Skellerup Holdings Limited (SKL) Earnings Call Transcript & Summary

Welcome and good afternoon, ladies and gentlemen, and fellow shareholders. I am Elizabeth Coutts, Chair of Skellerup Holdings Limited, and thank you for joining us today. We are delighted that we can meet both in person with those of you able to be present, and by video with shareholders joining online. This is the 21st Annual Meeting of Skellerup Holdings Limited. I recall the first annual meeting following Skellerup listing under the Skellmax name. It has been a sheer pleasure to serve as a Director and more recently as Chair over the past 21 years. The notice of meeting and the 2022 annual report has been circulated and made available to all shareholders. You can also access these at any time via our website. As noted, today's meeting is being held as a hybrid meeting here at Eden Park and online via the Computershare online meeting platform. If you are online, congratulations, you've successfully navigated entry. Before we commence the formal business, I should advise that those present in the event of an emergency, please remain calm and follow the clearly marked signs to exit the building safely. I am pleased to advise that the being a quorum of shareholders present, I declare the annual meeting open. To begin, I would like to take this opportunity to introduce to you those people alongside me today. On my immediate right is David Mair, our Chief Executive and a Director of the company. Alongside David is Graham Leaming, our Chief Financial Officer. Alongside Graham is Alan Isaac, an Independent Director; and alongside Alan is Paul Shearer, an Independent Director. On my left is John Strowger, an Independent Director. John will succeed me as Chair of Skellerup at the conclusion of today's meeting. Alongside John is David Cushing, an Independent Director. And alongside David is Rachel Farrant, an Independent Director appointed by the Board in May this year. Also in attendance with us today are representatives from our auditors, Ernst & Young, and our legal advisers, Chapman Tripp. A number of our leaders across the Skellerup Group are also here today, and David will introduce those to you shortly. The order events for today will be as follows: First, I will take you through Skellerup's highlights for the past year and the Chair's address. I will then hand over to David Mair to give a presentation as Skellerup's Chief Executive. I will provide an opportunity for questions at this point and my address and David's presentation. I will then put the resolutions outlined in the notice of meeting. We will cover each resolution in turn and invite questions specific to those resolutions. There will be an opportunity for any discussion by shareholders on Skellerup's business and performance. For online attendees, you may submit questions at any time. To do so, select the Q&A tab on the right half of your screen, type your question into the field and press Send. Your question will immediately be submitted. Should you require assistance, you can type your query and one of the Computershare will assist and reply via the Chat function. Alternatively, you can call Computershare on 0800-650-034. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please note that your questions may be moderated if we receive multiple questions on the topic amalgamated together. Finally, due to time constraints, we may run out of time to answer all questions. If this happens, we will answer them in due course by e-mail. Voting. Voting today will be conducted by way of poll on all items of business. For those in attendance, you should all have a voting paper, which was given to you when you registered. If you do not, can you please indicate that now by raising your hand and a member of Computershare team will assist you. No, we seem fine there. So for those online, I now declare voting open on all items of business. If you are eligible to vote at this meeting, you'll be able to cast your vote on the vote tab on your screen. To vote, simply select your voting direction from the options shown on screen. You can vote for all resolutions at once or by each resolution in turn. Your vote has been cast when a tick appears. To change your vote, simply select change your vote. You have the option to change your vote up until the time I declare voting closed. I will give you a warning before I move to close voting. I'll now move to my Chair's address. Good afternoon again, and welcome to Skellerup's 2022 Annual Meeting. At last year's annual meeting was conducted virtually, it is a real pleasure to be standing back before you, our loyal shareholders. It is a huge privilege and honor to chair Skellerup, a true New Zealand iconic company. So it is with pride tinge with sadness that I make my last address to you as Skellerup Chair. I retire from my role with Skellerup in great heart and with another record result to sign off on. I feel a real sense of satisfaction with Skellerup's performance during my time as Chair. I've been involved with Skellerup for 25 years, having been on the Board of Skellerup's predecessor Viking Pacific and a founding director of Skellmax when Skellerup listed on the NZX. Skellerup has transformed over that time, starting as a New Zealand-based manufacturing and exporting company, primarily supporting the agricultural industry to today, an international company with manufacturing base not only in New Zealand, but now the U.K., Italy, China, and Vietnam, plus conversion and distribution operations in Australia, the U.S. and Europe supporting a diverse range of industries. It has been an incredible journey to be involved in the rebuild of the agri manufacturing facility relocated to Wigram, following the Christchurch earthquakes, and to successfully grow the business by investing in acquisitions, product development and new technologies and support our people. Now after chairing the Board since 2017, I consider it healthy for new leadership to take Skellerup forward. Much has changed since even a year ago. And we know our businesses were still heavily affected by COVID-19 and its globally disruptive effects. The resilience of our business model and strategy have been thoroughly tested, particularly these past 2 years, and its success has seen us continue to deliver substantial growth and earnings and returns to our shareholders. Over the past 7 years, Skellerup's revenue has increased by 50% and net profit after tax by 133%. These are excellent outcomes, but there's no resting on our laurels. It's important we continue to invest in our new products, technology and our people to provide the platform to keep delivering, growing and sustainable shareholder returns in the years ahead. It is therefore with pleasure that Skellerup reported another record year. Net profit after tax was $47.8 million, a 19% improvement on the prior year, which was also a record result. Growth was robust across both agri and industrial divisions. The Directors were delighted to recognize this with a final dividend imputed to 50% of $0.13 per share, which took the full year dividend to $0.205 per share, a 21% increase on the prior year. The final dividend was paid on the 14th of October, 2022. At Skellerup, our leadership has been strong, evidenced by Chief Executive, David Mair, being awarded the Deloitte Top 200 CEO of the year for 2021. Our Chief Financial Officer, Graham Leaming, was acknowledged as a finalist of the CFO of the year, and Skellerup also finalist for company of the year. David was also awarded the 2022 overall Leadership Award by the Institute of Finance Professionals New Zealand in May of this year. But these acknowledgments are really a tribute to the entire Skellerup team. We thank all our people for their performance this past year. We are grateful for their dedication and contributions. They have all been through a tough time, and we are very proud of their resilience and commitment. I would also like to acknowledge the service of Simon O'Connor of Ernst & Young, who has been the audit engagement partner for the past 5 years. As required, Simon has now stepped down, and I welcome Susan Jones as the audit engagement partner for FY '23. Today, Simon is with us, the second row here, and Susan is in Christchurch visiting our Wigram facility. As David said in the annual report, Skellerup has, over its 110-year history, built a reputation as a good employer. That reputational capital is an important ingredient to our success, and we reciprocate by investing in our staff's development to grow future leaders, remunerating them fairly and by keeping them safe. I'm proud that every Skellerup site has an active Health and Safety Committee reporting monthly to the CEO, with the Board having oversight of the committees with their activities also reported to the Board. Your Board is focused on enduring long-term success as befits Skellerup's history. We have been part of New Zealand story for a long time. Naturally, challenges over such a long period change. However, building and leading a sustainable business that can adapt to changing circumstances is a constant. One of those changes we're now facing is climate change. Skellerup recognizes the impact climate change is having on the world. In June 2022, we formed a sustainability committee to oversee and measure Skellerup sustainability initiatives. This adds impetus to our existing sustainability lens evidenced by investments we have made over the last 6 years to reduce our emissions and water usage at key sites across our geographies. Recently, we consolidated 3 Auckland facilities onto a single site at Otahuhu, which will enable us to realize improved commercial, employee and environmental benefits now and in the years ahead. We have also implemented the ESG world platform to provide shareholders and stakeholders the opportunity to review Skellerup's environmental, social and governance performance against the range of frameworks in place throughout the world. Skellerup is a global business, and our Board has a diverse range of skills, knowledge and governance experience to deal with the complexities that accompany our international business. In May 2022, Rachel Farrant, a partner at BDO Wellington, joined as an independent director. Rachel brings a strong financial focus to the Board and experience across a range of sectors, including construction, technology, finance and property. While COVID-19 has until recently hampered the Board's ability to get across our network of businesses, we have nevertheless been active in visiting our domestic operations to learn from the coalface, the issues facing our businesses and workforce. We are pleased to reward shareholders after another record result in FY 2022. Skellerup as befits its story is in it for the long haul as a future-oriented and solution-focused business. And in line with our well-tested strategy, we'll continue to focus on working closely with key customers to provide engineered products using a range of critical applications and to look for investment opportunities that create synergies to fuel our ongoing growth. We are very optimistic about Skellerup's future growth prospects and look forward to bolstering capacity to meet the opportunities. Thank you for your ongoing support and trust in the Board, executives and employees of Skellerup. Looking to the future, I believe you'll be in good hands with experienced Board members and led by John Strowger. Thank you all for your loyalty. And I'd like to close by wishing Skellerup and its shareholders continued success well into the future. Thank you. I'll now hand over to David.

Thanks, Liz. I'd like to start by introducing the team. So I'll ask each person to stand up and I encourage you all at the end of the meeting to go and have a chat to the team because as Liz said, the results are really a result of a lot of hard work by all our team members. We only have a few here today, but I'd like to start by introducing some of the agri peoples that we have. The Agri Divisional Manager, Hayley Gourley. So Hayley's been here just over 3 years and seen a huge change in the Agri Division in that time. We have Dino Kudrass. So he's the new -- his title is the Head of Product and Process Development. He's a very smart engineer. I did engineering. He's a very, very clever engineer. I'm critical of engineers, but he's very, very good. Delighted to have him on board and the team. Mark England has been around for a while. He's National Sales Manager. So some of you may recognize him. We have Kintilla du Boucher-Ryan right at the back. Sorry about that. And she does a lot of digital marketing. Her title is Marketing Manager Agri, but she has a particular passion about digitization, digital marketing and things like that. And last but not least, here today, we have Mike Christmas. So Mike is the R&D Manager. Now Mike, he will leave on the 10th of November. So he's decided to retire. Retire means he's going to go and do other things that he wants to do. He's a very clever guy. Mike has been heavily involved in the development of the Red Band gumboot, and he's been a big part of the development of China. And I have a lot of respect for his technical ability. He also runs Flexiflo. So he's recently handed that over to a young person who most likely will be at the shareholders' meeting next time. But Mike has served in 2 instances, he served more than 32 years. We were trying to work it out together, but I think 32 years. So well done, Mike. And I'm looking forward to a beer or 2 with him in Christchurch early in November. We have Pat Crotty here. Pat is the Business Unit Manager for Gulf Rubber Australia. So Pat has come in, a relatively new leader, very structured and having fantastic results. We have Mark Ho, who's been running SRS. And Mark has led through difficult times, a lot of the site health and safety. So I would say that Mark has been one of the best, we've used some of the techniques there and other parts of the business. And I think the SRS site has benefited a lot from Mark's time. Mark will be leaving soon to pursue a new opportunity, and we wish him well. We have [ Logan McKinsey ]. So Logan has been around even longer than Mike Christmas. I won't go into how long, but he is the international market support for vacuum systems. And so he's seen the transition from pumps to thinking about systems, and that's a big part of the growth program we have in the U.S. through Masport. We have Shaun Spacey, so where is Shaun? Down at the end. So Shaun leads product development and a very key team for what we do, particularly for the Gulf Group. So we see a lot of opportunities for future growth, particularly in the U.S. through that process and Shaun and his team have been working very, very hard. Recently, we were in Vietnam for a week or he was there for a week. I was there for a couple of days. And just to see the transformation of some of the products we make there is just fantastic. Richard Cosmann. So here we are, Richard is down here. So Richard is also helping the -- he collates all the information on health and safety. He makes sure we rigorously go through the explanations if they're a bit weak and make sure we're right on top of the management process for health and safety. He was also a big part of bringing the sites together in Auckland. Liz referred to the 3 sites coming together at Otahuhu. And that's not easy, and there's a lot of logistics and things like that. So Richard has done a great job. We have Mere Baker, where's Mere? Down the end. So Mere is the Sales Manager for this new combined group Ultralon Nexus. And so she's -- how long have you been here, Mere, sorry?

Nexus, 6 years.

Six years. So she's a very good salesperson. It's quite technical, some of the things she does. So she's doing a very good job, and we have a newbie. Where is he? Marin, over the back. So he's the National Sales Manager for Construction. So he also works at Otahuhu. And so overall, the New Zealand businesses are benefiting from that consolidation. We have a special guest today, of course, we have Kate. So Kate's here, Kate Welch, she's the Digital Marketing and Brand Manager for DEKS. So Kristian Speers, the Business Unit Manager, would normally be here, but DEKS actually moved locations in Melbourne this weekend -- this last weekend. And so Kristian couldn't come. Kate's come over, and Kate is also leading the charge on digital marketing. And she's very, very clever in this area, which, to be honest, is an oldie. I don't fully understand how we can use that to our best advantage. But if you want to learn more, you're going to have a chat to her or you can have a chance to Kintilla, who is also very strong in this area. And it is a big part of the future of the business. We acquired Talbot as you may know, we have Mike Draper. So he's the Business Unit Manager of Talbot and doing a very good job there. And of course, we are supported by the head office team. So we have Tim Runnals at the back who'll collate and check the questions that come in. And of course, our EA Danielle Burke. So thanks, everyone. You make our job easy. Right, on to the actual CEO of dress. So it's great that Skellerup has had another record year, the latest in an unbroken chain of performance excellence by our people across all parts of Skellerup's global businesses. I've been reflecting on our sustained success, so I'd like to begin by talking about trust. The essence of building trust is in valuing long-term relationships. It's about being consistent. It takes a lot of effort and can be easily destroyed by one slip. Over time, a reciprocal trusting relationship that brings benefits to both parties is built. That's how you build loyalty. I've talked about purpose in previous annual reports. Our purpose consists of 5 groups of people, 5 long-term relationships: our customers, our suppliers, our people, of course, our shareholders, and the wider community that they influence. Working closely with customers to define and solve their problems has been an unwavering focus of Skellerup's -- our chief purpose. Without customers, of course, there's no business. It's a dynamic interaction that takes place between our deep material expertise, strong product and tool design capability, and remember, that's hard to reverse engineer, so it's hard for competitors to take advantage of that and proven manufacturing process knowledge. It is that dynamic and direction that has been the enduring key to building trust and loyalty with our customers, as has our ability to solve difficult supply problems for them accentuated during the disruptions of the past 2 years. Excuse me a minute. Sorry, I've runny nose. Sorry about that. So in the same way, we strive to be the best supplier to our customers. We also seek to be the best customer to our suppliers. We are demanding but fair. And over time, we have established high-performing networks with those suppliers. Trust also underpins the relationships with our people. Skellerup has always treated its workforce as an extension of family. Over time, this has built a reservoir of trust or reputational capital. I see loyalty as a reciprocal process. So we work hard to develop our people, broaden their skills and provide opportunities for their career development. Allied to developing our people in their sharing in our successes, Skellerup is deeply committed to keeping them safe. The protection and safety of our people and others from accidental harm in our workplaces is our highest priority. We are proud that once again this year, there have been no serious harm injuries. Safety is also reinforced through our commitment to maintaining a high standard of ethics in how we operate and do business. We ensure Skellerup's leaders work closely with their teams to review and discuss the behaviors outlined in our code of ethics, including ensuring our suppliers and partners operate in accordance with our standards. Taken together, being a good employer engenders reciprocal trust and loyalty and helps to create the stable workforce necessary to ensure consistency of performance. A final word on trust. I believe building reputational capital with our customers, suppliers, workforce and out in the community underpins our value proposition to shareholders. We have an effective Board that gets to the essence of business decisions quickly. This is key to improving our performance and enable shareholders to have confidence in us. I see a lot of loyal shareholders here today. Thank you. So moving on to the Industrial division. Just going back through some of the numbers and things like that. So the Skellerup's Industrial division designs and manufactures products that often combine multiple materials such as rubber, plastics and metals to perform in a wide range of applications. Our Industrial division develops products predominantly for original equipment manufacturing customers with 85% of its revenue generated from international markets. From our technical salespeople to our engineers and chemists, we work closely with our customers and their customers to develop and deliver reliable products that meet their needs. Interacting dynamically in collaboration with our customers to help define and solve their problems and designing products that perform is a consistent thread across the division's businesses. Results from our Industrial division reached another record with sales of $206.4 million, up 16% from 2021 and earnings before interest and tax, EBIT of $39.1 million, also a record and up 20% on FY '21. Revenue growth was driven by strong demand for gaskets, seals and vacuum systems into potable water and wastewater applications, most particularly in the U.S. market. Our acquisition of Talbot Technologies at the end of August 2021 is bearing fruit with expanded technical and production capability, enabling future revenue growth. We also saw strong sales of high-performance foam products across most of our market geographies. While sales growth has driven strong performance, we have also made efficiency gains such as the consolidation of 3 businesses I mentioned earlier on to one site at [ several ] Lincoln, Auckland. Operational efficiencies have been gained and will continue to be gained, won't they Richard? With improved storage and distribution from a single site. Additionally, the consolidation also saw a reduction of intercompany freight costs and time and an improvement in health and safety and sustainability gains through better social distancing space, LED lights and solar paneling on the roof of this facility. On to the Agri Division. Skellerup's Agri division is focused on and a global leader in dairy rubberware design and manufacture. We also design and manufacture rubber footwear for farming and specialty applications, including fire, forestry and electricity sectors. Agri division sales were a record $110.5 million, up 8% on FY '21. EBIT was $33.6 million, also a record and up 10% on the prior year. 58% of Agri's division's revenue was generated from international markets. Sales revenue was fueled by increased sales of food grade dairy rubberware in the U.S. and New Zealand markets and increased sales of rubber footwear, most notably in New Zealand. Skellerup is the second largest manufacturer of food grade dairy rubberware in the world. Our products are critical to the supply of fresh milk and milk products. While dairy faced a challenging period in getting products to international markets, our adaptive capability in sourcing different materials and finding ways to get products to customers underscores the skill and diligence of our people. FY '22 reinforced the value of our customer focus as in challenging conditions, we've continued to innovate new products, and embed strong relationships that will help fuel future growth. Agri division continued to see improved operating performance with greater process standardization to meet increased demands in revenue from the same capability. Productivity gains at our large New Zealand and China manufacturing facilities helped to offset some of the significant impact of raw material prices and freight costs. Skellerup is committed to continuous process improvement, which improves processes and offers training to selected employees. While we are proud of Skellerup's performance this year, we are always focused on the future. We learn from our successes but are continually seeking the next improvement, the next quality acquisition and looking to develop new products and expand markets. The business environment will remain challenging in the short to medium term. So we are also turning our minds to pricing strategy and structures to ensure we have a good understanding of costs and that products are priced fairly for market conditions so as to continue to provide value for our customers. Staying close to our customers and providing them with solutions remains the main driver of our performance going forward. Under current economic conditions, helping them navigate a high inflationary environment will also be a particular focus. We will strive to ensure Skellerup's consistency of performance and continually seek to standardize processes to deliver on our promise of continuous improvement and building resilience across our businesses. We also continue to build trust capital with our people and support them, focusing on retaining, developing and attracting quality staff, the quality staff that Skellerup needs as labor markets stay competitive. Building an adaptable, highly skilled and resilient workforce is central to our future growth ambitions. I'd like to end this part by thanking you, our shareholders, for your loyalty. It fuels our drive to keep Skellerup performing to reward your trust in us. To close, I noted that earlier today, we provided guidance on our expected results for FY '23. Our Q1 results are in line with a very strong comparative period. Markets are uncertain, but we expect to report another record year with FY '23 net profit after tax in the range of $48 million to $52 million. Thank you.

Thank you, David. Now before we move to consider the resolutions before the meeting, we will open the floor, and to online participants for any questions on the presentations provided by David and myself. A reminder to please state your name and whether you are a shareholder or a proxy holder. I will take questions from the floor first. Now we do have Danielle with a roving microphone. If any of you would like to -- thank you -- so we've got 2 roving microphones. Yes, question over here. I feel like I'm trying to swap someone.

Hello. My name is [ David Lee ], shareholder. In the financial highlights, the net profit after tax was $47.8 million, which is wonderful. Do you have a feeling for what that figure would have been if the New Zealand dollar exchange rate had stayed as it was at the start of the financial year. In other words, how much of that is affected by exchange rate movements?

I think Graham -- we'll pass it over to our CFO, Graham, who's an expert on this.

In terms of the comparative against the prior year, the exchange rate had very little impact. The average exchange rate over the last financial year FY '22 was actually quite similar to FY '21. So it had a very modest impact on our FY '22 result.

Thank you, Graham. Any further questions from the floor? Yes, we have a question from this gentleman, just wait for the microphone to come to you.

Thanks very much. [ Macleod ], shareholder. My question is directed to David Mair. Sometime ago, there was rumor that Skellerup may be entering into a business with the nuclear energy plants and supplying boots for personnel there. Has anything ever come of that?

So first of all, I don't think we supply boots into the nuclear industry, but we do make a special boot that protects against electric shock, which is quite a different thing. That may actually involve nuclear power stations, I'm not sure, but most of those are sold into the U.S. So the dielectric boot, we do have sales of dielectric boots. But that is a protection like a lot of Skellerup's product. It's a protection of the individual if that makes sense. So it's really around making sure that people can't be injured through electric shocks.

Thank you, David, and thank you for that question. Bruce.

I'm Bruce Parkes here, shareholder and proxy holder for the Shareholders' Association. Can you give us an update, please, on the Stevens milk filter plant relocation?

David...

Sure. It's been very successfully relocated to Christchurch. And I think it's been difficult. Obviously, logistically, it's been difficult to get containers in and out of Wellington, and it's much closer. It's not on exactly the same side as Wigram, but it's very, very near. And so I have to say, again, we've done a lot of relocation recently, as you've heard. It's a wonderful new site. Mike Dennes, the leader, has been working hard on the transition. And so from my point of view, it's gone extremely well. To be fair, I had very little to do with us other than approving it. And if you want more details, please ask Hayley, the Agri Divisional Manager later, but it has been very successful and actually necessary for us. So one minor advantage, we ship containers to the U.S. often probably fortnightly, if not more frequently. And because of the weight, there's often space in the top. Now we can do things like consolidate filters where we ship to the U.S. or things like that. So it's always easier to have your sites closer together. So it's been a big effort in Auckland with Otahuhu. It's been a big effort to bring a relatively minor effort to bring Stevens to Christchurch, but it's been great. Thank you.

A second question. How is the energy crisis in Europe affecting your costs and your Scope 1 and 2 carbon emissions?

The second part is easy, I think. But look, the reality is it's an uncertain climate. My take on what's happening in Europe is going to be more interesting in a year's time for the following winter, but directly in our businesses. So we have several businesses in the U.K. We've hedged the electricity there. That doesn't mean you won't get cut off, but we've hedged. So it hasn't affected our customers, but more importantly, we think it's negatively affecting our competitors. So some of our larger competitors are based in Europe. They compete with us internationally. And so we see that, in some ways, is an opportunity. So we often talk about the tyranny of distance being a little island nation far away from our markets. In actual fact, this is quite a good thing for us. In terms of scope emissions, Scope 3 is the big issue for us, that's the shipping bunker fuel mainly. So of course, next year, we'll be reporting on that. But a good question. But like a lot of things, I see that as an opportunity for us, not as a threat. Directly in our raw materials, we don't see a lot of increase in our raw material costs at this time. We do, in general, but not from Europe and the energy crisis. Thank you.

Thank you.

[ Peter ], shareholder. Thank you for your guidance today, $48 million to $52 million. How much of that can be attributed to price rises as an inflation growth or currency shifts, please?

Sorry, Liz. Look, 2 years ago, I think I'm right in saying -- more than 2 years ago, I seem to note all of the leaders warning them that we were likely to be in an inflationary period and that our cost would go up and they needed to be reviewing pricing. And so a number of our businesses, not all, but a number of businesses started then to move on pricing ahead of time in that sense, and we are continuing to review pricing. I don't necessarily want to get into the divisional thing for obvious reasons because we do have customers that listen carefully and review what we say, but we believe we are realizing the true value of what we do. And so we have price increases that will impact on this financial year, and many of those have already been agreed. Of course, no customer wants to accept a price increase. The really interesting thing is what are they doing? So what we're starting to see with some customers is they are putting prices up in the market. That also gives us an opportunity. So one thing I can say is, in general, we are managing 2 things really well. One is our pricing strategy, and I mentioned that briefly in the CEO report, but also collections. We have a number of customers who, without giving names necessarily, but in the U.S., they pay on time. It's in their interest to pay on time. So as much as I think about price increases and profit, I think they're getting paid because at the end of the cash flow cycle, you have to get the cash. So honestly, I think the team has done it great. It's not easy, ask Hayley after the meeting, not easy. Thank you, Peter.

Thank you, David. Any further questions from the floor? Yes, 1 more. Thank you.

My name is [ John Griffin ], I'm a shareholder. I think this is really a question for Liz. Skellerup is quite a cash-positive company. In fact, the turnings in a year really cover its debt load. Could you outline the strategies that you mentioned in one of your report about your defense to a takeover?

I think you -- I'm not sure with you, but I've been asked that question over the years. And our approach has been that we promote our company, and we perform well, and that gets a share price up, and that is the best form of defense that we can have is the higher our share price, the better the defense it is. So good performance provides us with defense. Are there any other questions from the floor? Tim is our Group Financial Controller, and he's our moderator. Are there any questions online, Tim?

Yes, Liz. We've got 2 questions that have come through. I'll just put those to you and then you can direct them to the Board. So the first question is from [ Justine Margaret Baker ]. She's asked if the Board could provide some information around the working conditions in Skellerup factories and workplaces here in New Zealand and overseas? There's a number of other questions in there. But I guess the Board, just a general feeling of the working conditions and the way Skellerup's employees are treated, both in New Zealand and offshore.

I will answer it. I have personally been to not quite all the sites because of the COVID the last 2 years and where we've made acquisitions overseas, I haven't been able to visit them because of closed borders. But I've been with the business a long time, I've visited every site. So I can say I am very impressed with our premises, the way our people are treated and the general working environment, and that includes China, I've been there several times. To Vietnam I've been several times as well as U.K., Italy. And when we set up an overseas jurisdictions, we set up with the basis that it has to comply or be to a New Zealand standard. So we do not have or want different standards around the world. So I'm, as I say, been impressed with how we do look after our people and the environment that they work in. And I, for one, and as other Board members have also visited some of the sites will certainly let management know if we saw any issues.

Can I add something to this?

Yes.

Sorry, if I may, I'll just add a couple of things. So the first is that we -- the structure of China is a wholly owned foreign enterprise. And so in general, we fit in with the minimum wage or the requirements of the country. But I'm very proud of the fact that actually we pay people better than that. So whether it's New Zealand, whether it's in Christchurch and a relatively new company, Talbot, has joined in, and they've seen some of the changes there. We don't want to be talking about the minimum wage. We don't want to be talking about the so-called living wage. And so that goes back to the trade-off between productivity gains and sharing that with our employees. So that's very important to us. Specifically though, we do not own a factory in Vietnam, but I was there recently. They comply with the ILO, the International Labor Organization rules. And actually, it's the Vietnamese government that owns that business. So in other words, everything complies with both the local law and the ILO conventions, and we have certification for that, which we will put on the website. Thank you.