Good morning and thank you for joining us today for the Oura Group results presentation for the financial year FY 2021. I'm joined today by Sean Hughes, our Chief Financial Officer. And today, I'm pleased to provide you an overview of the results for the year ended 30 June 2021, an update on our safety performance, a recap on our strategic pillars against which we have continued to make good progress. I will also share with you our strategic objectives and roadmap for the beverage and OPS businesses. And today, we'll be announcing a new chapter in sustainability at Aurora.
I'll then hand over to Sean, who will take you through the group and business unit financial results in more detail before I conclude with some perspectives and outlook for FY 2022. And at the end of the presentation, Sean and I will be happy to take your questions. But before we start in any detail, please take note of the important information on Slide 2. So turning to Slide 4 and our full year results. The group reported strong improvement in our FY 2021 results with both our Australasian and North American businesses delivering improved operating and financial performance, resulting in an increase in underlying EBIT.
Group EBIT increased by 11.6% on a reported basis and 17.3% on a constant currency basis. This outcome was driven by earnings growth in Australasia, up 2.5% and a strong increase in North America, which was up by 43%. Underlying NPAT was up 23.7% to $156,700,000 while EPS increased 29% to $0.169 per share. The stronger earnings and lower levels of CapEx in FY 2021 translated to a 44.9% increase in operating cash flow to $246,000,000 The Board has declared a final ordinary dividend of $0.075 per share unfranked and 100% sourced from the conduit foreign income account. This brings the total dividend paid with respect to FY 2021 to $0.14 per share.
Turning now to Slide 5. Our FY 2021 result demonstrates continued momentum from the second half of FY 2020 and reinforces the benefits of an ongoing focus on the execution of our strategy and strategic priorities. In Australasia, higher earnings were driven by volume growth in cans and closures. With specific reference to glass, growth in beer and other non alcoholic beverages partially offset the reduced wine bottles resulting from the China tariffs of white exports. Pleasingly, we have made progress on redeploying this capacity and I'll share further details with you on Slide 10.
Strong growth in cans volumes across all categories drove higher Australasian earnings with overall beverage margins reflecting increased levels of at home consumption of 375 ml cans across FY 2021. This together with the ongoing impact of higher energy costs and insurance costs led to a 60 basis point reduction in EBIT margins. The North American businesses have continued a positive momentum that started in late 2020, delivering improvements in both operating and financial performance. This has been achieved through a sustained and disciplined increased sales force effectiveness by leveraging data insights to improve customer account profitability and an ongoing focus on cost control measures. These actions delivered by the North American team resulted in an increase in U.
S. Dollar as well as A dollar earnings for both OPS and OB. Local currency EBIT was up 43% to $73,800,000 and EBIT margins expanded 90 basis points to 3.7%. The impact of COVID-nineteen on North America was materially greater than that felt in Australasia. While many retailers remain closed for much of the first half of twenty twenty one, to their credit, both OPS and OV have returned to revenue growth in FY 2021, with trading conditions improving over the course of the second half.
Now moving to Slide 6. For most organizations, COVID-nineteen has added complexity and challenge to the operating environment. Importantly, we have maintained a range of health and safety measures in response to COVID-nineteen targeted at mitigating the risk of transmission into and at Aurora sites and workplaces. This includes health as well as well-being initiatives. In FY 2021, the recordable case frequency rate decreased, whilst the lost time injury frequency rate increased.
Although this increase was primarily from low severity injuries, this highlights the need for ongoing safety improvement initiatives. There were no serious injuries or fatalities in FY 2021 and we had a 43% improvement in preventions of incidents that may have escalated into serious injuries or fatalities. The improvement in the prevention of incidents in FY 2021 was driven by a number of initiatives, including new behavioral based safety programs, leadership programs, hazard and near miss reporting and initiatives from Aurora's Global Integrated Safety Improvement Program or GSIP. Moving now to Slide 7. I first presented the strategic pillars at our FY 2020 results.
These were established to support Aurora in executing our objective of becoming a leading sustainable packaging solutions company. Our strategic pillars remain unchanged. These have guided our actions and supported the delivery of our achievements in FY 2021. Our strategic pillars are optimizing growth operational improvement and best in class execution, enhance and expand core products and services to strengthen our value proposition and enter new segments that are complementary to Aurora's are complementary to Aurora's capability set. It is the consistent and relentless pursuit of these strategic objectives that has enabled the delivery of our recent results and will continue to guide us over the coming years.
Now on to Slide 8. This year, we have made some important changes to the shareholder value blueprint that I'd like to draw your attention to. Firstly, in relation to capital investments. In addition to investing to enhance our capacity and product capabilities across our portfolio, we've added sustainability as an important driver for investment. In relation to acquisitions, in addition to our focus to expand our beverage footprint and aluminum and cans product capabilities in Australasia, we have added an element that looks to expand product and service capabilities in North America.
With the business platforms in North America now stabilized and scalable, the expansion of product and service capabilities including through M and A will come into the greater focus throughout FY 2022 and beyond. And finally, for capital management, we've added balanced to reflect our balanced and disciplined approach to capital allocation. I want to reiterate our ongoing commitment to deliver and reporting against these strategic pillars. This means delivering acceptable organic growth, meeting returns focused hurdles and making appropriate investment decisions whilst ensuring a balanced and disciplined approach towards capital management. And as I've said before, this is what you should expect from me and my management team.
Moving now to Slide 9. This slide steps out steps and priorities that we are committed to deliver now and in the medium term that will drive long term growth and superior shareholder returns. These steps and priorities are aligned to our strategic pillars that I referred to on Slide 7 and what we have focused on in order to achieve above market long term growth. Collectively, these steps and priorities are designed to position us to deliver shareholders with attractive above market growth and reliable cash flow generation. We're now on Slide 10.
Throughout FY 2021, we've made good progress against our core strategies in each business and we'll continue to leverage the positive momentum that we've developed into FY 2022. In FY 2021, we increased our can capacity with completion of the Slimline expansion at Reesby, New South Wales. In North America, new leadership was installed in both OPS and OV during the 2020 calendar year. This team has delivered strong results in FY 2021. In OPS, we've driven a significant improvement in operating discipline and financial performance and continue to deliver in both EBIT and margin improvement.
OV has returned to profitability driven by a focused cost reduction program and improved execution. Pleasingly, year on year revenue and earnings growth have both been achieved and the business is well positioned for any improvement in local trading conditions. Looking more closely at our FY 2022 priorities, In Australasia, reflecting on the strong outlook for can volume growth and with the support of our customers, we continue to progress further capacity expansion plans, including the anticipated installation of an additional line at an existing facility for operation during FY 'twenty three. In glass, we have made good progress to consolidate alternate pathways. Over FY 'twenty opportunities that we have secured will replace approximately 90% of the China export volume as measured in bottles.
And this is through a combination of new products and building on existing non wine sales through beer and water. These have been heavily focused on import replacements and with a number of these opportunities being on the East Coast of Australia have lower margins after freight costs. This means that whilst we replace the volumes, they will be not at the same margin. For OPS, we have an ongoing focus on business model enhancement initiatives, including a refreshed e commerce platform and customer self help functionality. We remain on track to achieve EBIT margins greater than 5% in the next 2 to 3 years.
We will start to explore inorganic opportunities in North America to expand our product and service offering from the second half of financial year 2022. For OV, we are looking to scale our customer value proposition by capitalizing on the solid foundation established in FY 2021. We are on track to complete the end to end review of our strategic direction for OV by the end of calendar year 2021. Now moving to Slide 12, where I set out the beverage strategic objectives roadmap. The beverage business has a range of strategic initiatives across the full year of Aurora's strategic pillars.
Firstly, on the optimize and grow. The focus on business optimization and continuous improvement is part of the DNA of our business. And our robust systems and disciplined execution in our day to day operations forms a strong platform as we look to further scale the business into the future. Secondly, as it relates to enhance and expand, we constantly assess opportunities to further leverage the strength and resilience of our beverage business, such as the expected capacity expansion for cans. We're continuing to invest in our digital journey with a new e commerce and web presence being established for beverage, which will provide a range of exciting new opportunities for the business.
And from an inorganic perspective, we continue to assess opportunities to expand our market leading beverage business into logical adjacencies in the Australasian market that will align with our strategy and our capabilities. And lastly, we will assess opportunities to enter new segments over the longer term that can provide a natural and logical extension to our current capabilities. Now turning to OPS on Slide 13. As I've discussed in prior results, the OPS business been on a careful and calculated journey to reestablish stability in any operations and ensure that there is a strong scalable platform from which to sustainably grow. The results today speak to the positive Firstly, from an Optimize and Grow perspective, progress has been made against all key strategic and operating initiatives outlined here.
In particular, OPS made significant progress in utilizing business intelligence through the SAP system to drive greater sales force effectiveness and proactively manage poor performing accounts. These disciplines are being embedded in the business and will position us strongly for further growth as we scale the business. 2nd, we separated Aurora's strategic pillar of enhance and expand into 2 distinct phases in the OPS strategic roadmap. The immediate focus for OPS will be on continuing to enhance the business model with a number of critical initiatives. The business is at the beginning of its vital digital transformation with new e commerce capability being launched later this calendar year.
We're also introducing lean operating principles into our distribution and manufacturing businesses, which will drive greater efficiencies. With the business stabilized, focus returned to building out our product and service capabilities into our core markets. And lastly, as we move forward and embed further enhancements in the OPS business model, going deeper into targeted end markets and higher margin product and services, these may accelerate be accelerated by M and A where it makes strategic and financial sense. I'll now turn to Slide 15. Sustainability is part of Aurora's DNA.
It's vital to the way we operate. We made strong progress on sustainability initiatives in FY 2021. In Australasia, we increased the use of recycled glass at our production facility in Gala, taking the majority of recycled glass from the Western Australian and South Australian container deposit schemes and accessing other state initiatives as available. Renewable energy provides 80% of our total domestic electricity requirements secured through wind generated power. In North America, OPS drove an average of 70% recycled content in the corrugated board manufactured for our customers.
And OV introduced fabric made from 100% recycled PET bottles, which is used for our customers advertising campaigns. We submitted our 1st modern slavery statement demonstrating our commitment to human rights and the United Nations Global Compact. Good progress has been made on our 5 year ECO targets focused on reduction in CO2 emissions, waste to landfill and water use, building on our previous 5 year targets. Details of these targets performed in the annual report, which has been published today. Moving now to Slide 16.
And now a new chapter in our story. During the year, our teams undertook a comprehensive review of our sustainability framework. While our track record is strong, we wanted to be sure our approach is aligned with the expectations of our customers, investors and broader communities. As a result, we have redefined the pillars of our framework from people, planet and prosperity to circular economy, climate change and community, representing a more aspirational view, which is our promise to the future. On Slide 17, our contribution to the important issue of climate change is the commitment we have announced today of achieving net 0 scope 12 greenhouse gas emissions by 2,050 across our operations.
We have also announced an interim goal of achieving 40% reductions in these emissions by 2,035 and this is from our FY 2019 levels. As an energy intensive manufacturer, this is not an easy challenge to meet, but Aurora can build on the strong history of addressing this issue, including our eco targets, renewable energy sources and energy efficiency initiatives. We will report to the market annually on our progress, over time, firm up the pathway beyond 2,035 and broaden our approach to address Scope 3 emissions. Our well defined plan to reduce the 40% emissions reduction by 2,035 includes increased use of recycled glass color at our Golar facility to leverage energy reducing implementing less greenhouse gas intensive furnace technology at Golar such as Oxified Furnaces and procuring greenhouse gas free electricity for our businesses globally. Our Board supports the investment required to take this journey and external experts have reviewed our approach giving confidence to the feasibility of our goals.
Analysis of climate change risks and opportunities utilizing the task force and climate related financial disclosures is also underway and will be completed during FY 2022. Moving to Slide 18. Aurora is a proven leader in circular economy initiatives that benefit our communities and the environment. We maximize the recycled content of our manufactured products and ensure these products can be recycled again and again to minimize waste. Building on our strong foundation, we have today announced a target in our glass business of achieving 60% recycle content for glass beverage containers by 2020 5.
More goals will be developed in FY 2022 to advance circular economy efforts across our business. On Slide 19, I highlight a significant example of our commitment to sustainability and an exciting initiative that will help us achieve these goals. In May this year, we announced that we are building a color beneficiation plant at our glass production facility at Gala, representing a total investment of approximately $25,000,000 including $8,000,000 in government funding through the recycling modernization fund. The plant is expected to be commissioned in 2020 2 and will allow us to increase the amount of recycled content in glass bottles that we manufacture. This will deliver important sustainability and benefits, including a reduction in CO2 emissions, energy use and divert waste from landfill by reducing the amount of virgin materials needed to manufacture glass.
Moving now to Slide 20. The 3rd pillar of our framework is community, representing our enduring focus on our team members as well as the broader communities. Every day, we work to ensure the health and safety of our team members underpinned by our safety policies and improvement programs. Our modern slavery statement and supplier assurance framework demonstrates our focus on human rights across the supply chain. Our commitments to a diverse, inclusive and equitable work environment comes to life in many ways and helps drive better decision making, innovation and growth.
We have a clear gender diversity objective and further DE and I goals will be announced during FY 2022. Along with the executive leadership team, I'm extremely proud of the dedication from our people in developing our promise to the future and the important commitments that we have announced today. I'll now hand over to Sean, who will take you through the group and regional financial
results. Thanks, Brian, and good morning, everyone. I'll start with the group results before I cover the regional financial performance, and I'm on Slide 22, which summarizes the group's underlying and statutory earnings
results for the full year. At a
group level, revenue was down slightly 0.8 percent driven by a $303,000,000 negative FX translational impact on our North American sales. Importantly though, local U. S. Dollar revenue in North America was up 8.2% compared to FY 2020. On a constant currency basis, group revenue was up 7.8% and EBIT was up 17.3%.
Net finance costs were down 17 point $7,000,000 on the prior year to $32,800,000 and this reflects the lower average net debt in FY 2021 versus FY 2020, although net debt steadily increased in the second half of the year as the on market buyback progressed. Underlying NPAT and EPS were both up strongly for the year with NPAT increasing 23.7%, EPS 29%. This reflected both higher earnings, lower net finance costs and the impact of the share buyback, which I'll discuss further shortly. On a statutory basis, there were 2 significant items that net out to a $20,900,000 after tax loss. Related to the fiber sale, we completed the post completion account processes and as at the 30th June, had recorded a $6,100,000 after tax gain in discontinued operations.
We have also recorded additional decommissioning costs of $27,000,000 after tax at the former Petrie Mill site following ongoing project review and reassessment of the estimated remediation requirements. The time line for Petri remains unchanged and is expected to be completed by December 2022. Turning to Slide 23. Australia delivered sales revenue of 800 and $34,100,000 up 6.1 percent. EBIT of $150,300,000 was up 2.5% on the prior year.
This increase demonstrates the diversified strength and resilience of the Australasian businesses and was in line with our expectation of a broadly flat year on year EBIT. ROACE was 160 basis points below the prior year despite higher earnings, reflecting the impact of recent capital upgrades now in the asset base, including the G2 furnace upgrade, the new Galawea and the Reevesby Slimline expansion. The benefits of these investments will continue to flow over coming years. Roethi remains a very solid 25 point 4%. Cash flow was strong at $158,000,000 for the year, up 32%, and this was driven by an improvement in earnings combined with lower base CapEx, partially offset by an increase in working capital.
The negative movement in working capital compared to the prior year largely reflects an increase in the timing of increased Australian sales compared to FY 2020. Base CapEx of $18,900,000 was approximately $42,000,000 lower than FY '20, largely a result of the G2 rebuild in the prior year of approximately $50,000,000 Cash flow conversion for the year was in line with our expectations at 72.2%. We expect that the Australasian businesses will deliver cash conversion in excess of 70% in FY 2020. Turning to Slide 24. Revenue and earnings growth in Australasia was driven by strong volume growth in cans and closures.
In both cans and closures, the mix of product was skewed towards the grocery
channel, supported by the continued strength of
at home the grocery channel, supported by the continued strength of at home consumption. This trend was particularly noticeable in the first half and while easing slightly in the second half as the restrictions imposed by COVID were relaxed, the shift continues to impact margins. In glass, we saw a reduction in volumes in the second half as a result of lower capacity into other beverage categories, albeit at a lower margin. Earnings margin was down 60 basis points to 18%, impacted by increased levels of at home consumption, together with the impacts of the previously disclosed cost headwinds related to energy and insurance. Moving now to North America on Slide 25.
In FY 2021, the North American businesses significantly improved their operating and financial performance. In local currency terms, revenue was up 8.2%. EBIT increased an impressive 43% to US73.8 million dollars and ROACE increased 6.10 basis points to 15%. I'll step through this in more detail on the next slide. The OPS operating and profit improvement program has continued to gain traction throughout the year with EBIT margins increasing by 80 basis points to 4.4%, noting the impacts of seasonality between H1 and H2.
Importantly, EBIT was higher than the prior comparative period in both the first and second halves of FY 2021. For OV, U. S. Dollar revenue for the year increased by 7.7% with H2 performance more than offsetting a constant currency revenue decline in H1 of 2021 compared to the prior comparative period. Pleasingly, a positive full year EBIT reflects the continued focus on cost reduction and a shift to defensive segments, which now comprise 37% of the revenue base, delivering revenue and margin growth.
North American operating cash flow increased by $38,200,000 to $88,000,000 reflecting improved earnings, lower base CapEx and an improvement in working capital. Total CapEx of $23,000,000 including growth CapEx of $10,000,000 was broadly in line with FY 2020 of $22,400,000 Cash conversion was approximately 74.1%, up from 46.9 percent in the prior year, driven by higher earnings and improved working capital management. Slide 26. As mentioned, North American EBIT Slide 26. As mentioned, North American EBIT improved 43% on a constant currency basis.
On a reported basis, EBIT was up 28.8% and includes a negative $12,800,000 FX translation impact. Aurora North American EBIT margins increased by 90 basis points to 3.7 percent, and these results continue to be driven by the successful execution of our strategic and profit improvement initiatives, including customer account profitability, enhanced sales force effectiveness and a stronger focus on cost control measures. Slide 27. Operating cash by $76,200,000 to $246,000,000 The strong improvement in operating cash flow, up 45%, resulted in cash conversion of 72.9% and was driven by an improvement in cash EBITDA, up 8% to $337,600,000 an $8,000,000 improvement in the net working capital movement to negative $61,600,000 In Australasia, the increase in the movement in working capital largely reflects the timing of customer receipts compared to FY 2020. And in North America, an increase in trade receivables was in line with increased sales and was offset partially by improvements in the OPSDSO and collections, lower base CapEx and a
slight increase in payables.
And finally, lower base CapEx of 30 FY 2020, largely reflecting the impact of the G2 rebuild at Golar of approximately $50,000,000 in FY 2020. We also had a net tax refund of $1,500,000 which reflects the timing of FY 2021 tax payments made in North America and New Zealand, offset by a refund of Australian taxes. Slide 28 highlights Aurora's strong balance sheet, which continues to provide operating and strategic flexibility as we move forward. At 30 June, net bank debt increased to $453,000,000 with leverage at 1.5x net debt to EBITDA. This represents a 0.6x increase from FY 2020 31 December 2020 and is driven by payments associated with the with the FY 2021 on market share buyback with $256,200,000 spent over the course of the program, offset by stronger earnings, reduced base CapEx, receipts from the closeouts of the fiber completion accounts the Australian tax refund and a $26,000,000 FX benefit on the U.
S. Dollar debt. U. S. Dollar debt is now approximately 65% of the group's debt.
The buyback was completed on the 30th June with 89,300,000 shares purchased, representing approximately 9.3% of issued capital at an average price of 2 point $8.7 The company maintains a strong liquidity position with committed undrawn debt capacity of approximately $400,000,000 and cash reserves of over $50,000,000 as at the 30th June. We maintained the strong support of our core lending syndicate, having recently completed the refinancing of our $350,000,000 syndicated facility, which was heavily oversubscribed. The tenure of the group's facilities following this transaction are now 3.1 years. Our approach to capital will continue to be balanced and disciplined, and we remain committed to maintaining sensible debt levels and investment grade credit metrics with our target leverage range between 2x and 2.5x. Moving to Slide 29.
The Board has declared a final unfranked dividend of $0.075 per share. This takes the total FY 2021 dividend to $0.14 per share, which represents a payout ratio
of
80% of underlying impact and a 16.7% increase on FY 2020. The dividend reinvestment plan will be reactivated for this dividend with shares purchased on market to meet our DRP obligations. Given the group's near term capital investment programs, the tax effects of Australia's instant asset write off legislation and other timing differences, the group does not expect to frac future dividends until after FY 2023. I'll now hand
back to Brian. Thanks, Sean. We'll now turn to the perspectives for FY 20 22 on Slide number 31. In Australasia, continued strong cans demand will require 20 fourseven operations across all sites and together with gradual improvements in product mix are expected to drive earnings growth. We will continue to identify and implement cost reduction initiatives, reinvest in asset upgrades and add new and add new capacity.
The investment in capacity expansion we've done with support from our customers and together with our continued focus on innovation will set a foundation for continued growth beyond FY 2022. We will continue to work closely with replace volume that have been lost from lower wine bottle exports to China by accelerating alternate pathways as our glass business cycles the impact of China tariffs in the first half of FY twenty twenty two. In North America, the focus for OPS and OV management teams remains on driving further positive momentum and continuing to build the demonstrated improvements delivered throughout FY 2021 via earnings, cost reduction and margin improvement initiatives. Market conditions for parts of the North American business will remain challenging. However, the business is well positioned as the broader economy rebounds from the impacts of COVID-nineteen.
Despite an increasing competitive operating environment, successful pass through of substrate and other cost input increases is expected to continue. OPS is on track to achieve greater than 5% EBIT margins in the next 2 to 3 years. A review of our strategic direction of OV will be completed by the end of calendar 2021. With respect to cash flow and CapEx, we are committed to ongoing investment in our existing businesses in both base and growth capital expenditure. For FY 2022, base CapEx is expected to be approximately 80% of underlying depreciation, excluding depreciation from leases.
We continue to target group cash conversion above 80 sorry, above 70% in FY 2022. And with respect to capital, FY 2022 dividends will continue to be towards the top end of our targeted payout range. We'll continue to explore adjacent growth opportunities in Australia and New Zealand. And with the North American business platforms now stabilized and scalable, expansion of product and service capabilities for OPS, including through M and A will come into greater focus throughout FY 2022. Turning now to the outlook on Slide 32.
Aurora delivered a strong increase in underlying earnings in FY21 with significant growth in group EBIT, NPAT and EPS. We sustained improvements in financial and operating performance demonstrating the strength of our diversified business model. In Australasia, we expect FY 2022 EBIT to be broadly in line with FY 2021. Continued strength in the cans business is expected to offset the impact of subdued glass volumes as the impacts of the China wine tariffs are cycled in the first half of FY twenty twenty two. In North America, significant progress made on the implementation of core strategic initiatives and the OPS and OV profit improvement and the OPS and OV profit improvement programs are expected to continue.
We are confident that the recent performance improvements are sustainable and we intend to further EBIT growth in FY 'twenty 2022 and correspondingly we are forecasting further EBIT growth in group earnings. This outlook remains subject to global and domestic economic conditions, currency fluctuations and the continuing impacts of the