Good afternoon, everyone. My name is Michael Sammells, and as Chairman of the Board of Sigma Healthcare Limited, I would like to welcome you here to today's AGM, including those joining us online in this hybrid meeting. I wish to begin by acknowledging the Wurundjeri people of the Kulin Nation, the traditional custodians of the land on where we are gathered today. We pay our respects to their elders, past, present, and emerging. I formally declare the 2024 Annual General Meeting of Sigma Healthcare open. All presentations and a recording of today's meeting will be available on our website for later viewing. Voting in today's meeting will be conducted by a poll. All polls will remain open until the conclusion of today's meeting. As we move through the items of business, I will respond to questions from shareholders and proxies.
As this is a hybrid meeting, we will provide opportunities for questions from those in the room and online. For those participating online, the instructions on how to ask a question are in the details provided in the online guide, which was provided to shareholders and is on our website. Before we proceed, I'd like to introduce the members of the Sigma board and management who are present today. Starting from your left, Annette Carey, who joined the board in April 2023, and is a member of the Nomination and Remuneration Committee. Neville Mitchell, who joined the board in February 2023, and became Chair of our Risk Management and Audit Committee in April 2023. Kate Spargo, who is the Chair of the Nomination and Remuneration Committee and a member of the Risk Management and Audit Committee.
Chris Roberts, who is also a member of the Risk Management and Audit Committee. Chris joined the board in October 2023, and is a nominee of our largest shareholder, HMC Capital. As this was after our last AGM, Chris is putting himself up for re-election by shareholders today. Vikesh Ramsunder, our Managing Director and Chief Executive Officer, who you will hear from shortly, and Kara McGowan, who is our General Counsel and Company Secretary. We are also joined by our senior executives, who will be available to chat with shareholders at the conclusion of the meeting, as well as representatives from the company's auditors, Deloitte, and our share registrars, Link Market Services.
Turning to the order of business, we have five items of business today, as outlined in our notice of meeting, being the chairman and CEO addresses, the financial statements and reports, the remuneration report, the re-election of directors, and the remuneration arrangements for the Managing Director and Chief Executive Officer . The first item of business is effectively an overview of the past twelve months and a general business update, which I will cover now before introducing Vikesh. Let me start with some high-level remarks regarding where we are at with executing our strategy. For some time now, Sigma has voiced our strategic objective of building a more sustainable and robust business with diversified earnings. We have completed our major infrastructure build and replaced our systems to provide these foundations for the business.
Now, subject to approvals, we're on the cusp of delivering the most transformational transaction in our proud history that will deliver against each of our strategic objectives. We've never been more advanced. Focusing on the last 12 months, we have delivered sustained improvement and significant strategic achievements that can fundamentally transform Sigma, Sigma for the long term. Most notably, we strengthened our core operating business, improved our efficiencies, and expanded our growth opportunities. Vikesh will talk to this shortly. We renewed our board and strengthened our leadership team. We secured the 5-year supply agreement with Chemist Warehouse, which will commence from July 1 this year. On December 11, 2023, we announced the Chemist Warehouse merger proposal. In January, we completed the AUD 400 million equity raising, which was well-supported by the market.
Securing the Chemist Warehouse supply agreement was an important achievement in securing volume that will help improve utilization and returns from our technology and distribution center investments. Clearly, the proposed merger with Chemist Warehouse, which is subject to ACCC approval, provides the biggest transformational opportunity in the long and proud history of Sigma. If the merger is completed, it will create a full-service wholesaler, distributor, and retail pharmacy franchisor. While this model already exists in Australia and internationally, it has the potential to accelerate our strategic direction by bringing together two complementary businesses with complementary core strengths. Sigma has world-class distribution, infrastructure, and capability that is best-in-class service to pharmacies across Australia every day. Chemist Warehouse, meanwhile, has unparalleled pharmacy, franchise, and marketing know-how and expertise. The work completed to date has identified AUD 60 million of potential cost synergies once the transaction is executed, creating further value for shareholders.
The proposed merger remains subject to ACCC approval, a process that we are fully supporting and cooperating with. The ACCC have undertaken their market inquiry phase, and on their website, have identified June 13 this year as the provisional date for the announcement of their findings, which may be a final decision or a statement of issues. While timing remains unclear, we are hopeful of a positive decision in the second half of this calendar year, which will then be followed by a shareholder approval process that is expected to take around three months... It is this timing and completion uncertainty, combined with the unique nature of the merger transaction, that led the board to implement certain remuneration arrangements that are being voted on today.
Given the size of the Chemist Warehouse Group, the proposed merger is essentially without precedent on the ASX, and hence, when we came to a range of issues to address, including remuneration, market norms, while considered, don't necessarily deal with the unique nature of the merger proposal. The merger requires the skills and expertise of Sigma's key executives to unlock its potential shareholder value. Further, while the board remains hopeful that the proposed merger will be finalized, in the event the proposed merger does not proceed, retention of key skills, expertise, and corporate knowledge will be critical in driving a standalone Sigma to continue to diversify our business, grow our margins, and identify and execute alternate strategic transactions. Having reflected on comments received from proxy advisors, I remain confident that the board has acted in the best interest of shareholders.
More details surrounding the proposed transaction, governance, and reporting will be provided in prospectus documentation to be released of a shareholder approval process. Importantly for shareholders, if the merger is not approved, Sigma remains a more attractive standalone investment thesis than it was prior to the completion of our two-year turnaround. We have a state-of-the-art distribution center network with capacity for growth, strong heritage brands, a pipeline of private and exclusive label products to grow margin, sales growth through the Chemist Warehouse volume under the new five-year supply contract, and other strategic options to diversify our earnings. This is all underpinned by a stronger balance sheet following our equity raise completed in January.
The progress we have made and the strategic opportunities ahead have been recognized by investors, with Sigma's share price opening today at AUD 1.25, up 100% over the last 12 months. Finally, notwithstanding everything happening in the business, we've not lost sight of our ESG obligations. We have released our fourth sustainability report, where we outline some of the achievements throughout the year, including facilitating the donation of 2.2 million of health products to Foodbank, reaching over 23% of solar energy consumption, diverting over 71% of our waste away from landfill, maintaining a strong health and safety focus, and continuing to support diversity and inclusion within our workforce. Our attention now turns to preparing our business for the next phase of ESG maturity, including the upcoming regulatory reporting changes.
Before I hand over to Vikesh, I just would like to thank my fellow board members for their hard work, skills, experience, diligence, and support, as we have navigated successfully through the transformational set of decisions in relation to both the Chemist Warehouse supply agreement and merger proposal. I would also wish to thank Vikesh for his exceptional leadership and his executive team for the outstanding progress and achievements made during the year. With those comments, I thank our shareholders for your support of Sigma, and will now hand over to Vikesh.
Thank you, Michael, and I would also like to extend my welcome to everyone in the room today and those joining online. Before I provide more specific details, I would like to start by acknowledging our team members, who have shown incredible resilience through an intense period of change. Executing our strategy has been a two-year turnaround that has enhanced our capabilities, strengthened our cooperations, and solidified our balance sheet. Customer service performance metrics sit at world-class levels, and combined with the execution of our simplification strategy, has delivered an improvement in both productivity and cash flow. The overall impact is starting to be seen through improvements in our financial performance and in the strategic growth opportunities that lie ahead.
Today, I will provide you with an overview of our financial performance for the year, an update on our operational performance, outline progress with our retail brand strategy, discuss the regulatory environment, provide a brief current year update. While I understand you may have questions relating to the Chemist Warehouse business performance, we are not in a position to provide an update today, but we'll seek to do so at our half-year results announcement in September. In late March, we announced our financial performance for the previous year. In summary, net sales came in at AUD 3.3 billion, and excluding the merger proposal costs, we achieved earnings before interest and tax of AUD 31.4 million and net profit after tax of AUD 12.7 million.
Including merger proposal costs, EBIT was AUD 23.2 million, and NPAT was AUD 4.5 million, an increase of 150% on the prior year. The improvement was supported by an 11% reduction in total operating costs. Considering the improvement to the business, the board agreed to pay a final partly frank dividend of AUD 0.005 per share. Turning now to operational performance. Pleasingly, the reliability of our systems and operational performance has continued to be a highlight. Sigma delivered 230 million units during the year, and our delivery in full metric has been sustained above 99%, which is a world-class standard, along with the stock availability, which has improved to 93%.
At the same time as increasing availability, we reduced our stock on hand by AUD 103 million through better demand planning, stock management, and divestment of non-core assets. We also achieved the ISO 9001 quality accreditation during the year, a key milestone that validates the progress made in enhancing and standardizing our processes across the entire network. A very important outcome was the securing of the total Chemist Warehouse supply contract, which commences 1 July this year, and we are well advanced in the execution of our onboarding plans. We have negotiated with suppliers, built our stock replenishment plans, and mapped our delivery routes to optimize service levels to all our customers. We have also recruited the additional team members required to deal with the anticipated 40% growth in volume. In 2023, we announced plans to discontinue the Guardian Pharmacy brand.
This process is now complete, and I'd like to thank our Guardian members for their commitment to the brand and their communities over the years. Simplifying our retail strategy from five to two brands has enabled us to provide more support to the Amcal and Discount Drug Store members. The consolidation allows us to focus on brand positioning and consumer messaging to increase footfall through our stores, and provide scale to deliver the economics of both a private and exclusive label strategy, which is currently subscale. We have over 250 private and exclusive label products launching this year, with approximately 80% expected to launch in the second half of the year. This is an important vector for growth, as it delivers differentiation and margin for our franchise brand members and for Sigma.
In the medium term, we have set targets of growing the Amcal brand network to 300 and DDS to 150. As you are aware, Sigma operates in a highly regulated industry, with agreements in place that govern our wholesale distribution margin and is supported by a funding pool to deliver services in the CSO Deeds with government. While we are currently bound by a non-disclosure agreement, I can say that we are in advanced negotiations with the government and the Department of Health on the next funding agreement. Critical for Sigma, in this high inflationary environment, is that we achieve an increase in funding to fairly remunerate our industry for the services we provide to government and patients. Before I hand back to Michael, I would like to provide some remarks on our progress year to date. The macroeconomic environment remains challenging and intensely competitive.
Sigma, however, operates in a more defensive market segment that is less susceptible to fluctuations. Sales for the first quarter of our financial year support this, with sales revenue up 4.9%. However, in such a competitive and regulated market, we are restricted in our ability to pass on cost increases, intensifying our focus on driving operational efficiencies and on securing a sustainable funding model with government. We anticipate this will be agreed to commence in the 2024 calendar year. While we still have much work to do, progress is positive, and the actions we are taking today are a step towards reaching our medium-term EBIT margin target of 1.5%-2.5%.
To the second half of the year, we will navigate our way through the ACCC process for our proposed merger with the Chemist Warehouse Group, while continuing to focus on business performance improvement and service excellence. This includes the seamless transitioning of the Chemist Warehouse PBS volume from 1 July, while maintaining high service standards for all existing customers. With the proposed merger in front of us, this is an exciting and truly transformational opportunity. If approved, it will help diversify our income streams and provide further opportunities for growth. Finally, I would like to personally thank the board for their unwavering support, with special thanks to Michael and Neville, who have both made significant contributions to the Chemist Warehouse merger proposal. I would also like to thank our customers who have continued to support us, and we remain committed to supporting community pharmacy.
Thank you, and I will now hand back to Michael.
Thank you, Vikesh. Before we move on to the remaining orders of business, we did receive one question from a shareholder in advance of today's meeting. While I am paraphrasing, the shareholder essentially questioned the validity of climate change on the environment more broadly, and therefore, why Sigma identified climate change as a risk and needs to react or respond. I don't plan to debate climate change today. Environmental factors do form part of our risk planning, as it does potentially impact our ability to distribute essential medicines to patients who need them. Therefore, as a board, we are committed to Sigma being a responsible corporate citizen and supportive of the business taking actions today that are less detrimental to the environment tomorrow.
We'll now then move to four items of business, which are: the financial statements and reports, the remuneration report, the re-election of directors, and remuneration arrangements for the Managing Director and Chief Executive Officer. All eligible proxy votes were required to have been received by 2:00 P.M. on Tuesday, May 28. All voting will be conducted by way of a poll. I will be voting any undirected proxies, appointing the Chairman as proxy in favor of all resolutions. Item 2 of the notice of meeting is consideration of Sigma's financial report, directors' report, and auditors' report for the financial year ended 31st of January 2024, which I'll take as received and read. The matter does not require resolution. The company's audit partner, Marzena Delaney from Deloitte, is available to take any question on the auditors' report and on the conduct of the audit.
Are there any questions with respect to the company's report?
Chair, we do have a general question from Mike Robey from Australian Shareholders' Association. "I congratulate Sigma on what we hope is a successful merger with the Chemist Warehouse Group. It's good to see a deal without the fat payments to brokers. My question is about non-renounceable placement of AUD 400 million. This was a 54% increase, so shareholders who didn't have the cash to take up their entitlement were heavily diluted. Why not, like many listed companies, use a renounceable offer, where retail shareholders can sell their entitlements on the market and suffer zero dilution? Why did Sigma go non-renounceable?
Thank you for the question, Mr. Robey. When we considered the size of the equity offering, we felt that the pathway we took provided greater certainty for shareholders and shareholder value. In fact, I think the retail buy shareholders, retail shareholders was akin to 53%-54%, which is above the average for these types of offer. We also note some retail shareholders took up additional options. We think it was the right outcome for the organization, and I think that the market support for that shows accordingly.
Thanks, Gary.
Are there any other questions?
Leonard Levy.
Chairman, we have Leonard Levy here, who has a question for you.
Thank you, Michael. I'd like to make a couple of observations, then ask a couple of questions, if I may?
Certainly.
I'm delighted with the performance improvement. It's great. I'm delighted that the share price has doubled in the last 12 months, but I wonder if that's purely due to the merger that we're hoping to achieve. I'm also wondering why, with a, with a 40% growth in volume, or how is that reflected in cash? What's our cash flow situation? We have a good financial performance. Again, I'm looking at my portfolio and thinking I get about a 1.2% return on the current share price. When are we going to see an increase in dividends? I'm a little bit old. I've been coming to these annual general meetings now for over 60 years, and I can recall different figures to AUD 0.005 in the past.
What we have seen is this great growth over the years, continual expansion, continual improvement, obviously money into whatever it takes to make the company work properly. The question still remains: when will the dividends improve?
Mr. Levy, thank you for your question. I think it's only in recent years that we've actually restored paying dividends to shareholders. I think you will be personally aware we went for a couple of years of not, and yes, the company has invested a lot of capital into its infrastructure. I think what you should expect on a look-forward basis is, as we increase the volumes in those warehouses, particularly on the back of the Chemist Warehouse supply contract, that the profitability of the company increases accordingly, and therefore that gives us greater capacity to share some of that with shareholders through dividends. The other part, I have to say, is we have not got to the position of signing off over a dividend policy for the Merge Co.
The point in time for that style of information to shareholders will be through the form of a prospectus to inform merging considerations on an assumption that the ACCC clear the transaction. That's when you can expect some more information.
Thank you. That's very good. Now, Guardian's disappeared, and you have two brands left. What's happened to the numbers of the two brands before and after Guardian disappeared, or even in the last 12 months? Have the numbers increased for Amcal, or have they gone backwards? What's happened with the numbers on these two franchises?
So the numbers in total will be a slight decline, which is not unexpected. I don't have the actual numbers on me. I'm not sure, Vikesh, if you want to talk about that, or we can take it on notice. But you-
So the numbers of Guardian pharmacy. Sorry, the number of Amcal pharmacies have actually increased. Around 40% of the Guardians actually converted into Amcal pharmacies, so you're now seeing a growth in Amcal pharmacies. Inherently, we still have, you know, the DDS brand that's got about 111 members at the moment. So in total, of course, we've shrunk because around 50 Guardians to 60 Guardians have become, let's just say, independent. But-
... It was intentional so that we could start to drive greater concentration, and production of private label. To do that, you actually need more brand members. That was really the strategic decision behind it.
Thank you, Vikesh. Thank you. Good. Thank you, Michael.
Thank you, Mr. Levy , for your questions.
Gary, you got a? Is that? Okay. That concludes our consideration of the financial statement and report. Thank you. We now come to item 3 on the notice of meeting to adopt the company's remuneration report for the year ended 31st of January 2024. The Corporations Act requires an advisory, non-binding resolution to be put to shareholders for the adoption of the remuneration report. Let me make a few introductory comments before I open this item. As I outlined earlier, in December 2023, Sigma announced a transformational merger with Chemist Warehouse. Accordingly, the board considered it appropriate to implement remuneration arrangements to support this objective.
We understand that proxy advisors and shareholders are typically not in favor of retention repayments, and as a board, we share that view in normal circumstances. However, given the uniqueness of the transaction and the size and complexity of the Chemist Warehouse group, the proposed merger is essentially without precedent on the ASX, so the board decisions with regard to remuneration needs to be considered in that context. We have a particularly unique set of circumstances, given the relative size of Sigma and Chemist Warehouse, of which Sigma's CEO, Vikesh, has been named as CEO of the merged company, should it proceed, hence his importance to Sigma and our decision-making process. We are also mindful that the proposed merger would take time to seek the requisite regulatory approvals, and if successful, a further number of years to integrate, embed, and realize synergies.
The board considered it critical to ensure appropriate management of key personnel at this time and maintain management's focus on completion and integration of the proposed merger. The board remains committed to ensuring Sigma's remuneration practices and disclosures align with stakeholder expectations and market practice, while also considering commercial sensitivities. While in the FY 2024 remuneration report, Sigma improved its disclosure from prior years, we recognize further improvements can be made in FY 2025, and we will continue to engage with key stakeholders to identify further opportunities for improvement and more granular information on measures, weightings, and outcomes. With that overview, I'll now open up to any questions with respect to this item.
Chair, we have a question from Mike Robey, from the ASA again. The remuneration structure and quantum is in line with the ASA guidelines. While we accept the commercial and confidence nature of your NPAT target for the STI in the year, we do expect that in the subsequent year, you will reveal what the hurdle was for the prior year. All we got was that it was passed, and we're not given the target. Can you do so in future, please?
So thank you for your question, Mr. Robey. I think you will see in our remuneration report for the year in question, the disclosures, the detailed disclosures for our STIs is materially more detailed than prior years. We have received a range of feedback from a range of stakeholders out there, and the Remuneration Committee will take that on board as we consider the format for next year's report, your specific point included.
Mike Robey's been busy. The ASA has difficulty with the discretion of the board in the event of a successful merger or the departure of the CEO. Our view is that if a CEO does not complete the full term, then make prorated payments for the period served, if hurdles are achieved. This is not the case here, where complete discretion is given to the board on any payout. There are unusual conditions surrounding the three-year period of this plan, but this doesn't pass the test of fairness and transparency.
Thank you for the question. I think what we're asking shareholders to do is provide the board with the authority to use discretion. What we're not saying is that discretion would result in any payouts in full for the particular matter. I think, and I, I think you need to entrust the board that it will use shareholders' funds wisely in making those decisions. So we're not, we're not making decisions here about what sort of payout would be exactly. So I, I think, I don't think you should be concerned.
There's no further questions online.
Are there any questions from the floor on this item? Okay, that concludes our consideration of the remuneration report. I will now put on the screen the valid available votes received from shareholders for this resolution. With this vote under 75%, this reflects a first strike against our remuneration report. To close this item, as I've already outlined, I remain comfortable that the arrangements we put in place, given the critical nature of the transformational transaction we are now executing, was the right thing to do. Had we done nothing and lost critical people in the process, shareholders would rightly be disappointed in the board for not protecting the company and the long-term interests of shareholders. I also note that while just over 50% of our shareholders have expressed support for the remuneration report, which is truly appreciated, we have received a first strike.
Having said that, the board has taken on board the feedback and concerns raised from stakeholders through the process. We will continue to engage and take advice on how we can address the concerns we have heard. We now come to item four on the notice of meeting, the re-election of two directors. In accordance with Rule 3.6B of the company's constitution, and being eligible, I, Michael Sammells, am offering myself for re-election as a director. In addition, Dr. Christopher Roberts, who was appointed by directors in October 2023, automatically retires at the next AGM following their appointment in accordance with rule 3.3 of the company's constitution, and being eligible, also offering himself for re-election as a director. No other nomination has been received in accordance with Rule 3.5C of the company's constitution.
As the next item of business relates to me, I will now stand aside and hand over to Kate Spargo as Chair of the People and Remuneration Committee, to chair this part of the meeting.
Thank you, Michael, and good afternoon, everyone. It's my pleasure to chair this part of the meeting today. Now, this next item is 4.1, relating to the re-election of Michael Sammells. Michael was appointed to the board in February 2020, and is currently the Chair of the Sigma Healthcare Board, as you know, and he is also a member of the Nomination and Remuneration Committee. Speaking on behalf of my fellow directors, Michael became Chairman of Sigma in incredibly difficult and challenging circumstances, some of which some of you may be aware of. He's shown wonderful leadership and resilience through that time, and has since played a pivotal and demanding role in advancing our current strategic direction, which has led to the proposed merger with Chemist Warehouse.
I can say on behalf of all of us that I think Michael has been absolutely instrumental in achieving that deal along with Vikesh. Michael's experience is set out in the notice of meeting, which you've had an opportunity to read, and I'll now hand over to Michael to address you as shareholders.
Thank you, Kate. It's been a privilege to be part of the Sigma board since I was first appointed in February 2020. Shortly after being appointed, I was appointed as Chair of the Risk Management and Audit Committee. I've been Chair of the board since August 2022, after being asked by the board to become acting chair, following the tragic passing away of our then Chair, Ray Gunston. I believe a long executive career in healthcare, with significant time spent as a CFO, with experience in all matters finance, mergers and acquisitions, and IPOs, has enabled me to add value to the Sigma board, complementing the experience of my fellow directors.
During my time on the board, we've secured the services of Vikesh as CEO, and in turn, supported him to make a large series of changes to our business that has materially improved our financial and business performance. More recently, in my time as Chair, have helped navigate the business through securing the Chemist Warehouse supply agreement and then the proposed, proposed merger with Chemist Warehouse, announced in December last year. It would be a privilege to be elected to continue to represent shareholders on the Sigma board.
Thank you, Michael. All directors have voted in favor of the resolution. I now move that Michael Sammells be re-elected as a director of the company. Are there any questions from anyone in the room in respect to this or online?
There's no questions online.
Would anybody here like to ask anything about this re-election? All right. I'll now put up on the screen the details of the valid available votes received from shareholders for this resolution. I congratulate Michael on his re-election. I'll now hand back to you.
Thank you, Kate, and thank you, shareholders, for your vote of confidence. I'm very committed to ensuring Sigma's strategy and transformation is executed to deliver value for shareholders. Next is item 4.2, relating to the re-election of Dr. Chris Roberts. Chris was appointed to the board in October 2023, and is a member of the Risk Management and Audit Committee. Chris's background and experience is set out in the notice of meeting. From the board's perspective, Chris brings a wealth of industry experience and knowledge and has been a valued contributor since joining in October. I now hand over to Chris to address shareholders.
Thank you, Michael. As Michael said, my name is Chris Roberts, and I joined the board of Sigma last October, and as well as being a member of the board, I'm also a member of the Risk and Audit Subcommittee. I've worked in the healthcare space continuously for what is now 48 years. I entered healthcare through technology, initially as a chemical engineer, and then completing an MBA and PhD in biomedical engineering along the way. But a lot of my experience has been with healthcare companies driven by the two Is, sort of lots of innovation and lots of internationalization, sort of global businesses. Well, I started in the 1970s. In 1989, I was one of the founding directors of Peter Farrell's ResMed, a wonderfully successful Australian story.
I left there in 2004 to become CEO of Cochlear and remained there for just under 12 years, about 11.5 years. During my time at Cochlear, my tenure at Cochlear, I remained on the ResMed board. In fact, I didn't leave the board until about 2000-- the ResMed board, until about 2017. I've actually been a director of a publicly listed company or publicly listed companies now continuously for 29 years, which includes companies on NASDAQ, New York Stock Exchange, and the Australian Stock Exchange or Australian Securities Exchange. Prior to that 29 years, I had 15 years' experience of directors of operating subsidiaries of public companies. My connection with Sigma came through David Di Pilla's HMC Capital. I joined the board of HealthCo at the 2021 IPO.
HealthCo is a real estate investment trust, investing in hospitals and medical centers and some childcare, sort of wellness centers. But I also went on the board of HMC Capital Partners Fund One, which is a, an unlisted high conviction fund, and it's that high conviction fund that took a strategic position in Sigma, building it, I think, at one stage, about 19% of the Sigma shareholding. That's now a little bit lower. I was nominated by HMC Capital to become a director of Sigma Healthcare because of my connection with HMC Capital Partner Fund One, but also because of my background in healthcare and sort of suitability or skills. And I'm currently not considered an independent director because of that particular shareholding connection.
But even though I was nominated by HMC Capital to be a director of Sigma, I certainly went through a fairly thorough interview process at Sigma, and Sigma certainly ensured themselves of that my experience and background was relevant to what they wanted and were comfortable that I could make that contribution to the board. The proposed merger between Sigma and Chemist Warehouse is genuinely visionary and transformative. It's a transformative proposition for you as Sigma shareholders, and I'm really excited to play a part of that transformation by being a board member. Finally, I'd like to thank you for your support. Thanks, Michael.
Thank you, Chris. All directors have voted in favor of the resolution. Are there any questions with respect to this item?
I have a question online from Mike Roby: "Dr. Roberts is well qualified for a director of Sigma, whether or not the merger goes ahead. The ASA has concerns whether he has the time to give to the workload, including the merger. He is currently a director of two listed companies and five other organizations, which sounds like a full dance sheet. Can he assure us that he will have time for the year in which this planned merger takes place?
So Mr. Roby, thank you for the question. The first thing I would say is that for the time that Chris has been with us, he's been beyond more than available to do whatever is required for board duties. But, Chris, I'm not quite sure if you'd like to say something about-
Well, thanks, Michael, and thanks, Mr. Roby, for the question. But I must say, from my point of view, I feel that my current workload is much reduced and simplified compared to my past. When I spent 30 years of brutal international travel, and I was some part of every month in a different continent, that's all gone. When I stepped down 8.5 years ago from my Cochlear role, I put a portfolio career together of activities related to university activities, government activities, and industry. The university, I took a professorship with the Plus Alliance, which is an alliance of three universities, a professorship with University of New South Wales, Arizona State University, which was one...
is one of the larger public universities in the US, a very innovative university, and also King's College London, which is a top 20 global university, and spent a lot of time in London working on a new way, new transformative university focused on engineering education, that is transforming engineering education in the UK. We got that business proposal up and running and that, university up and running, actually. Technically, it can't be a university till it's been operating seven years, so today it's an institute, the Engineering and Design Institute. But I've finished all that work. I chaired it for a number of years, and I, and that work all finished last year.
And the government, I was on New South Wales government bodies and federal government bodies, and all that work's finished, and I probably will never do another government role ever again. So sort of come back to industry. And while there are, apart from the listed companies, Mr. Roby mentioned and listed there, a couple of those entities, like the Cochlear Foundation, it's a philanthropic, not-for-profit, so there's, you know, we're giving grants out a year. I was really keen on Cochlear being able to set up a foundation. We set that up 18 years ago or something, and I'm excited to remain on that, but that's not a large workload. And another one is a medical research institute.
So the Centenary Institute does some fantastic medical research, but that's set up by an act of Parliament, and various people have nominate different directors, so the Governor of New South Wales or the Vice Chancellor of Sydney University or another one is the Federal Minister of Health. And I was asked by the Federal Minister of Health at the time, I was the Federal Minister of Health's nomination to go on that. So, you know, that's a pro bono board. It's sort of not really heavy, heavy operational. So I feel very comfortable with my with my current workload.
Thank you, Chris. I will now put up on the screen details of the valid available votes received from shareholders for this resolution. I congratulate Chris on his re-election, and as you can see, he has amazing skills and experience that he brings to the Sigma board. That now brings us to item 5 and the related resolutions 4-6 regarding the remuneration arrangements for the Managing Director and Chief Executive Officer. A full explanation of this agenda item and the 3 supporting resolutions is set out and explained in the notice of meeting. As an overarching comment, over the last 2 years, the board reviewed the remuneration framework in place to ensure greater alignment with our updated strategy and appropriate growth metrics.
In relation to the long-term incentive plan, Sigma has returned to a more market standard offering following the one-off executive equity grant issued last year. This year's LTI plan is at 100% of total employment cost and subject to a three-year performance period with the following measures: 50% against a three-year EPS growth performance target, 50% against a three-year TSR growth performance target. We acknowledge that with the potential merger on the horizon, including a possible change of control, vesting conditions and metrics may not be appropriate on a combined entity basis. Accordingly, in this circumstance, the board has discretion to determine how unvested LTIP rights will be treated, including, but not limited to, amending the vesting conditions or determining that some or all of the unvested LTIP rights will vest.
For clarity, while the 2024 LTIP rights are subject to the same board discretion, I expect that this discretion would not be affected in relation to these rights being voted on now, but rather the vesting conditions will be adapted when we know the outcome of the proposed merger. With that introduction, I will now move to each resolution. Item 5.1 or Resolution 4 relates to the grant of rights to the Managing Director and Chief Executive Officer under the 2024 long-term incentive plan. Are there any questions with respect to this item?
There are no questions online.
Are there any questions from the floor on this item? I will now put on the screen the details of the valid available votes received from shareholders for this resolution. Thank you. Item 5.2, Resolution 5, relates to the grant of rights to the Managing Director and Chief Executive Officer under the company's Short-Term Incentive Rights Plan . Participants in Sigma's STI Plan are assessed against predefined financial and non-financial performance measures. The board retains discretion to amend aspects of the plan as a last resort, such as to reflect achievements beyond the predefined measures or events beyond executives' control. The board believes it continues to demonstrate its commitment to rigorous performance hurdles evident through increased transparency in our STI disclosures and remains confident in its ability to strike the right balance in setting achievable but challenging targets to ensure executives continue to deliver improved shareholder returns.
Are there any questions with respect to this item?
No questions online.
Are there any questions from the floor with regard to this item? Okay, thank you. I'll now put on the screen details of the valid available votes received from shareholders for this resolution. Thank you. Item 5.3 or Resolution 6 relates to shareholder approval for the potential retirement benefits to the managing director and chief executive officer in accordance with Section 200B and 200E of the Corporations Act. The board has sought shareholder approval at this time to provide Sigma shareholders and our CEO with certainty regarding the terms that may apply if a relevant accelerated event were to occur, and to assure that such arrangements, which are considered appropriate by the board and in the best interests of shareholders, are able to be proceed in a timely manner. Are there any questions with respect to this item?
No questions online.
Thank you, Gary. Are there any questions from the floor with respect to this item? I'll now put up on the screen details of the valid available votes received from shareholders for this resolution. Thank you. I now formally close the meeting. Voting will remain open for a further five minutes to enable shareholders to complete and submit their votes. The results of the voting from today's meeting will be announced via the ASX and placed on the company's website. Finally, a sincere thank you for joining us today, and invite you to join us, those present here, for refreshments in the lobby. Thank you, everyone.