Good morning, ladies and gentlemen, and welcome to Orica's 2019 Annual General Meeting. My name is Malcolm Broomhead, and I am your Chairman. I'd 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, as well as to elders from other communities who may be here today. We do have a quorum present. I declare the meeting open. With your permission, I propose to take the notice of meeting as read. To begin with safety. For your safety's sake, I'd like to draw attention to the exits. The emergency exits, should we have to evacuate, are really where the lights are shown, the main ones being where we all came in.
Should an emergency arise, then the Park Hyatt staff will be here to assist you to evacuate the building. If you do have a mobile phone, I'd ask that you switch it off or turn it to silence for the duration of the meeting. Let me introduce my fellow Directors to you and our Company Secretary. Seated on my immediate left is Alberto Calderon, your Managing Director and Chief Executive Officer, and he will be addressing the meeting shortly. Next to Alberto is Maxine Brenner, and then Gene Tilbrook, and on my far left, Denise Gibson. On my far right is Mr. Boon Swan Foo, then Karen Moses, and on my immediate right is Kirsten Gray, your Company Secretary and Chief Corporate Services Officer.
We also have members of our executive committee here today sitting in the front row, and they will be available if you have any questions you'd like to ask them after the meeting. Our auditor, KPMG, is also in attendance, represented by our audit partner, Penny Stragalinos. She will also be available after the meeting if you wish to talk to Penny, rather. Before we move on to the resolutions as outlined in the notice of meeting, I'd like to make some comments, and I would also like to make some comments on some areas that are important to Orica and to you, our valued shareholders.
Firstly, our performance over the year, both financially and culturally, including some changes we've made to our governance and a new appointment that we've made to the Orica Board, will be some of the subjects I'd like to talk to you about, as well as some of the broader issues that we face as a company and as a nation. 2019 has been a year in which we have successfully built momentum right across the company, improving our core business and advancing our strategic agenda to commercialize Orica's market-leading, technology-led innovations. As we work hard to drive operational and financial performance in every area, clearly, safety remains our number one priority. I'm pleased to report, once again, we have achieved our goal of zero fatalities. Alberto will talk in more detail about our ongoing efforts to improve every aspect of health and safety right across the group.
Financially, we have seen a pleasing turnaround in Orica's performance with the restoration of profitable growth. Statutory net profit after tax was AUD 245 million, which compared with a loss of AUD 48 million in 2018. EBIT were AUD 665 million, an increase of 8% compared to last year. Looking at executive and board remuneration, a key priority for the board is to ensure that there is high alignment between shareholders and management, the board is pleased with the performance outcome in the financial year and the substantial improvements that were made with respect to safety and the value that was generated for you, our shareholders. As such, average short-term incentive outcomes across our key management personnel were 53.3% of maximum, which was up on the 23% paid in 2018.
Partial vesting of long-term incentive awards were granted to executives as average return on capital performance conditions were met between the threshold and target levels. We continue to show restraint in fixed remuneration. Indeed, with our chief executive's fixed pay being maintained at the same level for the fourth consecutive year. There were no pay rises awarded to key management personnel except where there was a change in responsibilities or where required by law. Director's fees were also maintained at the same level. Your board declared a final ordinary dividend of AUD 0.33 per share, AUD 0.05 of which are franked. This brings the total dividend for the year to AUD 0.55 per share, up AUD 0.035 per share on last year. This reflects a payout ratio, which is the key metric that we keep an eye on, of 56% of underlying earnings.
Moving now to governance, culture, and sustainability. 2019 has witnessed a significant discussion in the Australian business community on the importance of corporate culture and of corporate accountability, and how these factors shape behavior and risk management. Your board has followed this debate closely and shares the view that governance and strong internal cultures are indicative of a well-run business. Here at Orica, the centerpiece driving acceptable returns remains accountable leadership, a compliance culture based around Orica's code of business practice, and an organizational design underpinned by clear, consistent responsibilities, which are contained in our group policies, standards, and procedures. Our updated board reporting framework will ensure that the information that was received by the board reflects evolving community standards and governance best practice. We've also refreshed the terms of reference for the board and committees in accordance with the fourth edition of the ASX Corporate Governance Principles and Recommendations.
Now, during the year, we established a new Innovation and Technology Committee, which is there to support Orica's investment in technology-led growth and to support the commercialization of innovation in the company. In May, we welcomed the appointment of Mr. Boon Swan Foo as a non-executive director. He brings a deep understanding of a variety of industries and markets across Asia, including China, and will be a great asset to the company. Today we announced that Mr. John Beevers is also joining our board. John worked at Orica for 27 years. He was CEO of GroundProbe in the five and a half years before he acquired it, so he knows both our traditional business and our new technology areas intimately. His insights and extensive operational and technological expertise will be of tremendous value as we enter our next growth phase.
In addition, our legal and regulatory requirements, Orica takes its social responsibility very seriously, and we've identified a number of sustainability issues as being most material for our business, including safety, environmental protection, product security, climate risk, diversity, and ethical conduct. We're working hard to make meaningful impact in all of these areas. I'm pleased to report a solid performance across our sustainability commitments this year, and you can read more about that in our 2019 sustainability report. I'm confident that our approach to creating a more resilient business aligned to our values, our commercial strategy, and the expectation of our people and stakeholders will deliver better outcomes for you in the year ahead. I'd now like to briefly talk to a more general issue, which I believe challenges not only your company, but most of the corporations in Western economies.
That's the decline we see of reasoned, articulate, and productive discussion and debate at almost every level in our society. It's a great shame that 30 years after the fall of the Berlin Wall, where there was a great hope of a future united world, we seem to just be pulling ourselves apart in a frenzy of self-righteousness. There's an attitude of, "I'm right, and I'll shut down anyone who disagrees," and it's becoming increasingly prevalent. People tend to listen as a result of new media, more to their own echo chambers, and are becoming more intolerant of the general views of others. You see that manifested also in an attitude of extreme pessimism. Certainly from where we sit, look, there are a number of important issues for the global community to solve.
If we do solve them, one can conceive of a very positive future for society in general. For example, if you look at storage technology for power, specifically industrial power, in other words, better battery technology, we will have a much more prevalent use of renewable energy going ahead. With respect to education, already software enables people in remote parts of the world to access some of the best lectures in the best universities on their mobile phones. The continued evolution of the economy in China, India, and hopefully in Africa, will lead to massive reductions in the level of poverty. In fact, I saw a report during the week where poverty levels are at the lowest, proportionally, on record. As prosperity increases, then population growth will slow.
In medicine, we're seeing a fast-approaching time where genomic-based personalized medicine will be available at a very reduced cost and lead to a substantial reduction in major diseases. Better food technology is reducing hunger. Self-driving cars and robotics and algorithms are enabling a much more efficient and safer form of transportation. All of this will lead to more empowerment of individuals and less dependence on governments. In terms of climate change, education, communication, poverty alleviation, population growth, medicine, transportation, food, it's possible to perceive a very much more positive and better world in quite a short period of time. However, to get to that position, we have to work together, and it requires cooperation, understanding, and most importantly, compromise. Compromise is the common necessary ingredient for every part of our interactions.
From all of the groups that we're involved in, from families through teams, through corporations and organizations, governments, public service, even countries, we have to compromise. We have to be therefore more involved in the institutions of a civil society, not less involved. The current level of trade wars, isolationism, and tariff barriers is very troubling in that context. It's moving back into an individual view of the world. In particular, from Australia's point of view, we need to nurture our relationships with countries such as China, where we'll always have differences of opinion, but where we do need to look at a broader context of our common interest. At Orica, we very much are on the side of problem solvers and solution bringers, and we will continue to work to support policies and relationships which pursue the common good rather than short-term, single-issue interests.
On that note, before I invite Alberto to the stage to talk about our financial and operational performance in more detail, I'd just like to reiterate my views about this terrific company and the bright outlook ahead. The positive results we're presenting to you today are the results of the hard work over a lot of previous years. We've got the right strategy, we've got the right people to deliver that strategy. The creativity and enterprise shown by our people, by your people, and the investments we've made to strengthen our core and to develop world-leading technologies will drive us to even greater success. On behalf of the board, I'd like to thank you, our shareholders, for your continued support, and also thank the executive team and our colleagues right around the world for a year of significant progress and achievement.
I'd now like to welcome your chief executive and managing director to address you. Alberto.
Thank you, Chairman, and thank you to you, our shareholders, for joining us today, both here and in Melbourne and in the webcast. This morning, I will talk about our performance over the past year and the outlook for FY 2020. I will start, as I always do, with safety. The first and most important of our values is that we all return home safely every day. I'm pleased to report that once again, there have been no fatalities across the group. During the year, a global pilot for major hazards management process was launched, which seeks to take the day-to-day management of major hazards to the next level. In the 2019 financial year, over 9,300 key control verifications were conducted and consistently verified so that the major hazards key controls were 100% effective 100% of the time, which is the objective.
As you may already be aware, we have complemented our traditional Total Recordable Injury Frequency Rate measure with a new metric called Serious Injury Case Rate. This measure, which includes personal injury and illness incidents that result in an actual serious impact, has been stable over the previous years. We have seen some increase in our Total Recordable Injury Frequency Rate, and we are looking into that. This was due to an increase in low-severity injuries with the vast majority of these events being at the lower end of the spectrum. Nevertheless, we can always do better, and making Orica an even safer place to work remains our number one priority. Financially, fiscal year 2019 is a pleasing set of results. Our growth drivers are starting to deliver, and we are seeing continuing momentum in profitable growth.
As Malcolm noted, earnings before interest and tax increased by 8% to AUD 665 million, with explosives volume increasing by 4% to 3.97 million tons, which will be the highest that we've ever hit at Orica. Each of the regions delivered a strong result, particularly Europe, Middle East, and Africa, with an increased EBIT in 24% and a growing market share right across Australia, Pacific, and Asia. Growth in the Canadian market in North America and in the earlier-than-expected business recovery in Latin America also contributed to this result. Our long-term strategic investment in research and development is seeing increasing customer adoption of our expanding best-in-class technology solutions. Our wireless detonator, WebGen, and digital blast management platform, BlastIQ, passed several important commercial milestones over the year. We are particularly pleased with the ongoing strong performance of our GroundProbe business, which continues to track ahead of expectations.
After several years of management focus, the Minova business has also delivered a significantly improved result in this period. Progress on rectification at the Burrup plant continues, and the plant is expected to be fully operational in the second half of the 2020 financial year. The strategic value of having production close to our customers in the Pilbara region remains very strong. We continue to make progress in making Orica a more efficient and effective business. Reliability and utilization of our manufacturing plants globally have improved, and our focus on cost management is delivering results. Our most important and valuable asset is, of course, our people. We work hard to build and develop our teams right across the breadth and depth of Orica, and the positive momentum we are seeing on every front is due to them.
During the year, we conducted an organizational health survey, and we're encouraged that the majority of our people around the world took the opportunity to give us their feedback. Key findings include that our workforce is positive and engaged, and our safety culture is strong. While these are very pleasing results, we always strive to do better, and we'll use the data to identify areas where we can further improve engagement and productivity. Looking ahead, the outlook is good. Growth in the core engine remains positive. Mining of all major commodities is forecast to increase globally in the coming years. With strip ratios continuing to climb, miners are having to remove increased volumes of overburden to access the underlying valuable ore. The world is expected to extract around 3.6 billion tons more material in 2023 compared to what was achieved last year. Furthermore, mining is becoming increasingly more difficult.
Ore deposits are becoming harder to access, often found in remote, difficult-to-access locations, parts of the world, and sometimes in the harshest of settings. This is where Orica's technical expertise, logistics network, world-class technology, and proven expertise sets us apart. For our customers, this means we can anticipate their needs in advance and deliver integrated solutions that create safer, more predictable, and more productive blast outcomes. For you, our shareholders, we will create more value by delivering an even more efficient and effective core business, while at the same time driving our technology growth engine where we can expect high double-digit growth and margins well beyond what the core can achieve. We expect the momentum in profitable growth this year to continue into 2020 with higher EBIT underpinned by further penetration of our technology-based solutions, increased demand across all regions, and an operational Burrup plant in the second half.
A key initiative will be the final phase of the SAP project, which will, alongside our embedded operating model, transform the way we work and unlock value for our customers and our shareholders. We are very excited about our recently announced partnership with Epiroc. Together, we will develop a semi-automated explosives delivery system, enabling safer and more productive blasting operations in underground mines around the world. We anticipate this being an important first step on an exciting journey towards automating the entire drilling and explosives charging process. In summary, 2019 has been a year of important progress for Orica. After 12 months of diligent and focused effort, our company is a safer place to work, the momentum in profitable growth has continued, and we are organizationally stronger.
Our long-term investment in new technologies means we are leading our sector towards the possibilities of mining's digital future, delivering sustainable growth and more value to our shareholders. This positive result and outlook are the result of long-term investments of time and resources by my leadership team and our people, building a safer and more resilient business. I thank them all for their dedication and commitment, and thank you for valuable shareholders for your ongoing support. I look forward to continuing our work. Thank you.
Thank you, Alberto. Before opening the formal part of the meeting, I'd like just to make some brief comments about procedure. This is a shareholders meeting, and only shareholders and their proxies, attorneys, and authorized corporate representatives may participate in this meeting. You'll also note that there are two fixed microphones, just either side here. If you wish to make a question, ask a question, make your way to the nearest microphone. All questions on all items of business will be filtered through me as chairman of the meeting. I'll take questions from the microphones in turn. Please show your shareholder card to the microphone attendant, and that attendant will take your name and introduce you, when it's your turn to speak.
If you wish to ask a second question, perhaps you could go to the back of the queue at your particular microphone so that all shareholders have an equal opportunity to be heard. I'd also ask that shareholders be courteous and respectful to those attending the meeting, and keep your questions to a reasonable length. Please ensure your questions and comments are relevant to the matters before the meeting and to shareholders as a whole. If a shareholder has a detailed question about the operations of the company or a question that appears to be more relevant to the shareholder's own circumstances, we'll ask that shareholder to raise the matter with management following the meeting. I thank you for adhering to these procedures.
A number of our shareholders are not able to be present today and have taken the time to send us in their proxy votes in advance of the meeting. As not to preempt the view of shareholders in attendance, and at the same time, to ensure that all shareholders who have voted have their views known to us here, I'll provide a summary of proxies after the discussion, but before the resolutions are put to a vote. In relation to open proxies that have been received for the chairman, they've all been voted in favor of all resolutions. As indicated in the notice of meeting, each resolution will be decided on a poll. When you registered your attendance this morning for this meeting, voting shareholders and proxy holders were given a yellow attendance card. On this card, you'll find a series of boxes for voting.
After any discussion on each resolution, I will invite you to mark your card to indicate by placing an X in the appropriate box. As you complete your forms, I just want to draw your attention to the fact that, one, if you've not been issued with a voting card on entry of this meeting, you'll not be able to vote. Secondly, once you've finished marking your card, please place it in one of the ballot boxes at the exit or hand it to the returning officer's staff at the end of the meeting before leaving the room. I appoint Julie Stokes of Link Market Services Limited, the company share registrar, who will have examined and prepared summaries of the proxy forms received to act as returning officer for the poll.
Please also note that if you are a proxy holder, attorney, or nominee, and your appointer has directed how you should vote on any item, you must follow that direction. I now move to the formal agenda of the meeting. The first item of ordinary business in the notice of meeting is to receive and consider the financial report, the director's report, and auditor's report for the year ended 30th of September 2019. I now declare these reports open for discussion. Does anyone wish to ask a question?
Chairman, your first question is from Mr. Steven Schneider of Hyatt.
Mr. Schneider, welcome.
Thank you, Chairman. I noticed when you introduced the directors, none of them stood up as they usually do at other meetings. I presume they've been working so hard that they were too tired. I'm not sure, I didn't get a printed annual report this year. Are all the directors residents in Australia?
No, they're not. Denise Gibson is a resident-
Sonja Clontario
Ms. Gibson is resident in Chicago in the United States, and Mr. Boon is resident in Singapore.
Oh.
Otherwise, everyone is resident here in Australia.
I have lived in both those places at one time or another. Is there any chance of this company ever paying a franked dividend?
Franking depends really on our taxing position within Australia. Given that a lot of our earnings are offshore, paying a fully franked dividend is often a challenge for us. We do have a small amount of franking this year, but next year that will increase slightly but will still be a fairly low level, unfortunately.
Thank you. Do we intend to hold the annual meetings in this place next year or in future years?
I'm not sure about the specific location here. We've been here the last couple of years, certainly we're anticipating that we'll hold our next meeting in Melbourne at this point.
I'm only asking because I couldn't find any parking out the front, I had to park where the parkland is, there are two doors there, you need the key to get in. I was lucky that a resident let me in because it's far too far for me to walk right around. Would it be possible, I've seen that there are a lot of staff hanging around both here and there, that the hotel could keep someone at the door to let us in in the future?
All right. We'll bear that in mind. It's a nightmare in Melbourne CBD at the moment with all the construction, and so I do have a certain sympathy for you.
Thank you, Chairman, and thank you for doing a good job.
Thank you.
Mr. Chairman, I have pleasure. Your next question coming from Mr. Raymond from the Australian Shareholders' Association.
Mr. Raymond, good morning.
Good morning. Congratulations to the board and all the company on another year of fatality-free operation. The SAP project has been a major undertaking for Orica over the past few years and is a major, I think, cornerstone of the modernization for the company. It does naturally lend itself to centralized control and information. One of the major things Alberto did when he first came to the helm was to push a lot of responsibility out to the various divisions of Orica. I think we can agree that that seems to be bearing fruit. How do you balance those two aspects of the centralization of control and the devolution of responsibility with this SAP project?
Okay. Look, thanks very much for that question. It's a very important project for us. We haven't had a new unified IT system since the 1990s in Orica. You can imagine with acquisitions and divestments and new businesses, it's a hodgepodge of systems globally. Given that we have something like 450 sites in 54 countries, just the information flow is very difficult with our existing system. It's long overdue. It will add enormously to our information flow and enable us to compare the operations of plants and other procedures across the world, as well as giving us very good financial information. In particular, it will help with procurement, where we are buying products in all these different locations to assemble our own products. It will clearly help with maintenance, making sure we have uniform maintenance systems across all of our different plants.
It will help also with commercial contracts to make sure that they're much more standard in the different parts of the world in which we operate. They're the three key areas, as well as just giving us timely and fast information financially.
Could I
Alberto
I think you touched on a very interesting point and just to reiterate, we will keep the decentralized model. The only way you can keep a decentralized model and still have a standard company and in control is with systems. We call this the last piece of the puzzle, but it's not that we're going to centralize. We will keep the whole operating model pushing accountabilities as close to the customer as possible. It will be, as Malcolm said, the flow of information in real time that will allow us to be much more efficient. They're absolutely compatible. Actually, I think you can't really be successful decentralizing if you don't have good information systems. I think it's a very good question.
Mr. Chairman, Mr. Raymond has a second question.
Oh. Do you want us to take that one first.
Mr. Raymond, you go ahead. Thanks.
My second question relates to the Burrup area, where obviously now there's a big plant just about to come online. There was a fair bit of political Shall I use the term hoo-ha? When this was being set up, I'm sure Orica and their partner, Yara, has gone through all of the appropriate government approvals and so forth, which I'm sure were long and complicated given the sensitivity of the area. I do note that there was a meeting of state government environment ministers that agreed back in November, they agreed to put forward the area as a World Heritage site. What is Orica doing, I guess, to manage the potential risk around that site, and the unique aspects of that site, and the community engagement linked with that?
Look, we're well aware there is some rock art in that area. Anyone that's been to that part of the world, particularly further north in the Kimberley, will understand that the rock art is quite unique and valuable. There's a lot of work going on in terms of the archaeological analysis of that rock art. We're very sensitive to it. We have clearly been working quite closely with the West Australian Government in particular, but also local communities to make sure that our impact is not going to be harmful for the rock art which exists along the Burrup Peninsula. Alberto?
Just I would add, we support heritage listing, actually. It's not, as Malcolm said, it is separate from our site, but we support that. There is an independent process of monitoring the rock paintings that we also support to make sure that anything that is done in the region, and as you know, this is a pretty big industrial region, doesn't harm them. We're all supportive of that.
Thank you.
Chairman, your next question is from Mr Rex McKenzie of Bendigo.
Mr McKenzie.
Thank you. Thank you, Mr. Chairman. Is it appropriate to ask a question of the auditor at this point?
Well, ask the question to me, and I'll-
Okay
direct it to the auditor if you-
That's what I meant through you, Mr. Chairman.
Yeah.
I'd like to first make the comment that I found the auditor's report very informative and very clear. There are three key matters which the auditor directed more attention to. The environmental remediation, particularly at Botany Bay, I guess. The Burrup manufacturing plant. The third one was taxation. My question to the auditor is, the choice of those three key matters, and they are ones that bear a lot of costs and haven't been referred to very much so far in the meeting. I'd like to ask how he chose them, particularly the taxation one. Why they were chosen, and were there any other matters that were sort of vying for a guernsey in this trio of key matters to put particular attention on? Thank you.
Let me have a go first. We might ask Penny if she'd like to talk to that. When you look at Orica, clearly the environment and our environmental legacies, given that we've been operating in this country at least since the 1800s, are very important issues. The issue at Botany, as shareholders that have been following that saga for many years, has been a long and ongoing one in terms of cleaning up the groundwater, but also in terms of the HCB issue, which we now seem to be solving. We're starting to export that waste to be destroyed. Environmental issues, given the nature of our business, will always be an important issue for us.
Burrup, clearly, given the difficulties in the construction and the importance of it in terms of our economic performance in both the Pilbara and Australia generally, and therefore in the company as a whole, is our major remaining legacy issue or, as Alberto calls them, our headwinds from previous times. In AUD terms is a big impact on us. Taxation, we've had a number of taxation issues running in different jurisdictions around the world. We're in the process of getting on top of them and cleaning them up. They remain an issue, which is clearly important. Penny, would you want to talk a little more on that?
Thank you, Chair. Thank you for the question. Always pleasing to be able to talk about our audit report. In relation to the key audit matters
What drives that disclosure is those matters that, in our judgment, require the most audit effort, and as you mentioned, the work involved through the audit. I think the Chairman has covered the particular matters involved. Perhaps just to touch on the taxation matter, which you mentioned. That really reflects the global nature of Orica's operations and working in a number of tax jurisdictions, which adds complexity to tax calculations, and also the increasing scrutiny of tax authorities around the globe. I won't cover the other matters that the Chairman has covered. You will note in the first column of each of those matters in our audit report, we do explain the reasons why we have selected those matters. There's some further information there. Again, just to provide some context, they're not dissimilar from matters raised in other organizations of a similar scale and complexity to Orica.
They typically involve the areas that are the most judgmental, such as environmental provisions and carrying value assessments.
Thank you.
Thank you. Any other questions on the general nature? Very good. We now come to the election of directors, we have four directors standing for election today, being the re-election of Ms. Maxine Brenner, Mr. Gene Tilbrook, and Ms. Karen Moses, and the election of Mr. Boon Swan Foo as a director of the company. We'll now invite Ms. Brenner to say a few words in support of her re-election.
Good morning. It's a privilege to be seeking re-election to the Board of Orica. Since my last re-election some three years ago, we've been focused on both consolidation and growth at Orica. In an environment where our mining and other customers are demanding ever higher productivity in their own operations, Orica has been challenging itself to meet their demands. In particular, this has translated into considerable focus around our core manufacturing, IS, and supply chain operations, as you've heard, together with leveraging our research and development capabilities to provide new and unrivaled products to our customers. Our innovation around wireless blasting products will improve both safety and productivity at our customers' blasting operations. Additionally, our successful acquisition of GroundProbe has set the course for new areas of growth at Orica.
As Chair of the Remuneration Committee, we're focused on a number of areas, including our talent pipeline, diversity and culture, and risk culture. We're seeing a really exciting new bench of potential leaders coming through our talent program, many of whom come from very different backgrounds and gender. As a director, it's very encouraging to meet and see the quality of people coming through. Our surveys into organizational health and risk culture showed positive trends, and we have plans to track and monitor these matters on a regular basis and ensure that communication as to their importance continues. As an executive, I spent over 30 years as a corporate advisor in both the banking and legal industries. I've advised on all areas of corporate advice, including restructures, corporate finance, acquisitions, divestments, and wider advice to the corporate community.
Since becoming a non-executive director, I act as a director of other large and complex businesses which have both Australian and international operations. In the not-for-profit sector, I serve and have a keen interest in both education and innovation. As a full-time professional director, I have both the time and commitment to apply myself fully and diligently to my role with Orica. If I have the privilege of being re-elected, I look forward to working with my fellow directors, Alberto, and his management team to continue to strengthen and grow our exciting company. Thank you.
Thank you, Maxine. Resolution 2.1 in the notice of meeting seeks the re-election of Maxine Brenner as a director, and in accordance with the constitution of the company, Maxine retires, and being eligible, offers herself for re-election. The motion is now open for discussion. Does anyone wish to speak?
Chairman, a question from Mr. Geoff Phillips from South Australia.
Mr. Phillips.
We meet again.
Yes.
I hope you're well.
Thank you.
I'd like to congratulate you on your speech. It was terrific. I wish that more people around the world would take notice of what you said.
Thank you for that.
I rise, putting it bluntly, to oppose the re-election of this person. You and I have had this discussion before. I'm still out of pocket by AUD 400 thousand because of her husband. I don't believe that even though she's been a director of Qantas and Origin and Growthpoint, plus the others. She's picking up AUD 1 million a year.
Yes. Mr. Phillips.
If she gave half of that to the creditors, the unsecured creditors, including me, it would take her 2,000 years to pay them off. I've had enough.
Mr. Phillips, you have to keep your comments.
Yes, sure
to matters relating to Orica.
Well-
I know you have this issue.
We don't believe.
We have talked about it at length.
that she is worthy of the support of the shareholders around Australia and around the world because of her past George Pell is doing time in jail for something he did.
Hold on
25 years ago.
That's enough. No. Sorry. I won't accept that.
Okay.
Please, you've made your point. I understand your issue.
We'll have a chat afterwards.
Let's have a talk afterwards.
Not a problem.
Thank you.
I've got a present for you.
Thank you. Looking forward to that. Are there any other questions? The proxy results for resolution 2.1 are on the screen. I now put the motion that Maxine Brenner be reelected as a director of the company and ask that each of you vote on the resolution by marking the appropriate box on your yellow voting card. Resolution 2.2 of the notice of meeting seeks the reelection of Gene Tilbrook as a director, and in accordance with the constitution of the company, Gene retires and being eligible offers himself for reelection. I now invite Gene to address you in support of his election.
Thanks, Chair. Good morning, ladies and gentlemen. During the six years that I've now been on your board, we've had a strong focus in Orica on the internal issues and the pressures of our direct environment, especially our markets. While the pathway has been somewhat uneven, we have addressed many of those issues, as our results show. Meanwhile, in recent years, there have been even greater challenges and changes emerging in the group's broader environment. From the point of view of the Audit and Risk Committee, which I chair, while the balance sheet is stronger and cash flows are strengthening, we need renewed efforts in how we address and report on our risks and meet enhanced expectations for general reporting. In other areas, too, expectations have changed, particularly around strategies for culture and planning and reporting around climate change.
Experience across the other boards on which I sit, in energy and property, is relevant to all of these because while the perspectives vary, the processes of analysis and reporting over longer time frames have strong parallels. Underlying all of these considerations is the need to address emerging governance needs effectively in order to allow focus on working with management to improve operations, maintaining a strong safety focus to enhance shareholder returns. The key area where the group is enhancing its own capacities is through the growth and acquisition of information technologies that will transform our industry. While the funding environment for acquisitions has evolved a lot since my executive career, the success factors of financial discipline and effective integration remain consistent.
It's a privilege to work as a member of Orica's Board with members of strong complementary backgrounds and a collaborative approach, I hope to have your support for a further term on the Board. Thank you.
Thank you, Gene Tilbrook. The motion is now open for discussion. Does anyone wish to speak? All right. Before I ask you to vote on this resolution, the results of the proxies received in respect of the resolution will be displayed on the screen. I now put the motion that Gene Tilbrook be elected a Director of the company and ask that each of you mark your appropriate box on your yellow voting card. Resolution 2.3 in the notice of meeting seeks the reelection of Karen Moses as a Director. In accordance with the constitution of the company, Karen Moses retires and being eligible offers herself for reelection. I invite Karen Moses to address you in support of her election.
Thank you. Thank you, Malcolm Broomhead. Good morning, everybody. I'm very pleased to be with you today, and thank you so much for joining us. Before I start, as a shareholder and a Director, I wanted to say congratulations to our CEO, Alberto Calderon, and to his whole team, for your insights, your contribution, and your commitment to making Orica really a great company. Thank you. I've served as a Director of Orica for 3 years, including now as Chair of the Safety, Health, Environment, Community and Security Committee. I currently also serve as a Director across industrial and the energy sectors and the education sector, and have served on listed boards for over 15 years, as well as supporting the not-for-profit sector. I've sat on industry boards and advisory committees for the government considering public policy, have a good understanding of market regulation and market structures.
I bring a breadth of experience as a senior executive with over 30 years of operational experience in the energy sector within Australia and overseas. As the Finance and Strategy Director, I was responsible for corporate strategy, transactional activity, the finance functions, as well as IT, risk, health, safety, and environment. From that experience, I've learned a lot about what works, what doesn't, and what surprises you, and how to recover from those surprises. You learn a lot about yourself and a lot about others, and the richest learning comes from the most difficult issues. I've lived through the challenges of high growth environment, no growth, negative growth, changing industry structures and disruption, and changing community, customer, and investor expectations.
I've learned a lot from what was done well and learned even more from what could have been done differently. I bring all of that as a director to the benefit of Orica. Personally, my passion is people. It's so important to create an environment where everyone goes home safely, where everyone has the opportunity to be their very best, where the space is created for the best decisions to be made, and where everyone can give more than they take, to the benefit of the communities in which we operate and the people that we touch. I have more than sufficient capacity to fulfill my obligations as a director and provide additional time should it be required. I'm seeking your support today for my re-election to the board. Thank you so much, and I look forward to meeting you over a cup of tea. Thank you.
Thank you, Karen. The motion is now open for discussion. This is the motion that Karen Moses, who retires in accordance with Rule 58.1, is re-elected as a director. Anyone wish to speak? I now ask you to vote on this resolution by marking your yellow card. In the meantime, the proxy votes are shown on the screen behind me. Resolution 2.4 in the notice of meeting seeks the election of Boon Swan Foo as a director. Boon was appointed as a director on the 6th of May 2019. In accordance with the constitution of the company, Boon retires, being eligible, offers himself for election. I now invite Boon to address you in support of his election.
Thank you very much, Chairman, for your kind words and comments. Since I'm new, I decide that I will introduce myself under three capacities: as executive previously, as board director, and as advisory role. My first job was a shipbuilder. I was a ship designer, and my first design project was with an Australian design company. I must say, I was pleasantly surprised to find that Australians are very creative, very hardworking, and very compelling people. Since then, it's been a very interesting relationship I have with Australian companies. I've been CEO of three listed companies previously, and also CFO of a parent company. Interesting projects include setting up a U.S. manufacturing site, joint venture with U.S. We now have three facilities. There were three facilities in U.S. during my time doing aircraft maintenance. We have a shipbuilding site.
Other interesting projects include joint venture with India, joint venture projects with aircraft maintenance in Brazil, Venezuela, and Turkey. After that, I left a listed company to do an easier job as MD of Singapore, a government research arm. The job was to spend AUD 1 billion a year in research and development. I was in charge of commercialization activities, and we did a lot of joint ventures, a lot of collaboration with all the top U.S. universities, MIT, Stanford, Cambridge, Imperial College, and so on. I left the tough world of work to be a professional director. Since then I've been a professional director to about 20 or 30 companies in various industries, private equity, aerospace, airlines, shipping, venture capital, insurance, and so on. Interesting boards include Jetstar Asia, where I work with Geoff Dixon and Alan Joyce.
MIH Holdings, the South African company owns 35% of Tencent, we had board meetings in Cape Town during the football World Cup. I must say I was a little bit upset to have missed the Presidents Cup recently here. We have board meetings in Berlin, Amsterdam, São Paulo, and various parts of the world. They are really a truly international top internet companies. Other interesting board include being chairman of the Singapore Changi Airport, the managing partner with airport in Lima, Peru, Corusel, Costa Rica, and also in Luton. That's really my board role. In advisory, of course, I sit on Chinese boards, four Chinese SOEs. They're non-listed boards, a few of them in Fortune 100 to Fortune 500. In advisory roles, I've been advisor to Motorola, Inc., a research advisory committee previously, Imperial College, the Japan Advanced Institute of Science and Technology, and also Dean, Kennedy School of Government.
I was also senior advisor to the Singapore Government Sovereign Wealth Fund, Temasek Holdings, for a while. Currently, I'm the largest single shareholder in a listed company in Singapore, investment company, which was actually previously an Australian-run company. Also, I run my own investment firm. I hope to add value to the board through my commercial experience and also my international perspective. Thank you very much. Thank you for voting me. Thank you.
Thank you, Boon. A motion open now for discussion. Does anyone wish to speak? Before I ask you to vote on this resolution, results of the proxies received are displayed on the screen behind me. I now put the motion that Boon Swan Foo be elected as a director of the company and ask that you each vote on the resolution by marking the appropriate box on your yellow voting card. That completes the election of directors at this meeting. The next resolution three in the notice of meeting, is to adopt the remuneration report. The remuneration report is found on pages 31-51, 20 pages of rem, in the annual report. As you'll be aware, the vote on this item is advisory only, as it does not bind directors of the company who remain responsible for the remuneration policy of the group.
However, the board takes into account feedback from our shareholders, including the discussion and vote on this resolution when considering future remuneration strategy. By casting your vote in relation to the remuneration report, you'll be indicating your support for the remuneration strategy that the board's adopted for its most senior executives, including the managing director. The board sets the remuneration strategy with a view to attracting and retaining the best executives possible to grow the company in a manner that befits shareholders. A summary of our company's performance and the effect that has had on remuneration outcomes in the 2019 financial year can be found in the remuneration report. As you know, there are three elements to the remuneration in Orica. There's fixed pay, then there is a bonus achieved for short-term objectives, and a long-term incentive plan.
Full details, as I said, are in the remuneration report, and I'd be pleased to take any comments or questions you might have in relation to the company's remuneration policies. The motion is now open for discussion. Does anyone wish to speak?
Mr. Chairman, Mr. Raymond from the Australian Shareholders' Association.
Mr. Raymond.
Thank you. Broadly, the ASA supports the remuneration approach of Orica. I think we particularly like the holding locks that are placed on the awards, both STI and LTI, and would acknowledge that this is probably better than most of the major companies in Australia. Would exhort the company to perhaps extend them even further, would be great. Thank you very much.
Thank you. Look, I think very good question. The whole intent is to align management with shareholders. To do that, our view is we try to make them shareholders. In order to make sure that everyone acts in the long-term interests of shareholder value creation, we put holding locks on the ability to trade those shares that management have. We think we have an appropriate length of holding lock, but it's always something that we review actively, particularly given the environment where attitudes in the community and in the regulators are changing in this respect. We thank you for your comments and believe that we're pretty much up with the state of the art in terms of holding locks on shares. Any other questions? There being no further questions, I'll now put the motion that the remuneration report be adopted.
I wish to highlight that none of your directors, nor any of the senior executives listed in the remuneration report, may vote their own shares in relation to this resolution. Before I ask you to vote on this resolution, again, results of the proxies received will be displayed on the screen behind me. I'll now ask that members present vote on this item by marking the appropriate box on your yellow voting card. We now come to the proposed grant of performance rights to the managing director under the long-term incentive plan as the long-term element of his remuneration in the 2020 financial year. The actual number of rights to be granted will be calculated as set out in the explanatory notice of meeting. Under the ASX Listing Rules, shareholder approval is required for a director to be issued securities under the employee incentive scheme.
I'll be pleased to take any comments or questions you might have in relation to the grants of performance rights to the managing director. The motion is now under discussion. Anyone wish to speak? Before I ask you to vote on this resolution, the results of the proxies received will be displayed on the screen. I'll now put the motion that approval be given to grant the performance rights under Orica's long-term incentive plan to the managing director on the terms summarized in the explanatory notice of meeting. Any votes cast in favor of this resolution by the managing director or an associate of his will be disregarded in accordance with the ASX Listing Rules. I'll now ask members present to vote on this item by marking the appropriate box on your yellow form.
Resolution five in the notice of meeting proposes an increase in the maximum aggregate amount of remuneration which may be paid to non-executive directors in any year from AUD 2.5 million-AUD 2.75 million. The aggregate fee cap was last increased in 2010. To give you by way of background, the proposed increase takes into account a number of factors. Committee fees paid to directors have increased in 2019 because we've established a new committee, which is the Innovation and Technology Committee, and that, as I mentioned in my earlier address, assists the board in oversight of our commercialization, our new technology, our operation IT projects, and our digital platforms. Secondly, it gives the board some flexibility to deal with board renewals.
Clearly, if someone's going off the Board, we will hopefully bring their replacement on earlier to allow some overlap, and it's important that we attract and retain directors who contribute to the high performance of the Orica Board. The Board does not, however, intend to pay the full amount of the increase in the short or the medium term, but that a buffer is there if we increase the number of directors as a result of those processes. Motion is now open for discussion. Does anyone wish to speak? Again, before I ask you to vote on this resolution, results of the proxies received in respect of the resolution are displayed on the screen. I'll now put the motion that approval be given to increase the maximum aggregate amount paid to non-executive directors each year.
Note that, again, no votes cast by any director or associate or any member of the key management personnel or their related parties will count in this vote. I would ask that you vote accordingly on your yellow voting form. Resolution 6 of the notice of meeting relates to the reinstatement of the partial takeover provisions as Rule 86 of the company's constitution. This has been an ongoing matter for us but comes back to you as shareholders on a timely basis. Details of the effect of this rule, its advantages, and its disadvantages are set out in the notice of meeting. I don't intend to go over that again in detail. If renewed, this rule will be operative for a further three years before it comes back to this meeting. The motion is now open for discussion. Does anyone wish to speak?
Before I ask you to vote on this resolution, the results of the proxies received are displayed on the screen behind me. I'll now put the motion that the company reinstate the partial takeover provisions as Rule 86 of the company's constitution with effect from today's date for a period of three years. Once you've finished marking your card, please place it in one of the ballot boxes on the exit or hand it to one of the returning officers before leaving the room. If there are any aspects regarding the voting on which you are uncertain, please don't hesitate to ask one of the returning officer's staff. I thank you for your support at this meeting and for your support of the company. Rather than keep you waiting for the final result, I propose to formally close the meeting.
The results of the poll will be announced to the ASX as soon as they are finalized. It's clear from the proxies, though, as you will have seen, that all motions have been carried. After you voted, please join us outside for light refreshments in the ballroom foyer. You'll have an opportunity to talk to directors and indeed, senior management there today. Also, Link Market Services staff will arrange for voting papers to be collected and taken for processing. When written confirmation of the results of the poll are available, they'll be listed in the ASX. Thank you for your attendance. I now declare the meeting closed.