Good morning, ladies and gentlemen. My name is Nigel Garrard, and I'm your Chair of Ansell Limited. It's my great pleasure to welcome you today to the 2024 Ansell Annual General Meeting. I would like to begin by acknowledging the traditional owners and custodians of the land on which we meet today, the Wurundjeri people of the Kulin Nation, and I pay my respects to their elders, both past and present. Before I open the meeting, I would like to take you through the procedural aspects of today's meeting. Our meeting is being held in person, as well as virtually via the Computershare platform, where shareholders, proxy holders, and guests can watch a live webcast of the meeting, and shareholders and proxies can ask questions and submit votes online.
A significant number of shareholders have already voted, appointed proxies, and submitted questions ahead of this meeting, and I thank them for doing so. Every effort has been made to ensure this meeting runs smoothly, and a full recording of the meeting will be provided on our website in due course. I'll start today by walking you through a few procedural guidelines for the submission of questions and for voting for those in person and online. It is my duty as chair to ensure that shareholders have the opportunity to ask questions and discuss the items of business during the meeting. I ask that all questions and comments be concise, be confined to matters relevant to shareholders as a whole, and be informative and respectful. I will take questions from those physically present at the meeting, followed by written and audio questions from participants who have joined online.
Depending on the questions asked, I will decide as to whether I will answer or ask a member of management or the auditor to respond. I will now move to the formal proceedings of the meeting. The company secretary has confirmed that a quorum is present, and I declare this annual general meeting open. Voting is now open on all items of business. Please submit your votes at any time. I will give you a warning before I move to close voting. The Notice of Meeting was released on the twenty-sixth of September, two thousand and twenty-four, and with your approval, I will take the notice as read. This is a shareholders' meeting, and only shareholders, their attorneys, proxies, and authorized company representatives are entitled to vote and ask questions at this meeting.
If you are attending as a proxy and have been instructed how to vote, I ask you to ensure that any vote you cast is in accordance with those instructions. Voting today will be by way of poll on all items of business, and we have appointed Harvey Ferrier, at the back there, a manager of Computershare Investor Services, as Returning Officer for this meeting. For those attending the meeting online and who are eligible to vote, as the poll is open, a voting icon is now available on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. For those voting online, you are free to submit your votes at any time. To cast your vote, simply select one of the options. There is no need to hit Submit, as the vote is automatically recorded.
Please ensure you cast a vote in respect of all resolutions. You will receive confirmation of your vote on your screen. To change or cancel your vote, click the link at any time until the poll is closed. Votes may be changed up until the time I declare that voting is closed. For shareholders, proxies, and corporate representatives attending in person today, I will ask you to vote once we have gone through all items of business by completing the voting card that was provided to you upon admission. White cards are for visitors only, who cannot vote nor ask questions today. Shareholders with a yellow card are not entitled to vote on the items of business, and again, I will provide a warning before I move to close voting at the end of the meeting.
Thank you to the shareholders who have submitted questions in advance of the meeting today, and where appropriate, we have already replied directly to those shareholders. Many questions have been submitted, many questions that were submitted were on similar topics, and I'll respond to the most common themes during my address. For those attending today's meeting in person who have a question, when I call for questions during each relevant item of business, please make your way to the nearest microphone. Then, when it's your turn, please give your name to the attendant, who will introduce you. There is an attendant at each microphone, and I'll now ask them to stand and identify themselves, so you can see where they are. We'll ask them to move through the room as we get to that.
Only shareholders, validly appointed proxies, and corporate representatives who are given a blue or a yellow voting card upon entry are entitled to ask questions. When I call for questions, please raise your blue or yellow card and state your name or organization you represent before asking a question. For those attending the meeting online who wish to submit a written question, you may do so at any time during the meeting via the speech bubble icon on your screen. Type your question into the chat box on the right-hand side of the screen, and then select Send. Confirmation that your message has been received will then appear above. Please note that while you can submit written questions from now on, I will not address them until the relevant time in the meeting.
While time constraints may prevent us answering all questions today, we will do our best to address all of your questions during the meeting. Today, Michael Evans, our Head of Investor Relations, will be helping to moderate any questions via the Computershare platform. Instructions on how to ask a verbal question are shown below the broadcast window on the online platform. If you're asking a verbal question, please state your full name before asking your question. Today, please limit your questions to one or two questions at a time, and then rejoin the queue to allow others to ask questions. So joining me today in the meeting are, from my right, Debbie Goodin, our Non-Executive Director, our Managing Director and Chief Executive Officer, Neil Salmon, and Company Secretary on my left, Catherine Stribley.
Joining us by video today are our other board members, Bill Reilly, Christine Yan, Leslie Desjardins, Morten Falkenberg, and Christina Stercken. Zubair Javeed, our Chief Financial Officer, and our new Chief Human Resources Officer, Charlotte Dahl, are also in attendance today, sitting in the front row, paying close attention, I hope. Penny Stragalinos, who was KPMG's Audit Engagement Partner for the Ansell account for fiscal two thousand and twenty-four, is also present with us today and available to answer any questions during the meeting regarding the conduct of the audit and the content and preparation of the audit report. While I'm on that, this is the last year that Penny will be signing our audit report on behalf of shareholders, directors, and management. Penny, thank you for the last five years.
We've greatly appreciated your advice and assistance over that period, and we wish you well. So thank you. It is my pleasure to address you today as we reflect on the past year. A year of significance for Ansell as we navigated the lingering impacts of COVID-19 and took decisive actions to set the stage for future growth. Our financial performance, our results for two thousand and twenty-four financial year, were in line with our original expectations, with adjusted earnings per share of one hundred and five point five cents, which was within the original guidance range we provided in July two thousand and twenty-three. Pleasingly, in the second half of the year, we saw improved sales performance in our healthcare segment and clear signs that the lengthy period of post-pandemic destocking is largely behind us.
Our CEO, Neil Salmon, will shortly provide more detail on the financial results and also comment on the outlook for the current year. In July two thousand and twenty-three, we announced our Accelerated Productivity Investment Program, which comprises a series of productivity initiatives designed to adjust our business in response to post-pandemic operating conditions. Strong progress has been made with savings in fiscal twenty-four ahead of our original expectations. This program continues in fiscal twenty-five, and Neil will provide you with more detail on this shortly. A key focus for your company is driving long-term growth and returns through investments to reinforce our differentiation and to increase our presence in markets with strong long-term fundamentals. To this end, in April two thousand and twenty-four, we announced the acquisition of Kimberly-Clark's Personal Protective Equipment business.
This acquisition is a significant milestone for Ansell and enhances our position in key scientific markets. The acquisition was supported by a successful capital raising, demonstrating the confidence our investors have in the growth potential of the acquired business and in our strategic direction. I want to turn now to Ansell's progress on meeting our commitments on sustainability. Sustainability is central to what we do at Ansell. We are committed to making a positive impact on the environment and to the communities that we serve. This year, we continued to progress our sustainability initiatives. We submitted our letter of commitment to the Science Based Targets initiative, confirming our intention to set a verified end-to-end value chain net zero target, aligning with the Paris Agreement to limit global warming to one point five degrees Celsius above pre-industrial levels.
We've also deepened our engagement with our supply chain partners on emissions reductions and are tracking well against our Scope 1 and 2 emission reduction targets and also our waste elimination targets. However, due to challenges in optimizing the performance of our reverse osmosis systems, our water targets have been delayed by two years. We remain steadfast, however, in our commitment to creating safe, inclusive and respectful workplaces for all Ansell employees and for all employees across our supplier base. Since its launch in two thousand and twenty-one, our Supplier Management Framework has significantly enhanced our visibility into working conditions across the supply chain. In fiscal two thousand and twenty-four, we assessed over 90% of our direct suppliers from high-risk countries and raised performance assessment standards by benchmarking against best practice.
Following a successful initiative with finished goods suppliers, we extended our recruitment fee remediation program to packaging suppliers, identifying over 750 workers who paid unjust recruitment fees to secure employment with these suppliers. As a result of our efforts, more than AUD 700,000 was reimbursed to these affected workers. We continue to conduct regular check-ins with those suppliers to ensure that they fulfill their remediation commitments. I encourage all shareholders to read our 2024 Sustainability Report and Labor Rights Report for more details on our sustainability journey. Touching briefly on the topic of remuneration. Our remuneration framework has been in place since financial year 2022, with no major changes introduced since then. We continue to ensure there's a strong link between pay, company performance, and the shareholder experience.
For fiscal 2025, the board agreed to make some enhancements to the executive remuneration framework so that it continues to be aligned with Ansell's strategic priorities, while continuing to promote alignment to the shareholder experience. These include, firstly, for the Short-Term Incentive Plan, reinstating sales growth as a key measure in the STI scorecard, and secondly, for the Long-Term Incentive Plan, incorporating a relative Total Shareholder Return measure with a weighting of 30%. It was also determined to reintroduce the organic sales growth metric, which we removed in FY 2024, given the volatility in sales post-pandemic, and to remove the ROIC gateway to ensure that the plan construct did not become unnecessarily complex. As we look to the future, we are optimistic about the opportunities ahead.
Having navigated a multi-year period of post-pandemic end market disruption, Ansell is now poised for growth, with a strong foundation built on strategic acquisitions, innovation, and a commitment to sustainability. In closing, I would like to thank our employees for their hard work and their dedication, not only over the last twelve months, but over the last three or four years in the post-pandemic times. A lot has been accomplished this year, and I'm confident that we will continue to build on this success in the years to come. I would now like to invite Neil to provide some commentary. Thank you.
G'day, fellow shareholders. It is a pleasure to be with you today. Thank you for your comments, Nigel, and as promised by you, I want to begin with a review of the company's performance and the key milestones in the twenty-four fiscal year, and an update on our outlook for the current fiscal year. Fiscal year twenty-four was a year of significant strategic progress for Ansell as we emerged from this multi-year period of post-pandemic end market disruptions that have particularly affected our healthcare segment. While our growth has been curtailed through this period, we've continued to make those necessary investments to position Ansell for superior growth and returns in the longer term.
These have included enhancing our presence in emerging markets, maintaining our focus on innovation and new products, investing in manufacturing capacity, especially for differentiated exam, single-use, and surgical products, and improving our supply chain planning and digital capabilities. Notably, in fiscal year twenty-four, we also took significant steps to position Ansell for the future, improving our organizational and efficiency and manufacturing productivity through the Accelerated Productivity Investment Program, or APIP, mentioned by Nigel, and investing to improve Ansell's position in our most attractive end markets through the acquisition of Kimberly-Clark's personal protective equipment business or the KBU, as we now call it. With the effect of customer destocking largely behind us, Ansell now emerges as a fitter and stronger business, ready to realize the benefits from the significant investments that we have made over the past few years.
I was together with my senior leadership team last week in Brussels, and as we reviewed the underlying Ansell business, the status of delivery against the APIP program, and the performance and integration status of the KBU, there was a lot to feel good about, which makes me determined to ensure we continue to execute well and that we, as shareholders, continue to see improved outcomes on our investment in Ansell. Let me now take a few moments to talk through our financial performance in fiscal year 2024. Group sales were down around 3% on a constant currency basis for the year, with growth in our industrial segment offset, as expected, by a decline in our healthcare segment.
I was pleased with this performance of our industrial segment, where we recorded sales growth in both mechanical and chemical businesses, in market conditions that softened as the year progressed, but we offset that with help from success with new products. Customer destocking, as mentioned, affected sales in our healthcare segment in fiscal year 2023, and entering fiscal year 2024, we anticipated these trends would continue, particularly in the first half. Conditions then improved in the second half, with a strong rebound in glove sales and surgical orders increasing also, although that did not fully translate into sales growth due to port congestion and challenges with vessel availability from shipping disruptions in the Red Sea.
The other business within our healthcare segment, exam single use, delivered strong volume growth throughout the year, especially in differentiated industrial single-use products we make in-house, and where we have recently invested in significant additional manufacturing capacity. Our fiscal year 2024 EBIT was $196 million before significant items, just over a 1% decline on the prior year on a constant currency basis. This decline was primarily due to the sales reduction in healthcare that I just described. In our industrial segment, higher sales, net cost favorability, and improved chemical manufacturing performance contributed to strong earnings growth and the segment's highest-ever EBIT margin.
It was in our healthcare segment that the EBIT decline occurred, primarily in the first half, due to those customer destocking effects and as our own internal production was slowed to reduce the Ansell inventory levels, but improving in the second half as those temporary headwinds began to reverse. These segment results translated to the fiscal year 2024 adjusted EPS of $1.055, which was towards the upper end of the guidance range we provided to the market at the commencement of fiscal year 2024. I was also happy with the extent to which we were able to reduce inventory, with cash released through lower inventory holdings, fully funding our APIP costs and contributing to cash conversion of 131%, which represents one of our best ever operating cash flow results.
Turning now to that accelerated productivity investment program and providing you some more details on that. This encompasses a series of initiatives to reposition our organization for growth, to accelerate work already commenced to optimize the productivity of our manufacturing base and supply chain and unify our ERP systems. A critical component of the program implemented in fiscal year 2024 was the move to a simpler, more customer-centric, and lower-cost organizational structure, led by a new, streamlined executive leadership team. These changes were fully implemented in the first half of fiscal year 2024, and I'm impressed with how well our teams have adapted to the new structure while maintaining focus on our customers and delivering on our key performance objectives.
To improve productivity within our manufacturing operations and supply chain, we reduced employee numbers in both the production and the back-office manufacturing workforces, with the latter enabled by upgrades to our manufacturing ERP systems completed over the past few years. We also made changes to optimize our warehouse footprint and exited manufacturing of less differentiated, low-margin household gloves, which are sold through retail channels in Australia and other markets, and which required a restructure of a key manufacturing facility in Malaysia. Some further projects within the manufacturing component of APIP are being completed this fiscal year. The final APIP objective is to accelerate our digitization strategy, and central to this is the implementation of a global ERP solution, building on our successful program of manufacturing ERP upgrades, which we are now expanding to include our customer-facing entities.
Preliminary design work was completed in fiscal year 2024, and our focus in fiscal year 2025 is on preparing for initial go-lives expected to happen in fiscal year 2026. So our original targets for APIP was to deliver annualized fiscal year 2026 pre-tax savings of AUD 45 million, including savings of AUD 20 million in fiscal year 2024. Good progress in the initial program phases allowed us to increase our fiscal year 2026 pre-tax savings targets to AUD 50 million, and we achieved savings in fiscal year 2024 of AUD 28 million. Let me now turn to our progress against safety and sustainability commitments. And Nigel has already covered the status of our environmental goals and the continued progress of ensuring our social compliance standards are adopted across our supply chain through our supply management framework. So in my comments, I'll focus on three additional topics. Firstly, our safety record.
Ansell is, at our heart, a safety company, and our first responsibility, therefore, is to provide a safe workplace for our employees. After a steady reduction in recordable accidents over the past ten years, we saw an increase in the total recordable injury frequency rate from the record low achieved in fiscal year 2023. This was partly due to the inclusion of the newly acquired Carep lus facility, and as we typically see, when through acquisitions, we bring manufacturing facilities into Ansell, we bring them in at a substantially higher injury rate than our world-leading standards, so at Carep lus, in a short period of time, we have reduced the injury rate at that facility to a fraction of what it was prior to our acquisition, and yet it was still higher than the Ansell average in fiscal year 2024.
However, this wasn't the only reason for increased injuries in fiscal year 2024, and I and my management team are committed to maintaining the most rigorous safety standards and to ensure our safety performance remains best in class. So we're determined to improve on the fiscal year 2024 outcome in fiscal year 2025. Secondly, our commitment to waste reduction is yielding strong results, with all plants within the original program scope now certified zero waste to landfill, and implementation underway for our two recently added sites. What does that mean? Well, previously, approximately 20,000 tons of waste from our manufacturing facilities was going to landfill every year, and now that's been reduced by 99.8%, and we're all proud of that accomplishment. Thirdly, we're putting a lot of effort into communicating our differentiation in sustainability to customers.
This is not easy to do, as the topic is complex, and there are many factors to consider in what makes one product more sustainable than another. And so under a program we call Ansell Earth, we now have specific environmental attributes added to the product data sheets for almost 200 of our top-selling products. If you look up one of those styles on the Ansell website, it will tell you how it was made, with information on the use of renewable energy, waste management, recyclability of packaging, and so forth. Our distributor customers are finding this information very useful and are reflecting this in how they, in turn, themselves classify which PPE products have a lower environmental impact.
I firmly believe Ansell demonstrates industry leadership in sustainability, and I'm proud that our efforts across multiple years were acknowledged recently by two of the most respected sustainability rating agencies. EcoVadis awarded us its Gold Medal, and Morningstar Sustainalytics included us in its ESG Top-Rated Companies list. In both cases, these assessments put us in the top 10% of all companies rated worldwide. Let me now say some more on the acquisition of the KBU from Kimberly-Clark. KBU designs and markets differentiated hand, body, and eye protection under well-known Kimtech and KleenGuard brands to customers in global, scientific, and industrial markets.
The scientific market, which includes life science industries such as the manufacturing of pharmaceuticals and medical devices, has long been a priority area of investment for Ansell, with the very specific and demanding requirements for the PPE used in clean room manufacturing environments and associated laboratories, creating room for meaningful differentiation. Accordingly, for many years, I've considered this business to be one of our most attractive acquisition opportunities. It occupies quality end market positions, has two very strong brands and a complementary service offering, and is led by a very capable team. The ability of the Ansell and KBU businesses to complement and enhance each other is significant, and I'm confident that it will create considerable value for our shareholders.
It's now almost four months since the business became ours on July first, and I'm very pleased with the contribution of the KBU team and the enthusiasm towards the acquisition demonstrated by Ansell team members, including our new KBU employees, and also our customers, who see value in bringing our two portfolios together. We're seeing good momentum in the trading performance of the acquired business, while our immediate focus is on completing a seamless integration and exiting transitional service arrangements currently provided by Kimberly-Clark by the end of fiscal year twenty-five. Once we've achieved this critical milestone, we'll be in a position to accelerate sales growth and realize meaningful cost synergies into fiscal year twenty-six. Finally, let me provide a brief update on trading so far in fiscal year twenty-five.
As I mentioned at the beginning of my remarks, over the last two or three years, we've implemented a series of initiatives designed to position Ansell for superior growth and returns. It's therefore very pleasing to be able to say that the early signs in fiscal year 2025, that we are achieving these objectives, with the first quarter representing a strong start to the year. End market demand conditions are broadly in line with our original expectations. Manufacturing demand conditions in key markets are relatively weak, but new products have supported strong organic constant currency sales growth in our industrial segment in the first quarter.
As stated in our fiscal year twenty-four results briefing, the post-pandemic destocking in key healthcare end markets is now largely complete, and in the first quarter of fiscal year twenty-five, we've seen good organic constant currency sales growth in our healthcare segment, too, helped in part by the fulfillment of those surgical orders that we were unable to ship at the end of fiscal year twenty-four due to the Red Sea-related shipping disruptions that I mentioned earlier. Although these shipping disruptions have now reduced, we are seeing higher freight costs, including from the increased use of air freight, to respond to the strong demand we are seeing on key products and to mitigate sea freight delays. We're also seeing inflation in the cost of key raw materials and other manufacturing inputs, which we expect to have a greater impact in the second half of fiscal year twenty-five.
The KBU business is performing well, in fact, moderately ahead of my expectations at this point, and we also remain on track to achieve our fiscal year twenty-five APIP savings target of $45 million. So considering the strength of our performance in the early part of fiscal year twenty-five, I'm happy to be able to revise up the bottom end of our prior guidance range from 107 to 110 US cents. However, overall, there remains uncertainty in the global macroeconomic environment, and with the KBU business still to achieve that cutover from Kimberly-Clark Transitional Services to Ansell systems, scheduled in the second half of fiscal year twenty-five, we are leaving the top end of our prior guidance range unchanged. Hence, our new fiscal year adjusted EPS guidance range is 110 to 127 US cents.
So in conclusion, I'm very pleased with the evolution of our business and the results achieved over the course of last year and the early part of this year, and I would like to add my thanks to those of Nigel for the very considerable efforts of our employees worldwide. Despite the difficult trading conditions we've experienced over the past few years, we've continued to invest in those areas where we can generate meaningful, long-term shareholder value. And I'm confident that with the end market disruptions of the post-pandemic era now largely behind us, the benefit of those investments will begin to more fully reveal themselves in fiscal year 2025 and beyond. Thank you for your time and continued interest in our company. And Nigel, now back to you.
Thank you, Neil. Ladies and gentlemen, we'll now move to the formal items of business as set out in the notice of meeting. As I mentioned earlier, the poll is open for all items. The results of the proxy votes already received for each resolution will be displayed after any questions in respect of the relevant resolution have been dealt with. And the final results for each resolution will not be displayed at this meeting, but will be lodged with the ASX following the meeting. The first item is to receive and consider the financial report and the reports of the directors and the auditor of the company for the two thousand and twenty-four financial year. This item gives shareholders the opportunity to ask questions or make any comments in relation to the financial statements, the directors' or auditors' reports, or the operations of the company.
I ask that questions relating to the Remuneration Report be held until we get to that item later in the meeting. So I'll now take questions from the floor. For those attending in person, if you have a question on this item, please make your way to a microphone.
Hi, Mr. Chairman, I'd like to introduce Peter Aird. Oh, sorry, you say where you're from.
It's all right.
The volunteer from the Australian Shareholders' Association.
Morning, Peter.
Good morning, and today I hold proxies for 139 shareholders and over 260,000 shares. Just a little bit more detail, perhaps on the Kimberly-Clark purchase. In the announcement on the eighth of April, you indicated their most recent accounts showed a revenue for the year of $272 million and an EBIT of $66 million. How's the first quarter gone in terms of trading against these benchmarks?
Thanks for your question, Peter. I think as Neil indicated, the Kimberly-Clark division, or KBU, as we now call it, has traded mildly in excess of our expectations for the first quarter. It's been a solid start.
Good. Thank you. Just a second one: Given that only eight thousand four hundred and eighty of your over twenty-nine thousand small shareholders participated in your share purchase plan earlier this year, why did you use this method for raising capital rather than the pro rata method, which is much fairer and allows non-participating shareholders to obtain some benefits from the capital raising?
Yeah, good question. And look, we took advice from the company's advisors at the time, and the pro rata scheme is, as you would be aware, Peter, has some inherent risks with the time delays. For us to be able to acquire the Kimberly-Clark business, a degree of certainty of being able to raise the capital and pay for the acquisition was important. But we increased the amount under the share purchase plan from 65 million to 75 million, reflecting the demand from our individual shareholders. As you said, 8,480 retail shareholders made applications, and over 98% of those ended up with a minimum of their pro rata entitlement based on their shareholding.
So I think given the circumstances, we were as fair as we possibly could be, given the demand we had from our retail shareholders, which I might say we appreciated.
Hi, Mr. Chairman, I'd like to introduce Ron Guy, the Regional Trade Union Human Rights Shareholder Group.
Yeah. Thank you.
Yeah, I was just wondering if you could give an update on the lawsuit that was filed in August two thousand and twenty-two in the federal court in Washington, D.C., in regard to, well, and amended earlier the year, alleged that Kimberly-Clark and Ansell Limited, an Australian firm with a US presence, profited from human trafficking and forced labor at the Malaysian glove supplier Brightway Group, so I was just wondering for an update of how that's proceeding?
Yeah, thank you for your question. So, Brightway was a supplier of Ansell. To be clear, we no longer purchase from Brightway. The matter is before the courts in the US, so I can't comment in detail other than to say it's progressing. There have been some relevant court cases in relation to similar type of actions in recent times, but Ansell will be vigorously defending our position.
Is there a large legal cost that's happening in defending that?
I'm not at liberty to say, but it's not significant, no.
Thank you. Are there any other questions from the floor? Michael, are there any written questions on our online portal?
Chair, there are no written questions.
Thank you. Are there any audio questions, Michael?
Thank you. There are no questions on the phone lines.
Okay, so as there are no questions or further questions... Sorry, we do have one more.
There's one here. Yep, sorry. Did you wanna-
Sorry.
Stand across.
Sure. Peter.
Peter Aird again from the Australian Shareholders' Association. You stated that the changes to your executive team, announced at last year's AGM, as more customer focus. However, the structure is made up of functional positions in a centralized fashion. And you've removed business unit executives. Can you explain how this enhances customer focus?
Sure, so the executive structure is part of it, but it's also the structure underneath our executives that is equally as important. Ansell, like most companies, we're nothing without our customers, so customer focus and customer intimacy are really an important part of our success and our growth, and I think Neil and the team have looked at how we can best structure our business to be closer to our customers, and really, we don't. We're not very good at doing business with ourselves. We don't sell much internally. Internal meetings don't sell much, and so we've restructured the business so that our people are close to and dealing with our customers on a regular basis, and that's our view as to how we will win in the market and continue to win.
Do you want to add anything to that, Neil?
I think you've covered it fairly, Nigel.
Thank you.
Yep.
Are there any further questions? Michael?
No further questions.
Okay, so as there are no further questions, and there's no formal requirement for us to vote on this matter, I'll move to the next item, being the election of directors. The director seeking re-election today is Morten Falkenberg. Morten resides in Denmark and joined the board as a non-executive director in November 2021. He retires in accordance with Rule 33C of the company's constitution and, being eligible, offers himself for re-election. Morten's experience and board committee memberships are detailed in the notice of meeting. The board continues. The board considers Morten to be an independent director. Morten, would you like to say a few words?
Dear shareholders, my name is Morten Falkenberg, and I stand for re-election today. I'm a member of the Ansell board since the AGM of 2021, and sits on the Audit and Compliance Committee, along with the Sustainability and Risk Committee. I spent my career in leadership positions within fast-moving consumer goods, telecom, technology, and consumer durable goods companies, ranging from the Coca-Cola Company, both company and bottling site, along with group management at the Electrolux Group, globally responsible for one of its three divisions. My last operating position was ten years as CEO in Nobia, Europe's largest kitchen company by value. I lived half of my career outside my native Denmark in the U.S., Israel, Sweden, and Norway.
I bring a range of competencies which are relevant to Ansell, such as managing end-to-end value chains in the large global companies and navigating in complex chain, complex and changing international business environments. I'm highly motivated, and I'm looking forward to do my part with the Ansell board. Ansell is a great company, and I enjoy working in its diverse global business environment with a strong team at Ansell. I'm looking forward to serving on the Ansell board alongside with my board colleagues, contributing to the great future for the company. Thank you.
Thank you, Morten. I'll now move that Morten be re-elected as a director of the company, and I'll now take questions from the floor. Again, if you have a question, please make your way to one of the microphones. Are there any questions from the floor? No? Okay. Michael, are there any written questions?
Chair, there are no written questions.
Thank you, and are there any audio questions?
Thank you. There are no questions on the phone line.
Thank you. As there are no further questions, I'll now move on to the proxy results. Proxy results in respect of the re-election of Morten as a director are now displayed on the screen. The next item of business relates to the renewal of proportional takeover bid provisions set out in Rule 70 of the company's constitution, which were last approved by shareholders at the 2021 annual general meeting. Shareholder approval is sought to renew proportional takeover bid provisions for a further three years from the date of this annual general meeting. The effect of these provisions, including the reasons for them and potential advantages and disadvantages, are set out in the notice of meeting. I now move that approval be given for renewal of proportional takeover bid provisions, as summarized in the explanatory notes to the notice of meeting.
I'll now take questions from the floor. Again, if you have a question, please make your way to one of the microphones. Nope? Good. Michael, are there any written questions?
Chair, there are no written questions.
We're on a roll. Are there any audio questions?
Thank you. There are no questions on the phone line.
Okay, so as there are no further questions, I will now move on to the proxy results. Proxy results are now displayed on the screen. The next item of business relates to the grant of performance share rights to the Chief Executive Officer, Neil Salmon, under the terms of the company's long-term incentive plan, which is part of Neil's remuneration package, entitling him to an annual grant under the plan. This award is subject to the satisfaction of various performance conditions and entitles Neil to the grant of one ordinary share in Ansell Limited per performance share right. Accordingly, shareholder approval is sought for the issue of one hundred and thirty-six thousand three hundred and sixty-four performance share rights to Neil Salmon and his management company under the plan, in accordance with ASX listing rule ten point fourteen.
I now move that approval be given for the grant of performance share rights to the Chief Executive Officer, Neil Salmon, and his management company, on the terms summarized in the explanatory notes to the notice of meeting. I'll now take questions from the floor, and if you have a question, please make your way to a microphone.
Mr. Chairman, I'd like to introduce Peter Aird, a volunteer from the Australian Shareholders Association.
Thank you. We're pleased to see that you've included total shareholder return in your performance measures for the 2025 long-term incentive. The share price used is the ninety-day VWAP April to June of the start and at the end of the performance period. Would you comment on the use of this period compared to the period used for valuing the rights involved, which is around the release of the company's full-year results, and that is justified on the basis that the market is fully informed about the company's results at that stage?
Thank you for your question, Peter. I think it's important to understand that the value is on the VWAP for the ninety days up until the thirtieth of June, but the assessment at the end of the performance period is also on the VWAP for the ninety days to the end of June. So we're comparing like with like.
Yes.
The most important thing, I think, is that we do that so that it's a fair comparison over the period. We looked at what market practice is and ninety days is consistent with market practice, and so we have implemented that for this year. You know, I think for shareholders, providing we have a comparator which is the same at the beginning and the end of the period, then the comparison is both fair and reasonable. Thank you for your question, though, Peter. Are there any further questions from the floor? Michael, are there any written questions?
Chair, we have a question from shareholder Mr. Stephen Mayne, and the question is: "The Annual Report says that we have 38,270 shareholders, but less than 3% of them will have voted today on this LTI grant to the CEO, which was opposed by almost 18% of voted shares at last year's AGM. One way of tackling chronically low retail shareholder voting rates is to disclose how many shareholders actually voted for and against each line of business, like with the scheme of arrangement. Tabcorp, Suncorp, Qantas, and the ASX itself have all done this over the past week. As a new chair, Nigel, you have the data on how many of us voted, so why not disclose it to the market with the poll results, if only to provide some public ventilation of retail shareholder sentiment?
This would, in turn, stimulate higher participation rates in future, as retail shareholders won't feel powerless and swamped by end-of-town investors who dominate corporate voting in Australia, making retail voting pointless. And speaking of big shareholders, how do we manage our biggest shareholder, Allan Gray, which is now up to 19%? Were they influential in the design of this LTI structure?
That's not one question, that's a number. So firstly, what happened last year is a bit irrelevant to today's meeting. Today's meeting is about the issue of shares today. So firstly, from a disclosure point of view, Ansell meets the obligations under the ASX listing rules and the disclosure requirements, and we'll continue to do that. From a individual shareholder's point of view, I think it is. From our perspective, we have over thirty thousand shareholders, Catherine?
Mm-hmm.
Every one of those shareholders owns a share of our company. They own part of our company, and so we treat all of them with the appropriate respect and acknowledgement that they own part of our business. We encourage all of them to vote, but not all of them do. Equally, not all of our institutional investors vote. I think if you look today, we've got over 70% of the number of shares voted already by proxy, which is a high proportion of the number of shares in the business. I would encourage all shareholders, be they small, medium, or large, to continue to show interest in the business and continue to vote.
Mr. Chairman, I have Mr. Ron Guy for a question.
Modern-day slavery is a great concern to all companies now, and it's good that Ansell has taken steps to try and to remove it from its procurement and from its supply chain. But maybe Ansell should take the next step of including these performance indicators with modern-day slavery as part of their KPI, so for future financial gain from-
From the executives?
From the executives.
Thank you for your question. I think I can assure you that not only the CEO, but other members of our senior management team, have under their individual KPI objectives issues relating broadly to sustainability, including progress against modern slavery. So those matters are already addressed, and our executive teams are incentivized and assessed against their performance against those each year. We take it seriously, and the team is incentivized and managed against those. Are there any further questions from the floor? Oh, sorry, are there any further audio questions, Michael?
Chair, there are no further written questions.
Any audio questions?
Thank you. There are no questions on the phone line.
Thank you. And so as there are no further questions, I'll now move on to the proxy results. Thank you. As set out in the notice of meeting, in accordance with the Corporations Act, any votes cast in favor of this resolution by Neil or his associates will be disregarded. And proxy results, you have seen. Okay. The last item on the agenda is a non-binding advisory vote on the adoption of the remuneration report, which is set out on pages 45 to 68 of our 2024 annual report. Your board commends the remuneration report to you, and I now move that the remuneration report for the year ended 30th of June 2024 be adopted. I'll now take questions from the floor. Again, if you have a question, please make your way to a microphone. Nope. Michael, do we have any written questions?
Chair, we have a written question from shareholder, Mr. Stephen Mayne, and the question is: Did any of the five main proxy advisors recommend a vote against any of today's resolutions, including this remuneration report item? If so, what reasons did they give? Please don't say they are confidential. It is standard for companies to be across this detail on the voting recommendations and inform shareholders where relevant, without publishing the full proxy advisor reports, of course. Also, will you disclose the proxy position to the ASX, along with the formal addresses next year, to provide more timely market disclosure, as many ASX 200 companies now do?
In short, no. None of the proxy advisors voted against either this resolution or any of the other resolutions, so they were all in favor of all resolutions. And to the second part of the question, we'll continue to meet our obligations under the listing rules and disclosure requirements as we go forward. Are there any other questions, Michael?
Chair, there are no further written questions.
Are there any audio questions?
Thank you. There are no questions on the phone line.
Okay, as there are no further questions, I'll now move to the proxy results. Thank you. As set out in the notice of meeting, the company's key management personnel, including directors and senior management, may not vote in relation to this matter, except as a proxy for a shareholder who is not prohibited from voting, or if the proxy is the chair, and the appointment expressly authorizes the chair to exercise that proxy. Proxy results in respect of the approval of the Rem report for the year ended thirtieth of June 2024 have been displayed on the screen. Now, if there are any further questions that you wish to ask, we invite you now to do so, having dealt with the formal items on the agenda. I'll now take questions from the floor.
So if you have a question, you know the, you know the drill, please make your way to a microphone. No further questions from the floor. Okay. Michael, are there any written questions?
Chair, we have a written question from shareholder, Mr. Stephen Mayne. The question is: A follow-up question to the chair's earlier SPP comments. Does he agree that by structuring it as a placement and SPP, the thirty thousand retail shareholders who didn't apply for the SPP were all diluted without compensation for their loss of property rights? Does he also agree that by announcing a ridiculously low sixty million cap on the SPP after completing an oversized four hundred million institutional placement, many of your thirty-eight thousand two hundred and seventy retail shareholders didn't bother applying because it was obvious they were going to be heavily scaled back?
After more than 170 million worth of SPP applications were received, why did the board only apply a token increase in the SPP cap to 75 million, meaning that almost 100 million worth of retail applications were refunded? Given that the stock has since risen to AUD 31.43, how is it fair that the unknown big-end-of-town recipients of the 400 million worth of placement shares are currently enjoying collective paper profits of 160 million, yet the miserable 8,480 heavily scaled-back retail holders of the 70 million worth of SPP stock are only enjoying paper profits of 30 million? Don't you owe retail shareholders another SPP to compensate for this needless collective dilution of the retail class of shareholders in favor of the institutional class?
Firstly, I would not call the 8,480 individual shareholders miserable in any way, and I appreciate their support of our business. As I've said earlier, we took advice on the appropriate way to raise capital. It'd be fair to say that the capital issue, whether it be to institutions or to individuals, was heavily oversubscribed, and every applicant, without exception, was scaled back. And that is a terrific outcome for us as a company, but everybody was scaled back. The advice that we received was the SPP was the most appropriate way to do it, and we were very pleased that 8,480 shareholders put up their hand to participate in the SPP. Would we have liked more? Of course.
But every one of those 8,400 who applied were given at least their pro rata entitlement. I don't think I can add any more than that. And to be fair, all shareholders have benefited from the subsequent share price increase. Are there any more questions, Michael?
Chair, we have a question from shareholder Ms. Gillian King. The question is: The Sustainability Action Plan also contains a goal of 100% of packaging material is recyclable, reusable, or compostable by 2026. Many manufacturers claim that their packaging is compostable, but it is only compostable in certain industrial-scale composters, not the small-scale, low-tech compost systems with which most of us are familiar. What does Ansell mean when it says it's compostable?
I might let Neil talk about that and also talk about some of the initiatives that we are now involved in through the KBU acquisition. Neil?
Yes, so I recognize the questioner's challenge on the availability of industrial composting solutions. So yes, when we use the term compostable, we are including compostable through industrial means, and I agree that they are of limited availability. Therefore, where we can, we also make sure that the products are compostable through more regular household-type compostable systems. We also consider that when we innovate in our new products. So we recently launched a product for the food service industry. Its initial design was only appropriate for industrial composting, but we're currently looking to improve the formulation of the product so that it can be composted through home composting.
So, but I'd say our main focus in packaging materials is on the recyclability of packaging, both that it's made out of previously used and recycled materials, and at afterlife, it can also be recycled. And then the lead-in that Nigel gave me is on one of the service programs that the Kimberly-Clark business developed and that's now owned by Ansell. It's called RightCycle, and that's the world's leading recycling solution for after-use gloves. So it provides an ability for customers to collect gloves after use, as long as they are not hazardous through the way that they've been used. And then we assist them in collecting those gloves, taking them to a recycler, who can then convert them into another product that is of value and can be resold.
We're looking to extend that RightCycle program globally, and another step in our efforts to meet the recyclability and reduction of waste course through our end-to-end supply chain processes.
Thanks, Neil. Michael, are there any more written questions?
Chair, we have another question from shareholder Ms. Gillian King. The question is: Ansell has a goal that by 2026, 80% of new and updated products are designed with reduced environmental impact. Why is Ansell not aiming for all of its new and updated products to be designed for low environmental impact?
Look, I mean, for Neil, I'll let you talk to this. I would say we, from a business point of view, we would like everything to 100% of them, but we just need to be practical in what we're able to do, given current technology and given current materials. 80% is, frankly, quite an aspirational goal that will involve quite a number of changes in the type of products and the materials that we use. Is there anything you want to add to that, Neil?
Sure, yes. Yeah. Firstly, we're very tough in what counts as a more sustainable product. Generally, all Ansell products are more durable than competitive equivalents. And so if we just allowed ourselves to consider durability as an advantage, then I think the statement is probably correct, that 100% of Ansell products are more friendly to the environment than competitive equivalents. But we don't allow ourselves a relatively important and yet easy measure. So I think the second thing to say, though, is that there are many critical safety challenges also that it's our responsibility to address in the world.
If there's a solution to a cause of injury in industrial workplaces, and today we can't address that problem with a more sustainable set of materials, we still feel we need to launch that product into the market because it's addressing another source of sustainability priorities, meaning the safety outcomes of those who are wearing our products. Then the third challenge I would say is, still today, and I think we see this around the world, few customers, whether industrial or retail customers, are willing to pay more for a product that has sustainability characteristics. There's no point us launching products into the market that are not commercially successful, as that also won't benefit anyone. That's a further factor that we need to consider against our new products initiative.
It's perhaps more important that over existing products, we also take steps to improve their sustainability characteristics. And so we're actually thinking about that target right now, and whether we should balance it and also bring in place our rejuvenation programs to existing products. Those, of course, by their nature, as they're longer in the market, have higher volumes, and perhaps we can make a bigger impact through a rejuvenation program as well, not only focused on new product innovation.
Thank you. Michael?
Chair, a further question from shareholder Ms. Gillian King. The question is: "I commend the Ansell team for its efforts to stop damaging our precious common home, Earth. It's good to see an Australian industrial company showing the way towards net zero climate-damaging emissions. The company's sustainability action plan says that Ansell will offset less than 10% of emissions to reach its net zero goal. Offsetting can be seen as a weak cop-out because so many companies use it to avoid actually reducing emissions, and because it is difficult to permanently absorb emissions from the same atmosphere that the emissions go into. What is Ansell doing to ensure that any offsets achieve actual emissions reductions?
So, thanks for the acknowledgement of our work to date. Our focus is primarily to reduce the carbon footprint on our existing activities, and that's priority number one, and will continue to be priority number one. To the extent that we are not able to do that, we will look at carbon offsets, and you have my assurance that any carbon offsets that we do use, if that is required, will be absolutely first rate and sustainable. Any more questions, Michael?
Chair, we have a question from shareholder Mr. Stephen Mayne. The question is: "Australia is currently in the midst of an unprecedented deluge of takeovers that has contributed to listed entities on the ASX falling by 170 or 7.4% to 2,124 since June 2022, including 20 straight months of declines. There have already been 27 major takeovers above AUD 200 million completed so far this calendar year, with another 10 deals announced and in the works. The ASX is losing long-standing names such as CSR, Boral, Blackmores, Newcrest, and Crown, which have all disappeared over the past three years. There is a clear mispricing between public markets and private markets. Why are public markets not valuing ASX-listed companies like ours more highly, and what are we doing to avoid being gobbled up like so many other companies?
Does the Chair agree this is a problem for the nation, particularly with so few new floats replenishing the ASX ranks? And do we have any takeover protections apart from FIRB and the ACCC? Would the requirement to have two Australian directors be a takeover impediment?
So let me answer that this way. The best way of preventing a takeover is strong performance from a company and continued support from our shareholders. And so that is what we are primarily focused on here at Ansell. And shareholders ultimately vote on the value that they see in our company by the shares they either acquire or sell. Our focus has got to be on ensuring that the market is fully informed, and we think we've got fair value of, of the Ansell business. We have appropriate defense advisors in the event that we are approached, to ensure that the company is well-prepared and that, we look after the interests of shareholders in the event something like that has, or something like that occurs.
I can't really comment on what happens elsewhere in the market, and I'm not sure I subscribe to the comment about private and public markets being mispriced. Ultimately, you know, this is a public market. Our job is to make sure that we perform as well as we can to optimize the value to our shareholders. Yes, we have, as Mr. Mayne points out, the ACCC and the Foreign Investment Review Board, and in both cases, they have made appropriate decisions in some of those cases that Mr. Mayne has mentioned, and will continue to do so. Having two Australian-based directors is a requirement of the Australian Securities Exchange.
I'm not sure that affects anything in relation to takeovers, but in summary, our job is to optimize the performance of this business and to see that optimal performance reflected in the share price. Are there any more questions, Michael?
Chair, a further written question from shareholder Mr. Stephen Mayne: "Could the Chair please comment as to why the CFO resigned on October fourteen, and please comment on how this unexpected change of CFO is likely to impact the operation of the audit committee? Under his contract, what are the restraints or gardening leave provisions in terms of Zubair being able to join a competitor?
I'm not gonna get into the individual circumstances in relation to Zubair, other than to say, Zubair's been with the business for six years and has made, I think, a strong contribution to our company, and is now seeking to leave the business at a time when the business has positive momentum and the integration of the KBU is well underway. As you would expect, we have succession planning in place in the organization, which we're in the process of looking at, and Zubair will continue with the business for his notice period, which takes it to February or March next year, and has customary non-competes with the business.
But I think it's an appropriate time for me actually to acknowledge Zubair's contribution over what has been a very, let's say, difficult or interesting six-year period, as we had the highs of COVID and the lows of post-COVID. And I think we can all be comfortable that Zubair leaves the CFO position in a better place than when he joined. And on behalf of shareholders, I thank you, Zubair, for your contribution. Michael, have you got any more?
Chair, a further question from shareholder, Mr. Stephen Mayne: "Could new chair, Nigel Garrard, please comment on the biggest changes in board process, delegations, reporting lines, or governance that he has implemented since taking over as chair after last year's AGM? Could the CEO also comment as to whether Nigel is more or less hands-on than John Bevan as a chair?
In relation to the second one, no, he can't. Look, we have Ansell's been a listed company here in Australia for a very long time. We have solid processes, solid governance, solid delegations of authorities, and there's no reason for wholesale change to have been made, and we have not made wholesale change. What has been different over the last twelve months is that the business has come out of the post-COVID uncertainties or destocking, as Neil talked about, and we've focused quite a bit on growth, innovation, and obviously the KBU acquisition. So the focus of the business has been more on the medium to longer term growth as a result, than dealing with the post-COVID time. So I think that that's the major change. That's nothing that I've implemented as a new chair.
That's something that's just part of the process of where we are in the, the economy and the cycle. And like all CEOs, Neil, Neil would say, sometimes the chair is too involved and sometimes the chair has got it just right, and I think he would be the same as 99.9% of every ASX-listed CEO who would say the same thing. Having been one myself, I know exactly what that's like. Are there any more questions, Michael?
Chair, there are no further written questions.
Do we have any audio questions?
Thank you. There are no questions on the phone line.
Okay. Are there any more questions from the floor here? Going, going. Okay, there appear to be no further questions, so that concludes our discussion on the items of business. Now, the poll will close shortly. If you are ready, the Computershare staff members are now circulating the room with their purple box to collect your ballot cards. If you could place those in the ballot boxes, please. And as I mentioned earlier, the final outcome of the polls will be announced by notice to the ASX later today. So although the business of the meeting has finished, there will be a five-minute period at the closure of this meeting during which you may finalize your voting. Ladies and gentlemen, that brings us to the conclusion of our business today.
I thank you for attending, and for those of us, for those of you here in person, I look forward to joining you for some morning tea outside. Thank you.