Sims Limited (SGM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Geoffrey Brunsdon, and I Chair Sims Limited. It is my pleasure to welcome you to the 29th Annual General Meeting of your company. The health and safety of our people, shareholders and the communities in which we operate is of paramount importance to Sims. In light of the potential health risk created by the COVID-19 pandemic and actions taken by governments to address these concerns, we're hosting our first virtual Annual General Meeting. I'm pleased to be here, and I would like to thank you for showing your support in joining the meeting today. Before going further, let me introduce my colleagues who are with us today. We have our nonexecutive directors, Deb O'Toole, Jim Thompson, Georgia Nelson, Hiro Kato, Heather Ridout and Thomas Gorman; and our Group Chief Executive Officer, Alistair Field. In addition, our Chief Financial Officer, Stephen Mikkelsen; Corporate Secretary and General Counsel, Gretchen Johanns; and our moderator for today's questions, Angela Catt, Director, Investor Relations and Joint Company Secretary. This year, Sims has formalized its reconciliation journey to improve Aboriginal and Torres Strait Islander engagement across the business by submitting our first reconciliation action plan with reconciliation in Australia. I'm pleased to introduce and welcome our special guests today, Uncle Craig Madden, who will provide a welcome to country.

-- Thank you, Geoff. [Foreign Language] everyone. My name is Craig Madden. I'd firstly like to thank Sims Limited for inviting me here today to welcome you on the country. We're proud Bundjalung Gadigal men from the Eora Nation. Gadigal land is the land on which I stand here today. [ Bundjalung Gadigal ], this land displaces Gadigal. It's customary for aboriginal people to invite guests or visitors on to our land or country. It's a custom that we've been doing for thousands of years. So as a representative of the Metropolitan Local Aboriginal Land Council and a proud Gadigal man, I'd like to welcome you all on to Gadigal land Aboriginal land. I'd like to pay my respect to our elders, past, present and emerging. If you have any aboriginal brothers and sisters online or any provinces from the Torres Strait Island, welcome to Gadigal land. To our non-Aboriginal brothers and sisters, a warm and sincere welcome to Gadigal land and Aboriginal land. The Gadigal clan is 1 of 29 clans, which make up the Eora Nation. It's a nation that's bound by 3 distinct landmarks. So we have the Hawkesbury River to the north and the Parramatta River to the west and the Georges River to the south. Within the boundaries of those mighty rivers lies Eora Nation and the land that we stand on of the Gadigal People, 1 of the 29 clans of that nation. Any guests from across the seas today, from across your great country, great state, this magnificently beautiful city of Sydney of ours, welcome to Gadigal Land. I understand that we're here today as part of -- NAIDOC Week is just starting this week. NAIDOC Week is a very important week for our aboriginal people. It's day -- a week-to-week in showcase, our history, our cultures, our language, our laws, everything that makes us proud to be one of the most longer-serving existing cultures in the world today. The theme for this at NAIDOC Week is Always Was, Always Will Be, which is very poignant in today's society because for Aboriginal people, it has been and always will be Aboriginal land. So I'd like to thank Sims. I wish you all the best on your 103-year anniversary. And on behalf of the Metropolitan Local Aboriginal Land Council and its members, I hope you all enjoy tonight. And thank you again for allowing me to welcome you on this country. Once again, welcome, welcome, welcome. Thank you.

Thank you, Craig. It's great to receive such a warm and informative welcome. In declaring this Annual General Meeting open, I note and request that the minutes record that a quorum is present. The Notice of Meeting was duly given, and I take the Notice of Meeting as read. I note that Mr. Don Pasquariello, representing Deloitte Touche Tohmatsu, the company's auditors, is also present. He is available to answer questions. For the record, I would like to advise the minutes of our Annual General Meeting held on the 14th of November 2019, as signed as a correct record of the proceedings at that meeting. I advise and request that the minutes recorded at the company has received proxies covering approximately 163 million shares. Each resolution to be put to the meeting will be decided by a poll, and I will explain these procedures later on. In the interest of good corporate governance, I will advise you of the proxy situation in respect of each resolution, following discussion on that resolution. I declare the poll on each resolution opened. Our Annual General Meeting is an important event for Sims, allowing us to engage directly with you, our shareholders. We appreciate your time feedback and support, and we value the opportunity to update you on the business. Thank you for joining us virtually today. The fact that we are meeting virtually this year shows just how much the world has changed in a brief period of time. The 2020 fiscal year certainly has been unlike any other in the company's more than 100-year history. The COVID-19 pandemic has presented complex challenges for Sims, the industry in which we operate and the global economy. As Chairman, I am proud of the leadership team's swift disciplined response to this crisis to protect employees and keep the business running safely. To put simply, 2020 was challenging. The company experienced a difficult first half of the year with a steep drop in ferrous scrap prices in September, combined with low zorba prices throughout the 6 months. Ferrous scrap prices were improving at the start of the second half of the year, but the COVID-19 crisis and the efforts to slow the spread of the virus materially reduced intake volumes and sales prices. As the scale of the COVID-19 crisis became apparent, the company took quick action to reduce costs and preserve cash. The company finished the year with a strong net cash position of $110.4 million as at the 30th of June 2020. Without doubt, the economic impact of COVID-19 will continue to be felt for a long time. As a result of restructuring and cost reduction measures, Sims is now better placed to manage through global market volatility with a strong balance sheet and lower cost base. As a result of the OneSims project, the company expects to realize nearly $70 million in largely fixed cost savings for the 2021 fiscal year as compared with the 2019 fiscal year and is well positioned to take advantage of global government infrastructure stimulus. During 2020, the company returned capital to shareholders in the form of dividends and share buybacks. The company bought approximately $17 million of shares and paid an interim dividend of $0.06 per share fully franked. With the uncertainty about the pandemic and the economy, the Board determined that it was prudent not to pay a final dividend. I assure you that this was not a decision the Board took lightly. Over the past few years, the company has largely paid fully franked dividends. The Australian government recently announced COVID-19 taxation relief policies, including carryback of tax losses and the immediate write-off of capital expenditure. Assuming the company meets the eligibility criteria, it is highly likely that any dividends over the medium term will be substantially unfranked. Guided by the Sims purpose, create a well without ways to preserve our planet and our integral role in the circular economy, in FY '19, we announced an ambitious 5-year strategic growth plan. This plan sets Sims on a path to pursue opportunities for growth within its core metals and electronic recycling business as well as in adjacent businesses that will reduce waste and produce renewable energy. In FY '20, Sims began executing on its strategy in earnest, and despite the impacts of the COVID-19 pandemic, is on track to achieve the milestones we set when we announced the strategy. We made progress with our resource renewal program, commencing community consultation for the first facility to be built in Campbellfield, Victoria. Our goal is to divert 1 million tonnes of the material that remains after the metal recycling process from landfill and turn it into useful products for society. In addition, we made progress against our target to reuse, redeploy and recycle 200,000 tonnes of cloud material by the end of FY '25. Despite the impacts of the COVID-19 pandemic, Sims Lifecycle Services was able to grow its customer base and volumes during FY '20. We also took important steps during FY '20 to advance Sims business transformation, a plan to implement a number of productivity improvements in a single operating system. Significantly, we reorganized the management team and aligned the business by function rather than geography, which will reduce cost and enable the standardization of best practices across the business. While we're unable to grow ferrous and nonferrous volumes during FY '20 due to the COVID-19 pandemic, we have structured the business to best position us to achieve our strategic goals. The COVID-19 crisis has presented health and safety challenges not previously faced during the working lives of our leaders. Sim's first priority has been, and will continue to be, the safety of our employees, customers, suppliers and those in the communities in which we operate. We will continue to maintain safe, social distancing at our facilities and offices, execute enhanced cleaning protocols and enable our employees to work from home wherever possible. Moreover, we will remain diligent in improving our protocols as risks are identified in the communities in which we operate around the world. Although responding to the pandemic was our top priority during much of FY '20, we also made significant improvements in employee safety during the year. Specifically, the company made significant improvements in its safety management system, standardizing operating practices and performance measures, streamlining and simplifying safety program standards and training. I'm pleased to report a significant decline in both the total recordable injury frequency rate and the lost time injury frequency rate as compared to the prior year. Safety is paramount in all that we do and is key to operating responsibly. We will continue to use systematic approach to driving improvement in safety until we reach our goal of 0 harm. The Board recognizes the value of diversity, both in terms of background and experience. In order to achieve Sims purpose, a diverse workforce is essential to develop the innovative and creative solutions necessary to drive a profitable and sustainable future. Sims workforce is geographically diverse with operations in 15 countries. We still need to improve our gender balance, and the Board and management remain focused on achieving this objective across the entire workforce while creating a workplace that fosters diversity in the broadest sense. The company continued to make strides to improve gender diversity in its workforce in FY '20. This year, the company improved the diversity of its applicant pool with women comprising 25% of all job applicants, and the company's overall female new hires will outpace the current female population. These actions resulted in the company's female representation increasing to 21% at the end of FY '20 from 19.5% in the prior year. Our purpose clearly articulates our identity and will enable us to attract the best and brightest talent with the skills necessary to develop and implement our strategic growth plan. With a clear purpose and a talented workforce, Sims' future is bright, safe and secure. On behalf of my fellow directors, I would like to recognize the significant contributions and hard work of our management and employees over a challenging year. I would also like to thank you for your continued support as shareholders in the company. I sincerely hope you and your family and friends remain safe and well. Now I would like to introduce our company's Chief Executive Officer, Alistair Field, to present a more detailed account of last year's performance and comment on the outlook for the industry.

Thank you, Mr. Chairman. Ladies and gentlemen, fiscal year 2020 brought challenging conditions for our global business. First and foremost, we saw the decline of scrap prices at the start of the fiscal year. And then the coronavirus quickly spread from Asia to the rest of the world. It goes without saying that the global pandemic has had a substantial financial impact on every aspect of our international operation. However, we were able to progress key aspects of our strategic plan throughout the year, and we will continue to deliver on this. Within the context of widespread lockdowns to slow the spread of COVID-19, it is understandable that Sims Limited was not profitable. We closed FY '20 with an underlying EBIT loss of $57.9 million, due to the tough market conditions that persisted throughout the year. Although we saw signs of improvement in early 2020, the unprecedented global health crisis during the second half of the fiscal year materially reduced intake volumes and sales prices, most notably in North America, the United Kingdom and New Zealand. Sales revenue in FY '20 was 26% lower in FY '19 due to lower volumes and prices. That said, we were able to maintain a strong balance sheet throughout the pandemic with net cash as of 30 June 30, 2020, of $110.4 million. The executive leadership team and I reviewed the structure of our global business to determine where we could experience greater efficiencies. We removed $70 million of largely fixed costs when comparing our budgeted FY '21 outcome to FY '19 actuals. Pleasingly, these largely fixed cost reductions are being achieved. An important part of our sustainable growth strategy includes having a disciplined approach to capital management and expenditures to ensure that we are appropriately balancing the need for shareholder value with strategic investments into our business and its operations. We sold the European compliance business for $140 million and, separately, sold some underutilized land for a gain of $20.4 million. The foundation of our business operations, financial investments and cultural mindset is the Sims purpose, create a world without waste to preserve our planet. I am pleased to share that we still believe this is the right focus for Sims Limited. While we did have to pause several key initiatives within our metal recycling business in FY '20 during our initial response to the COVID-19 pandemic, we made great strides in implementing and living our purpose in our other business divisions. We were able to start the community consultation process for our first resource renewal facility planned for Campbellfield, Victoria. Our aim for Sims Resource Renewal is to double 1 million tonnes of auto shredder residue, the material that remains after the metal recycling process from landfill and then turn it into useful products for society. We also onboarded 3 significant data center customers within our Sims Lifecycle Services business division, which allows us to further establish ourselves as a worldwide leader in cloud infrastructure reuse, redeployment and recycling. We also saw increased recycling volumes from this business despite logistics disruptions and other considerations due to COVID-19. However, in August, we noted that due to the pandemic restrictions, we had issues obtaining good site access, and this was key to reaching our FY '21 cloud material volume targets. This issue continues to persist, and we now expect cloud volumes to remain flat in FY '21 at around 25,000 tonnes. The medium-term prospects remain the same, and we are well positioned for strong growth in this business. Sims Municipal Recycling bid for and won an additional municipal recycling contract for Palm Beach County in Florida. We brought that operation online in earnest using our sustainable recycling services. We continue to seek out additional opportunities to expand this business across the U.S. As part of the review to uncover operational efficiencies, we are implementing a global technology system to better manage and track our inventory, logistics, sales and human resource functions. The program remains on track, and we look forward to implementing a global HR solution and sales and outbound logistics solution for global trade, the U.S. and the U.K. in the 2021 fiscal year. Respect is one of our core values. And we educate our people and suppliers to live this through our culture and a good understanding of our policies. Following the social justice protest across the U.S. and other parts of the globe, we shared several antiracism and social justice resources, perspectives and educational content to raise awareness around racial injustice, and we took the opportunity to restate our policy and stance on respect and inclusion. Our first priority will always be the safety of our employees, customers, suppliers and the community. Our Head of Environmental Health and Safety quickly stood up an international cross-functional COVID-19 response team to ensure business continuity as well as guide decisions to keep our employees, customers and visitors safe for the duration of the pandemic. As part of the business continuity process, we also wanted to ensure that we addressed other safety concern in values-based fashion that was aligned with our purpose. As compared to the previous fiscal year, we've seen an improvement in our safety performance, largely in part to our new critical risk management program. The goal of this program was to allow us to identify and address the risks within our business that could potentially lead to a serious injury. We socialized this program to all employees across the company, and our leaders have the added responsibility of conducting mini safety audits as a way of challenging our current controls and safety norms. These combined efforts have allowed us to make hundreds of improvements and several corrective actions to remove inefficient controls and processes. To share this progress and further embed this culture of safety throughout our organization, we enhanced our safety communications via e-mail, in person and on intranet. When it comes to sustainability, our path to achieving our purpose is clear: reduce waste and keep resources in use for as long as possible. Our environmental objective is inextricably linked to our multiyear growth strategy, with the intent to drive scalable, sustainable growth throughout each of our business divisions. The sustainability strategy is built on 3 pillars: operate responsibly; close the loop; and partner for change. These 3 pillars correlate to, and are in support of, 3 of the 17 United Nations Sustainable Development Goals: decent work and economic growth; climate action; and responsible consumption and production. Supporting these global initiatives affords us with the opportunity to share the responsibility of living in a more sustainable world, while simultaneously sharing our growth and sustainability strategies with other like-minded organizations. This responsibility also rests with our employees who are eager to change behaviors and ways of working as a means to demonstrate that they understand the role Sims Limited plays in the global circular economy and how our work impacts the communities where we operate and do business. Since 1 November 2020, recycled nonferrous that meets quality standards can be freely imported into China without quotas. Approximately 90% of our nonferrous material can be imported into China. And we have already sold material to Chinese businesses under this new category, validating our investment in quality initiatives. Zorba pricing has recently strengthened to USD 1,300 per tonne due to increased demand from the global automotive industry and the ability to fully import over zorba/twitch into China. The relaxing of quotas into China, combined with our diversified channels to other markets, puts us in a strong position to continue to grow the nonferrous business. The recycled ferrous market is recovering with increased steel demand in many industrial sectors. International steel mills have raised the price for ferrous scrap resulting in prices close to USD 290 in the Mediterranean and USD 320 in Pacific regions. China also announced that it is looking to allow the import of recycled ferrous subject to certain quality standards that are currently under development. The possible reentry of China as an importer of ferrous scrap early next year would certainly tighten the supply, at least in the short run. That said, Germany and France have announced shutdowns of their economies to reduce the spread of COVID-19, and we need to be mindful of the effects on world steel demand and other aspects. Intake volumes for the September quarter remained at 85% of average FY '19 intake volume. However, we are more robustly structured, and it is pleasing to see that the predominantly fixed cost savings are being achieved. Importantly, when volumes do recover, our restructured footprint still has the capacity to exceed our FY '19 intake volumes. I'm pleased to say that our free cash flow for the September quarter was positive, and all metal divisions and the group achieved a solid positive EBIT for the September quarter. There remains uncertainty regarding impact of COVID-19, for example, the recently implemented social lockdowns in the U.K. Furthermore, we will continue to monitor staffing considerations in the event of a material COVID-19 outbreak at a particular site. The balance sheet remains strong. Our costs are lower. We have structurally changed to better manage buy and sell risks. And in the medium term, the ERP will enable us to manage the business in a more optimal way. We remain in a strong position to benefit from global government infrastructure stimulus.

Thank you, Alistair. Before moving on to the various resolutions to be considered today, I'd like to draw your attention to the voting and question procedures for today's meeting, which are shown on the screen. Given this is a virtual meeting, please pay close attention to the slide. In order to vote or ask a question during the meeting, you will have to register for a voting card. You can do this by clicking on the Get a Voting Card box at the top and bottom of the site. You'll need to enter your shareholder number and a post code or proxy number. Please note that only shareholders, proxy holders or shareholder company representatives may vote. Eligible shareholders will be able to cast the vote for, against or abstain for each resolution during the meeting. Once you finalize voting on all resolutions, you must submit your vote by clicking the cast a vote or cast partial vote button at the bottom of the page. You will be able to edit your votes by clicking the edit card until voting is closed at the end of the meeting. You'll be given 5 minutes after the end of the meeting to finalize your voting. A countdown timer will appear at the top of the page so you know how much time is left to cast your vote. Once you've registered to vote, you'll be able to ask a question during the meeting through the Ask a Question box at the top and bottom of the page. You can either select to ask a general question or ask a question on a specific resolution. You must submit select the submit question box to lodge your question. If you're asking multiple questions, please submit each question separately. I encourage shareholders that have questions to send the questions through as quickly as possible. If we answer your question during the meeting and you want to reply, please do so by asking a new question. We will attempt to answer all questions raised during the meeting. But if the same or similar question is received multiple times, we'll only answer the question once. Most of the questions received before the meeting have been addressed in the CEO and Chair addresses. Given the new technology, we'll now pause for a minute or 2 to allow shareholders time to submit questions. Please note, we will only pause briefly during each of the resolutions for questions. We will address general questions after the pause, and any specific questions to a resolution during the consideration of the -- during consideration of the relevant resolutions. Please submit your questions now.

So we have some pre-submitted questions as well as some questions that we've just received live. There are a number on sustainability and climate change. And can you please address those questions now?

Thank you, Angela. So the questions cover a whole range of issues related to moving as quickly as possible to sourcing as much renewable energy as possible and measuring the carbon pollution and sustainability measures. So our purpose to create a world without ways to preserve our planet drives us to constantly innovate and offer new solutions in a circular economy for consumers, businesses and governments as well as the communities in which we operate, in every country in which we operate. Each year, we help divert millions of tonnes of secondary materials from landfills, mitigating greenhouse gas emissions and reducing demand for virgin raw materials. And I think as one of the questions pointed out, our sustainability report confirms our goal to achieve carbon neutrality. To that end, we've contracted the services of a third-party experts to help us develop targets to address climate change and that follows the science-based target initiative, the SBTi methodology. So the SBTi analysis has been completed, and we're considering a part that makes the most sense for our company. Knowing that our emissions are in almost 60-40 split between electricity and fuels and mostly diesel, our first approach will be processes for the optimization and transition to renewable energy and electrification of our equipment. So our focus is really on both scope 1 and scope 2 emissions, which we can address immediately. Given Sims is a global trading organization, scope 3 is largely around the shipping that we contract. And while we don't actually control the vessels that we charter, we do have a choice as to which vessels we charter. So along with ensuring that shipping companies adhere to the new low-sulfur fuel requirements and looking for the most efficient vessels, we're also considering other issues such as modern slavery when we charter our vessels and looking at those sorts of issues. We're committed to acting sustainably and preserving the environment in every part of our business. It's core to our DNA. We're a member of the World Business Council, which gives us access to a lot of benchmarking data, which we use. We're also an active member. There are a number of consumer product organizations that we work with to test how efficiently their packaging can be recycled. We did that at our Brooklyn facility in the U.S. And so by doing this, we are seeking to position ourselves as a logical partner for those global corporations that are committed to close loop -- the closed-loop economy.

Thank you, Chair. This is a pre-submitted question from shareholder, [ Ado ]. Why do companies pay incentives? If you are paid a commercial salary, shouldn't the person be trying their best anyway? Please explain.

Thank you, Angela. So it seems our compensation philosophy is really designed to drive strong performance and align executives' interests with the interest of shareholders delivering sustainable value. The mix of total target remuneration for executives consists of fixed remuneration for the performance of job duties; short-term incentives for meeting 1-year goals to drive improved operations of the company; and long-term incentives for the achievement of long-term goals and strategic execution. In setting those targets, both short and long term, the Board not only looks to the budgeted requirements, but also the challenge in achieving those and achieving longer-term returns, sustainable returns for shareholders. So we believe that that mix of compensation actually not only incentivizes and rewards but it gives a fair balance between returns to shareholders, i.e. because in order to achieve those performance targets, the company has to be profitable and has to be achieving strong returns on investment and equity with employees, which enables us to continue to retain our best employees and, as we grow into the future, attract the best and brightest talent to our organization.

Thank you, Chair. This is a pre-submitted question from Nick Bury from the Australian Shareholders' Association. The ASA abhors the attempted opportunistic class action instigated by Williams Roberts lawyers against Sims. Is there a current time frame in which this predatory action against Sims shareholders is likely to be heard? Will Sims advise all shareholders that class actions against public companies that are seemingly devoid of merit are launched at the expense of all shareholders given the time and expense entailed in defending the same, so shareholders should be discouraged from joining like actions, so depriving the same of oxygen? In the case of a successful outcome, will Sims pursue the litigant for expenses to discourage like future behavior at the expense of shareholders?

Thanks, Angela. Look, I'm limited in what I can [ say it's an ] ongoing litigation. However, I can say that Sims is in the process of presenting a vigorous defense against the claims. And if, as we expect, we are successful, we will be pursuing the litigant for costs.

Thank you, Chair. This is a pre-submitted question from Nick Bury from the Australian Shareholders' Association. Does Sims plan to recruit future nonexecutive directors with specific experience in its scrap metals and steel business as opposed to accountants, lawyers and recruits from other disciplines who have no knowledge and/or hands-on experience in the field in which Sims operates?

So the Board regularly reviews the skills we need around the table, and we have detailed succession planning as an ongoing agenda item for the Board. And it's always active. Currently on the Board, we've got expertise in steel, steel industry, scrap industry, shipping, logistics, global trading, manufacturing. We look at all those skills. Overarching, we need directors that have got a strong safety perspective and bringing those skills, which often are married with strong financial skills with the background of our directors. We believe the Board currently is well balanced. And in terms of pursuing Board renewal, which is an ongoing requirement for good governance, we're constantly looking at individuals who bring those skills to the table as others retire, but also what new skills we need around the table to address the challenges of the 21st century, particularly those in the circular economy.

Thank you, Chair. We have an additional question live on sustainability from [ Gillian King ]. In the sustainability report, the stakeholder engagement section says that climate change is a key topic only for shareholders. I was surprised that it is not a key topic for employees, suppliers, customers, communities and governments and regulators. This contrasts to other companies. Would you please explain why Sims has climate change listed as a key topic only for shareholders?

Thanks. Well, look, it's a good question, [ Gillian ], if that is a takeaway you've got from our sustainability report, we've got a little bit of work to do to change perspectives. We have really 3 pillars that we look at in our approach to sustainability: our operations, which I guess are inside our fence; our community in which we operate, the impact, and that includes carbon emission, which is global issue; and closed-loop projects, so the commitment to the circular economy. So all those targets are not only for the company and the shareholders, but they're for employees. They impact communities. So it really is a very holistic approach. And I mentioned earlier that we work with global corporations looking at the ability to recycle their packaging because those organizations are becoming closed loop. But I think there's a really important point here, and that is that while we're committed to achieving carbon neutrality, while we're committed to moving to 100% new -- or renewable sources of energy, we also are absolutely committed to doing it profitably. So in the economies of the 21st century and beyond, sustainability and profitability will be inextricably linked. So I really want to make it clear that our focus on sustainability is integral to our strategy. And our strategy is absolutely integral to driving improved value for shareholders. So we, in our mindset, don't disassociate the impact on our communities, on our employees, on others, on our customers, on our suppliers or on our shareholders. We think of it as a holistic approach. But good question. And obviously, I'll take this one. We'll have a look at our sustainability report for FY '21. Angela, are there any other questions?

Thank you, Chair. There are no further questions.

Okay. So I know there are a couple of questions on the specific resolutions to come. So if you've asked a question around a specific resolution, then we'll be addressing that in a moment. So the matters for consideration at today's meeting. All resolutions being put to the meeting will appear on your virtual voting card. You'll be able to vote on the resolutions at any stage during the meeting, but I will prompt you to record your votes throughout the meeting. As noted earlier, once you finish voting on all the resolutions, you must submit your vote. Once submitted, you may be still entitled to edit your votes until voting closes by selecting the edit card and then resubmitting your voting card. So the first item of business on the agenda is to receive and consider the financial statements of the company and its controlled entities for the year ended 30 June 2020 and the related directors' report, directors' declaration and auditor's report. So I'll just pause briefly to see if there are any questions on the accounts. Okay. So there are no questions submitted. And I would ask the minutes record that the accounts report were received and considered. Next item of business on the agenda is ordinary resolution 1, which is the reelection of Ms. Heather Ridout as a director. Before I read the resolution and ask for your vote, I would like to ask Ms. Ridout to say a few words about her background and experience. Heather?

Thank you, Geoff, and good morning, fellow shareholders. I'm very pleased to have the opportunity to stand for reelection to the Sims Board. And I would like to thank particularly the Chairman, Geoff Brunsdon, and my fellow Board members for whom I have enormous respect and admiration. Despite being over 100 years old, Sims is a genuinely 21st century company with a purpose integral to the interest of shareholders and the wider community. I bring to the Board an association with Sims that goes back from 30 years, so I know it well. I've had CEO experience having led The Australian Industry Group, which focuses heavily in the industrial sector. I also bring extensive experience on both listed and private Boards across a diverse range of sectors. I bring a strong knowledge of governance, remuneration and risk frameworks, an extensive understanding of markets and the economic and political dynamics that drive them, and an understanding and abiding interest of global operations and their many complexities. And very importantly, I am also deeply committed to the company, to Sims and its purpose and its values. Indeed, under the leadership of Alistair Field and with the support and input of the Board, Sims have sharpened and refreshed its values and purpose. We have also developed and are implementing an ambitious strategy, which will, if achieved, set Sims up for success for many years to come. Despite the challenges posed by COVID-19, and there are many, the focus on the strategy has remained strong. Moreover, as we have heard from Alistair and Geoff, measurable and material gains are being achieved, which will benefit shareholders in the short and medium term. COVID-19 has posted, as I said, a number of challenges for our company. But I'm very proud of how management, to date, has safeguarded the safety risks to our employees and the way we supported our employees through this ongoing pandemic. And the risk, of course, are not over. If I am reelected, I assure you I have the time to devote to this role and fulfill my obligations. And I would be pleased to have the opportunity to see the strategy and the related projects through. Thank you.

Thank you, Heather. Look, if shareholders can just indulge me for one moment before I open up discussion on Heather's reelection, I'd like to just say how strongly I support Heather's reelection to this Board. She's a really experienced director. She has a long history, as she modestly described, as a leading figure in public policy debate in Australia. As Chief Executive Officer of The Australian Industry Group between 2004 and 2012, she's got -- uniquely positioned to understand how Sims fits into the industrial landscape in Australia. She's also been Chair of AustralianSuper, which is -- continues to be involved in the investment committee there. She was a director of the Reserve Bank, and she currently serves as a Director of the Australian Securities Limited Board. So she's got a wide range of views. And I've got to say, Heather's perspective and guidance has been invaluable as we've navigated the geopolitical challenges of the world over the last 10 years and, certainly, as the time that I've been Chairman. So I wholeheartedly endorse Heather's reelection. And Heather, at a personal level, thank you for your ongoing support. So the resolution is that as Heather Ridout retires by rotation of the Annual General Meeting in accordance with the company's constitution and the ASX listing rules and having offered herself for reelection and being eligible, be reelected as a director of the company. So just pause briefly for questions. Please submit any questions.

Chair, this is a pre-submitted question from Nick Bury from the Australian Shareholders' Association. Ms. Heather Ridout's reappointment as a nonexecutive director is supported on this occasion. But as she will have served 12 years on the Board on her next prospective time for reelection, which would place a question mark on her independence, will Sims alternatively consider injecting new blood onto its Board?

Thanks for the question, Mr. Bury, and Angela for relaying it the way you have. Look, obviously, independence is a question we ask about every director to be weighed against the contribution around the Board. And Mr. Bury, as you know, you and I have discussed this independence question on numerous occasions. The comment I'll make, one, is that I mentioned earlier the work we do in relation to an earlier question, the work the Board does to ensure that we've got the right skills around the table, as part of that, obviously, we're thinking about independence and objectivity. And I can attest to Heather's independent mindset, her ability to challenge and bring that independent perspective, which is very, very important to the Board table. So thank you for your support of Heather's reelection. And I can assure you that, in relation to every independent director, we think about tenure and independence constantly.