Orora, who will act as our moderator during today's meeting. Also joining online are Tom Gorman, Chair of our Remuneration Committee; Abi Cleland, Chair of the newly formed Safety, Sustainability and Environment Committee. And of course, our company auditor, Anton Linschoten, is joining us from PwC. All directors and Anton are available to respond to questions during the meeting. I appreciate that some shareholders may have to leave before the end of the meeting. I, therefore, formally open the poll on resolutions and encourage all shareholders to submit their written questions now. All polls will remain open until the conclusion of today's meeting. As we move through the items of business, I'll respond to relevant questions from shareholders and proxies. So before addressing the formal items of business, I'll briefly recap on the company's major activities during the 2020 financial year, including completion of the sale of the Australasian Fibre business and our recent capital management activities and Orora's review of strategy. It's been a very interesting year and rewarding year to serve as Chairman of the company. Orora has a long history in manufacturing and has adapted and responded well to the challenges thrown up by COVID-19, arguably one of the most significant and challenging health, social and economic events in recent history. Your Board and management took quick and decisive action to protect Orora's people and work closely with our customers to maintain open supply chain throughout the pandemic. The Orora business continued to operate seamlessly as essential service providers, ensuring customer requirements were met. Before turning to our financial performance, I wanted to acknowledge the resilience and incredible high health and safety standards that our Orora teams have demonstrated throughout the pandemic. So turning briefly to the financial results for the year ended 30th of June 2020. Orora delivered a 5.2% increase in sales revenue, principally in North America, assisted somewhat by movement in exchange rates. Reported group earnings before interest and tax and net profit after tax were lower than the prior -- than prior period due to a number of factors across operating geographies. While Orora mitigated the operating impact of COVID-19, the total [ earnings amount to ] $25 million, primarily due to lower sales as the pandemic spread across the year. Cognizant of shareholders' desire to maintain dividend income, a final dividend of $0.055 per share, unfranked, 100% sourced from conduit at profit after tax at the top end of our revised range. Following the successful completion of the sale of the Australia -- Australasian Fibre business on the 30th of April 2020, Orora returned a total of $600 million to shareholders, comprising a special dividend and a cash return. We were able to achieve this before the year-end because of Orora's already strong balance sheet and enables the company to continue to pursue value-creation opportunities, whether through our desire for growth investment or by way of additional capital management in addition to our current share buyback of up to 10% of issued strategic path and opportunities ahead for the company. The revised strategy, which Brian will talk to shortly, reflects Orora's commitment to growth, balanced with capital discipline and prudent use of shareholder funds. Our goal is to generate top-quartile shareholder returns and is reflected in the revised shareholder value blueprint released in the full year results and included as part of our company's 2020 annual report. Underlying growth is expected to be broadly in line with GDP, complemented by enhancements to business models with operational investments to continue to improve shareholder returns. Our previous target of 20% return on mergers and acquisitions was, of course, aspirational. Accordingly, this has been reassessed considering current interest rates, market conditions and asset valuations. Our revised objective is to generate a return with an appropriate premium to weighted average cost of capital while also being mindful of associated risk of any investment. The Board continues to focus on enhanced returns to shareholders with a revised payout ratio of 60% to 80% of net profit after tax, franked to the greatest extent possible, and a recommitment to our conservative leverage ratio of 2 to 2.5x EBITDA. Turning now to the 3 core pillars of Orora's sustainability efforts, which appropriately align with the company's ambition to become a leading packaging solutions provider. Beginning with people. Orora's commitment is to provide a safe, respectful, diverse and inclusive workplace. We will protect the health and well-being of our people, work closely with our customers and suppliers and maintain the respect of the communities in which we operate. A few examples during financial year '20 include: the very pleasing improvement in our overall health and safety performance, meeting our gender diversity targets with approximately 35% of new hires being female and the Board maintaining no less than 30% of each gender. And as an employer of a broad and multicultural workforce, both here and in North America, Orora is actively monitoring the treatment of minority groups and working to ensure that its governance around diversity, equality and inclusion remains robust. This includes our ongoing investment in the successful Women in Leadership program and other training and development initiatives. Our next priority area is the planet and how we play our part in the community. Orora recognizes that its activities are essential to consumers. However, we must also do our part to influence environment and climate outcomes. Orora seeks to reduce the impact on the environment and, accordingly, after successful achievement of Orora's first set of eco targets, has announced new 5-year ECO targets, which will drive further reductions in Orora's greenhouse gas emissions, waste to landfill and water usage globally. In Australia, Orora derives 80% of its total electricity from renewable energy. Orora is committed to making the shift to greener manufacturing and supports government and regulators, working collaboratively with the industry to drive better outcomes in this area. Our final priority is -- our final priority area is posterity. This pillar reflects Orora's commitment to a viable and enduring business, creating value and opportunity for us in rural areas across Australasia and North America, providing purposeful employment in diverse roles across manufacturing and distribution. To further focus these efforts and maintain clear oversight of emerging sustainability risks and opportunities, the Board has established a new Safety, Sustainability and Environment Committee. The role of the Committee is to advise the Board with respect to the objectives and targets set by Orora, including our commitment as a signature of the United Nations Global Compact. The Committee will be chaired by Abi Cleland, who is standing for reelection today. Moving now on to governance. Good corporate governance is integral to the culture and business policies at Orora. It adds to performance, creates value and supports an appropriate risk and return framework. During financial year '20, Orora maintained compliance with the ASX corporate governance principles and recommendations and is proud to have been an early adopter of the recommendations of the fourth edition where these are appropriate. Main corporate governance practices are summarized in the corporate governance statement published on our website and available to all shareholders. The Board also recognizes that diverse skills, background are fundamental to good decision-making and achieving the company's objectives. The key skills required for the Board to meet its objectives are disclosed in the company's 2020 annual report and our corporate governance statement. This skills matrix is used to review the existing capabilities of the Board and to identify any gaps in skills or experience. During the formal part of this meeting, Orora will seek shareholder approval to adopt an amended constitution, which is considered best practice and is broadly consistent with the current constitution. Shareholders will note a reference to proceed to hold virtual general meetings in the future only if the law is changed to that effect. As we move ahead, Orora will continue to protect our people, be partners to our customers and use both innovation and sustainability to differentiate our company. This is good for our business, good for our stakeholders and shareholders and forms an important part of the way we do business at Orora. In conclusion, and following a year that has reshaped the company in more ways than one, let me summarize the Orora investment proposition. Orora's businesses are -- Orora has a refreshed strategy, a more agile footprint and a clear vision for how we can continue to grow and deliver value to shareholders. I wish to thank the Orora leadership team and all of our team members around the world for their efforts during this year. On behalf of the Board, I'll also extend our thanks and gratitude to those former directors who retired during the year being Chris Roberts, John Pizzey and Nigel Garrard for their stewardship and commitment to Orora. And finally, this will be Stuart Hutton's last AGM as the CFO of Orora. Stuart has been a wonderful, dedicated member of the leadership team at Orora. He has guided the company's listing on the ASX, substantial growth in revenue and improved performance and share price. He was also incremental in the Australasian Fibre sale [Audio Gap] shareholders. On behalf of the Board and the whole Orora team, thank you, Stuart, for what you've achieved, and we wish you all the best in your future endeavors. With that, I'll hand over to our Managing Director and CEO, Brian Lowe, for a few comments.

Thank you, Rob. And to echo the Chairman, let me [Audio Gap] continued support of Orora during a year that was like no other. Likewise, thank you for joining us today via webcast as we continue to adhere to COVID safety restrictions and legislation here in Australia. Few could have predicted the events of the [Audio Gap] a clear commitment to health, safety and well-being of our people. Teams have worked in lockstep with customers and suppliers, and we've actively managed operating costs and increased the focus on efficiency. Orora's 3,000 anchored team members have certainly risen to the challenge, driving productivity and service agility to ensure that 24 manufacturing plants and 82 distribution centers continue to operate seamlessly. Having recently quarantined and passed several COVID-19 tests, I was able to visit our Gawler, Dudley Park, Revesby and Rocklea sites here in Australia. It's remarkable to see and hear about the resilience of our teams and operations despite everything they've been through. Regular catch-ups with our North American leadership teams tells a similar story. All our workplaces globally are making incredible effort to adhere to health and regulatory requirements in all jurisdictions. The strong focus on safety during FY '20 delivered a 23% reduction in total recordable cases globally, and pleasingly, we have maintained this positive momentum into financial year '21. Teams continue to drive a program of safety improvement initiatives across the business, guided by senior leadership teams as part of a comprehensive 3-year program. At Orora, safety is as much about mental as well as physical well-being. Programs have been carried out across all of Orora to reinforce the importance of mental well-being, particularly as some jurisdictions, including Victoria, experienced higher levels of COVID-19 restrictions compared to others. It's been a year that has seen Orora shift the focus and composition of its businesses. Orora completed the sale of the Australasian Fibre business for an enterprise value of $1.72 billion, one of the largest transactions completed in Australia during this unprecedented year. A significant portion has since been returned to shareholders, and in September, Orora commenced an on-market buyback program. We have renewed the businesses, their market opportunities and the overall strategy. We upgraded and expanded the state-of-art Gawler glass facility, the largest facility of its kind in the Southern Hemisphere, and this marks a 5-year $200 million investment program. The North American Orora Packaging Solution business has continued its business improvement and digital transformation journey. And the Orora Visual business continued its consolidation program, and while there is more work to do, both North American businesses have stabilized performance as we have entered financial year '21. As the Chairman noted earlier, Orora's strategy has been refreshed and aligned to current operating strengths, opportunities and future for each of the Orora businesses. Orora's strategy is underpinned by safe and diverse workplaces, customer focus and operating excellence. Orora has a long track record of delivering innovative product and operating solutions. And while the strategic approach has been adjusted, the commitment to prudent financial management has not changed. The strategy has 3 core pillars, which are to optimize and grow, enhance and expand and to enter new markets. I'll briefly discuss how these will be applied to our respective businesses. And beginning with our Australasian beverage business. The cans, glass and closures businesses are all leaders in their respective markets with operating and financial performances that compare with best-in-class peers. The team has a very good reputation for product quality and reliability. During the last 12 months, the beverage team had maintained and renewed several key long-term customer contracts. They continue to optimize the manufacturing process with a combination of investments such as the digital printer at Dandenong and expansion of Industry 4.0 initiatives. The focus of the revised strategy is to identify opportunities to expand the beverage footprint into adjacent or complementary end markets. In North America, the Orora Packaging Solutions business and Orora Visual businesses have established positions in significant markets, underpinned by an extensive network of distribution and production sites. And despite challenging market conditions, the breadth and depth of the U.S. economy means that B2B distributors like OPS will remain a key element of the food, beverage and medical supply chains. The OPS business has established performance -- a stabilized performance during the first quarter of FY '21, and its future success will be further maximized via digital transformation. A digital transformation leader with Fortune 500 company experience has been appointed. His focus will include maximizing opportunities to deliver on changing customer needs and sale experience, including increasing the visibility of customer and purchasing data to the thousands of products distributed by OPS. OPS has also invested in operating efficiency and warehouse automation with pic-to-life technology and robots -- robotic capability, and further implementation of these is planned. Orora Visual continues to build its value proposition with consistent point of purchase, visual communications and fulfillment offerings across multiple locations. This investment includes digital, customer and consumer engagement capability and print-on-demand solutions. To support Orora's strategic agility and activity, Matt Wilson, the new group General Manager for Strategy, joined us in January this year. And more recently announced -- we announced the appointment of our new Chief Financial Officer, Shaun Hughes. Shaun joined us with extensive commercial, procurement and supply chain experience. And it is a pivotal time for Orora as we realign our strategic direction and apply a fresh lens to the future of Orora's businesses. Shaun is currently working through an orderly transition with Stuart Hutton, who will leave Orora after a decade of strong leadership, and I would also like to take this opportunity to thank Stuart for his support of and contribution to Orora. It leaves Orora in an incredibly strong position and on a foundation on which we can build. The review of strategy also reconfirmed that Orora's enduring commitment to sustainable business is the right one. It is why we have emphasized it in our ambition to be a leading sustainable packaging solutions provider. As the Chairman noted, Orora's focus on sustainability is holistic. It's inherent in the recyclability of our product portfolio, our commitment to safety, health and mental well-being and the importance of diversity, respect and inclusion in the workplace. During the second half of the financial year '20, our culture and values program commenced to assess aspects of Orora's leadership, business practices and employee engagement with our core values. These are the same attributes that will enable Orora to achieve its strategic ambition and future growth. Orora is investing into a more sustainable future. This includes our recently completed investment in the rebuild of our G2 furnace at Gawler, forming lines and inspection equipment as part of those recent upgrades in South Australia. Specialists, who would have typically flown in to oversee detailed construction and commissioning, were not all able to do so due to COVID-19 travel bans. Instead, the rebuild was successfully delivered by a combination of site operations, engineering and local contractors through video conference with specialists throughout the commissioning. Several upgrades were also made during the rebuild to make the furnace more energy efficient and reduce environmental impacts, including a special innovation that will enable future waste heat recovery. Orora works closely with customers and suppliers to reduce waste and embed a shift to a circular economy. The Cans team are working to minimize packaging in their supply chains and further increase recycled aluminum content above our current 63%. OPS aims to reduce overall packaging footprint of customers and achieve 70% recycled content in the manufacture of corrugated board. Earlier this month, the Gawler site began receiving its first shipment of glass color from the Western Australian government's container deposit scheme. This volume is in addition to the approximately 70 -- sorry, 80% of all glass that's collected through the South Australian's CDS scheme. The more color that's used, the more Orora reduces its energy consumption and carbon emissions, positively contributing to our new 5-year eco targets. By proactively addressing the challenge to reduce waste and increase recycled content, Orora can accelerate simple and sustainable solutions for customers and society alike. This is what sustainability means at Orora, investing in people, products and operations to make a difference. I'll now briefly recap the full year financial performance for FY '20 and provide some commentary on the focus areas for FY '21. Sales grew by 5.2% during the year, whereas group earnings were impacted by a number of factors. Australasian beverage saw solid growth in cans volumes, which largely mitigated the impact of COVID-19. However, unfavorable product mix and lower glass export volumes did have an impact. When combined with the necessary completion of the G2 furnace rebuild, this resulted in slightly lower beverage earnings in FY '20. Separately, and as noted by the Chairman, the challenging economic and market conditions in North America are well documented and weighed on earnings for both the Orora Packaging Solutions and Orora Visual businesses during FY '20. As we move further into FY '21, the combination of COVID-19 and the pending U.S. election sees some challenge and uncertainty persisting. However, Orora's businesses continue to prove their strength and resilience with all 3 continuing to operate as a central service providers. 3 months into FY '21, the Australasian beverage business has continued to deliver as a market leader in all segments. During the first quarter, EBIT is in line with the first quarter of the prior year despite adverse product mix. In North America, both OPS and OV businesses have been trading steadily with EBIT across both businesses tracking ahead of the first quarter of last year. The strengthening of the North American performance comes off the back of comprehensive business improvement plans. These plans have delivered despite the ongoing challenges and uncertainty within that region. Finally, and before I hand back to the Chairman today, I would like to reiterate, this year has seen Orora recalibrate and restore momentum amid challenging conditions. We are a best-in-class manufacturer. We're focused on creating a digital step change in our distribution business, and we're targeting defensive markets and visual communications. Our teams have proven that Orora can safely and seamlessly work through a COVID-19 normal and have adapted to continue to deliver. The Australasian beverage business will continue to identify and implement cost-reduction opportunities, invest in asset upgrades, new capacity and innovation. In North America, the business will continue to consolidate and deliver by driving sales growth, margin improvement and cost efficiency. Along with the management team and Board, I'm confident that with the revised strategic approach and prudent approach to capital, Orora will continue to move from strength to strength. With that, I'll now hand back to the Chairman for the procedural part of the meeting. Thank you all.

Thank you, Brian, for that very informative update. So I will shortly take questions from shareholders on the items of business through our online facility. We will endeavor to read out all questions which are relevant to the meeting and will paraphrase duplicated questions. I will respond or, where relevant, ask one of my fellow directors to respond. Relevant questions received from shareholders and proxies prior to this meeting have been addressed as part of the presentation. Shareholders or proxies who raise questions during the meeting, which are not relevant to the meeting or material in nature, will be contacted separately following the meeting for an individual follow-up. If you haven't submitted your question yet, please do so now. However, before I proceed, I will outline in more detail the voting procedures at today's meeting. The resolutions at today's meeting will be decided by a poll. Julie Stokes of Link Market Services, Orora's share Registrar, will act as a returning officer in relation to the poll. The AGM online guide provides detailed steps on how to vote and ask questions online. If you need any assistance during the meeting, please refer to the online guide or contact Link using the phone number provided on the top of the online screen. [Operator Instructions] You can cast a full or partial vote. [Operator Instructions] Voting will close at the conclusion of the meeting. [Operator Instructions] The results of the poll can be obtained later today by visiting the company's website or from the ASX. The Board recommends that shareholders vote in favor of all resolutions. As Chairman of the meeting, I intend to vote all undirected proxies given to me in favor of each resolution. I'll now proceed with the formal business of the meeting as set out in the notice. The first item of ordinary business is the tabling of the financial statements of the company for the year ended 30th of June 2020 and the reports of the directors and the auditor of the company, which has been made available to shareholders. The reports will be tabled but not be subject of a resolution as there is no requirement to do so. Questions relating to the financial statements and report, together with other shareholder questions in relation to the management of the company generally, may be asked during this -- may be asked during this item. Moderator, are there any questions relating to item 1?

No, Chairman. There are no questions relating to item 1.

Thank you. We will now move to the second item of business, the reelection of Abi Cleland as a director. As stated in the notice of meeting, Abi Cleland retires by rotation and, being eligible, has nominated herself for reelection. The details of Abi's qualification and experience are set out in the notice of meeting. And I'd like, at this point, to invite Abi to briefly speak to her reelection. Abi?

Thanks, Rob. Thanks, Rob. Good morning, shareholders. It has been 6.5 years since I joined the Board of Orora just after the demerger from Amcor. It has been an honor to represent shareholders during this time. The business has grown its own culture, driven sales growth through innovation, invested in its operations to drive efficiency and capability as well as proactively driven a broad range of sustainability initiatives. Also, companies the last year had the additional challenge of the COVID environment, and Orora has responded quickly whilst also demerging the fibre business after its sale. I'm currently a full-time nonexecutive director. And as well as Orora, I'm on the listed boards of Coles, Sydney Airport and Computershare. Prior to this, I built a global career driving strategies, M&A, digital and running businesses for large corporates in the industrial, retail and banking sectors as well as building and running our successful advisory firm. With your support, I look forward to continuing to work with my fellow Board members, CEO and the exec team as we embark on the next phase of Orora's journey. Thanks, Rob.

Thank you, Abi. I'll now disclose the way in which proxy votes have been directed to reelect Abi Cleland. Moderator, are there any questions relating to item 2?

No, Chairman. There are no questions relating to item 2.

Thank you. I put the motion that Abi Cleland be reelected as a director. Would you please complete your online voting cards relating to item 2? [Voting]

Just to let shareholders know, we'll have a couple of minutes at the end to complete your voting, so don't worry if you haven't yet completed all your voting. So moving on to item 3 of the notice of meeting being the incentives grants to Mr. Brian Lowe. The Board proposes a grant to Mr. Lowe under the terms of the company's short-term and long-term incentive plans as summarized in the notice of meeting. As required by the ASX listing rules, shareholder approval is being sought in order to grant the proposed securities to Mr. Lowe. Mr. Lowe has not participated in Board discussions or resolutions concerning these grants. Each of these grants will be considered separately. Turning first to the short-term incentive grant to Mr. Lowe. 1/3 of any short-term incentive awarded is made in the form of deferred performance rights with the remaining portion paid in cash. Shareholders are asked to approve a grant of deferred performance rights to Mr. Lowe as set out in the notice. This grant is designed to reward the achievement of specific objectives for the 2020 financial year against the performance criteria outlined in the notice. Any short-term incentives granted -- grants made to Mr. Lowe is also subject to Orora's safety performance, measured against key safety metrics. Importantly, the Board has overall discretion in granting the proposed short-term incentives, including reducing any short-term incentive grant by up to 10% if our safety objectives are not met. I will now disclose the way in which proxy votes have been directed on this item. Moderator, are there any questions relating to item 3a?

No, Chairman. There are no questions relating to item 3a.

I put the motion under item 3a that Brian Lowe be granted deferred performance rights under the short-term incentive plan. Would you please complete your online voting cards relating to item 3a? [Voting]

Turning now to the long-term incentive grant to Mr. Lowe. Shareholders are asked to approve the granted performance right as set out in the notice of meeting. Orora's long-term incentive plan underwent a change from the commencement of FY '20, as a result of which performance rights are now the only form of grant under the company's long-term incentive plan, performance we measured across a 3-year period with an additional 1-year employment restriction. I will now disclose the way in which proxy votes have been directed on this item. Moderator, are there any questions relating to item 3b?

No, Chairman. There are no questions relating to item 3b.

I put the motion under item 3b that Brian Lowe be granted deferred performance rights under the long-term incentive plan. Would you please complete your online voting cards relating to item 3b? [Voting]

The fourth item in the notice of meeting is the remuneration report. In accordance with the Corporations Act, the directors have prepared a remuneration report up to the 30th of June 2020. It is included in the annual report that has been made available to shareholders. This report reflects Orora's strategy and associated remuneration practices, which have been specifically designed to drive high-performance culture, pay for performance and to attract, motivate and retain talent with the objective of creating long-term value for shareholders. In this unprecedented year, and as a result of the sale of the fibre business, the Board determined that there will be no change to existing performance rights allocated to executive KMP other than rebasing the EPS calculation for LTI grants with a vesting date of August 2021 and beyond. Importantly, this year's lower STI outcomes reflect the more challenging economic and market conditions, which quite rightly demonstrated the strong alignment between financial performance, executive remuneration and shareholder returns. Of note, the Board did not exclude any COVID-19 impact on the group's financial performance in the assessment of STI or LTI outcomes. Achieving completion of the complex sale of the Australasian Fibre business was, however, a significant achievement. As a result, executive KMP were appropriately awarded a conservative one-off short-term incentive [ business ] as disclosed in the remuneration report. The long-term incentive grant awarded in the year ended June 2017 did not vest as the performance hurdles were not met. The Board also determined there'd be no pay increases for executive KMP or the Board for this 2021 financial year to appropriately reflect challenging global market conditions -- economic conditions. In accordance with the Corporations Act, the vote on the remuneration report is nonbinding of directors. I will now disclose the way in which proxy votes have been directed on this item. Moderator, are there any questions relating to item 4?

No, Chairman. There are no questions relating to item 4.

Thank you. I put the motion that the remuneration report for the period ended 30th of June 2020 be adopted by passing an ordinary advisory resolution as set out in the notice of meeting. Would you please complete your online voting card relating to item 4? [Voting]

The final item in the notice of meeting is the proposed amendment to Orora's constitution. In accordance with the Corporations Act, the company seeks the approval of shareholders to amend its current constitution and adopt the proposed constitution in its place. As disclosed in the meeting, the proposed constitution is broadly consistent with the current constitution. Most of the changes are relatively minor, incorporating amendments to reflect changes in developments in corporate governance since Orora's listing on the ASX in 2013, and they do not significantly impact on shareholders. A summary of the material changes is set out in the notice, and the proposed constitution has been made available to shareholders on Orora's website. I will now disclose the way in which proxy votes have been directed on this item. Moderator, are there any questions relating to item 5?

No, Chairman. There are no questions relating to item 5.

Thank you. I put the motion that the proposed constitution be adopted in place of the current constitution with effect on the close of the meeting by passing a special resolution as set out in the notice of meeting. Shareholders, would you please complete your online voting card relating to item 5? [Voting]

Moderator, are there any further questions?

Yes, Chairman. We have a few questions in the General Business section, which I will read out. The first one is from Mr. Morton from the Australian Shareholders' Association, and his question is, "Are the North American businesses on track to meet FY '21 target? And are you satisfied with the robustness of the pre- and post-acquisition audits?"

I'll take the first part of the question. In terms of the North American business being on track, we -- it was very difficult to predict how FY '21 was going to pan out. So we actually delayed the setting of our operating plans for a couple of months, which I think was very prudent. Pleasingly, we'd given you an update in our trading statements about performance in the first quarter. So from the Board and management's perspective, I'd say we're broadly on track with our FY '21 targets. In terms of the robustness of the pre- and post-acquisition audits, I think the challenge with acquisition is you make assumptions about how markets are going to be developed. Broadly, the acquisitions we've made in OPS, our distribution business, have performed as expected with some integration issues. In terms of OV, it'd be -- the Board would not be satisfied with the performance out of those acquisitions. There was a series of issues around integration, but also the fact is that was the business that was most impacted by the onset of COVID-19 because its primary target, its primary sales customers are retail and entertainment, and a lot of those businesses shut down. Pleasingly, we've made some difficult decisions around closure of sites and consolidation of footprint, and our OV, Orora Visual, business is outperforming to expectations.

Thank you, Chairman. I have another question from Mr. Morton from the Australian Shareholders' Association, and his question is, "Will the planned government spending have a positive effect on the profitability of Australian companies?"

I think in terms of Australian companies, it depends very much on what industry you're in and your market position in that industry. But as we said during the meeting, the pleasing position for Orora in both North America and Australia is we were designated as an essential service. What we do like about the government's initiatives is that they will -- the accelerated cash -- the accelerated depreciation will be a significant tax benefit on our capital investment. We also are pleased with the continuation of the R&D incentives that government were talking about withdrawing last year. And also the focus on manufacturing, we should be a direct beneficiary of that. We've got some investments we'd like to make and will accelerate those based on the government's commitment to increase support of both manufacturing on Australian industry. Is there anything you'd like to add, Brian?

Thanks, Rob. I think the comments you made are correct in terms of where the benefit would be and certainly from an Australian standpoint, incentives around employment, something that we will keenly look at as well, whether it be relative to apprentices or other employment. So we'll be having a good look at how we can help stimulate some employment growth and benefit for Orora.

Thank you.

Now, Chairman, there is a further question from Mr. Morton from the Australian Shareholders Association, and the question is, "The Chairman's thoughts on the financial effect of a continued reduction in COVID-19 infections."

I think we need to think about this in our 2 specific markets. Obviously, in Australia, we've very much got the pandemic under control, and you can see those states of Australia where there's limited cases that things have not necessarily returned to normal, but the reduction in volumes from our perspective is single-digit rather than when you've got closures in the economy. In terms of North America, the situation is very different, and the cases continue to grow there. So look, my personal hope is that globally, we get this under control. The quicker, the better because the stimulus that governments are having to provide is probably holding economies up, and we'll see what the consequences are once that stimulus comes out of the system. But from -- specifically from Orora's perspective, the fact that we're an essential service, the fact that we're in food and packaging and beverages means that we've been less impacted than other organizations. Having said that, we've seen the situation can change very quickly. And as Brian said in his trading update, the important part is just being ready for any eventuality. The -- we don't know what the future looks like. You couldn't say that a continued reduction was the situation in the U.S. or Europe. But we're continuing to operate very effectively. We've got 2/3 of our workforce in the U.S. working from home. So we've got a way to work irrespective of the number of cases.

Thank you, Chairman. The next question is from [ Esther Parvati ] and [ James Nicholson ], and the question is, "When will the company pay a fully franked dividend?"

So for the last few years, number of years, Orora has actually paid a partially franked dividend. And that's as a consequence of the fact that a large proportion of our earnings come from North America. As shareholders know, franking credits can only arise from payments of tax on Australian profits, and the higher proportion of profits externally make that challenging. We -- but what we said as part of our presentation that our objective is to maximize the franking credits and the franking of dividend to the maximum possible. We'll use all the franking credits we have to maximize that. We've also got our on-market buyback program in place. And during this period, it's likely that our dividends will be unfranked in accordance with Australian tax rules. We'll continue to -- continually review it, and whatever franking credits we have, we'll pass back to shareholders.

Thank you, Chairman. We have a further question from the Australian Shareholders Association from Mr. Brett Morris. And the question is, "The ASA is the voice of retail shareholders in Australia. The annual report has details regarding its environmental policy. However, would it consider having greater disclosure and perhaps charts that allow shareholders to see year-over-year KPIs for environmental matters such as carbon emissions, water use, tons of waste to landfill, et cetera?"

Thank you very much, Mr. Morris, and very topical question and one of the reasons why we formed our Safety, Sustainability and Environment Committee. We've set our new 5-year eco targets. We've had a very good progress in the first 5 years. But the Board and management would agree, we can do a slightly better job of how we communicate that both to our customers but also to our shareholders. We do that through the sustainability report and the annual report. But we'll take on board your comments about charting that and making it easy to read and easy to understand. But certainly, our intention is to share those -- share our progress.

I'll just add, Robert, as part of our annual reporting, we do report against those targets. And now that we have set new targets going forward, it certainly is our intention to report against those new targets on an annual basis.

Thank you, Mr. Morris. Any further question?

Yes, Chairman. We have 2 more questions. One question is from [ Mr. Frank Thompson ], and the question is, "It has been reported in the media that Orora could be subject to a takeover in the near future. Can you please comment on this?"

I think it's difficult to comment on any media speculation, [ Mr. Thompson ]. We read these sort of articles about lots of companies. Having said that, the directors have a obligation, a fiduciary duty to assess any approach to the company and make sure, from a value perspective, we're assessing that option. But I wouldn't -- there is nothing in front of directors. Otherwise, we'd have to disclose it. I'd just read that as pure media speculation.

Thank you, Chairman. We have one final question, and this is another question from Mr. Brett Morris from the Australian Shareholders Association. And the question is, "As Orora is a packaging business, its activities and choice of products have a direct bearing on landfill and recyclability in Australia. Would Orora consider providing details in its next annual report regarding how recyclable its products are and how many are recycled so it can be compared on a year-on-year basis?"

I think that's a very topical question. Brian, it's probably a good one for you to take on, particularly the first part of the question. We've had a lot of discussion about recyclability and how we're positioning the company. So that's a good one for you to answer.

Yes. Well, certainly, our focus is on increasing the recycled content in our product. As I had mentioned earlier in my comments, we have been actively looking at that for our glass business in Gawler, adding to sourcing glass from the South Australian CDS scheme to the WA CDS scheme, which takes our recycled usage from 25% to 35%, and we're exploring ways to continue to increase that, similarly with our cans business being at 63% recycled content, where we continue to explore ways to increase that. And as we've mentioned, in North America with our manufacturing business, aiming to be 70% and above. So we have continual programs to drive recycling, and it certainly would be our intention to keep shareholders abreast of our developments in that area.

Thank you, Brian. Thanks, Mr. Morris. Are there any further questions, moderator?

No, Chairman. There are no further questions.

Thank you. As there are no further questions, I declare that the poll for all the items will close in 5 minutes, allowing shareholders to cast any remaining votes. The results of the poll will be released to the ASX and will be available on the Orora website later this afternoon. Thank you, ladies and gentlemen, for your participation at today's meeting. I can assure you that your directors and the entire Orora team will continue to work hard to deliver long-term value for shareholders while ensuring prudent management in these complex and ever-changing times. I now declare the meeting closed. Thank you.