Ansell Limited (ANN) 2016 AGM Report

Company/ASX Code : Ansell Limited (ANN)
Venue :
1.30pm Park Hyatt
1 Parliament Place
East Melbourne, Victoria
Monitor : Ms Fiona Addison
AGM Details / NoM : Wednesday 19th October, 2016
# of Attendees : 85 shareholders plus 72 visitors
# Holdings represented by ASA : 212
Value of Proxies : $7.1 million
# Shares Represented by ASA : 306,600
Market Capitalisation : $3.3 billion

Portfolio optimisation the key to creating shareholder value

Chairman’s Address

The Chairman addressed shareholders and advised that the company encountered tough conditions during FY16. Some of the challenges that faced Ansell were unfavorable exchange rates, increased tax charges and a number of temporary manufacturing challenges. However despite these challenges, there were some positive outcomes for the year, included 24% growth in operating cash flow, a strong balance sheet and the continued growth in the full year dividend payment, making it the 14th year of dividend increases.   

The Chairman outlined the portfolio review as part of their strategic initiatives. This includes the potential divestment of the Sexual Wellness business division. When the potential sale was first announced in August 2016, it was difficult to understand why their best performing business unit by sales (up 1.4% for FY16), would be considered for sale.  The Board has taken into consideration how to best employ capital of the company and how to optimise shareholder value. The Board will continue discussions with Goldman Sachs in reviewing the division.

CEO Address

The CEO addressed shareholders at the AGM reiterating the difficult year that the company has encountered during FY16.  This includes the challenges in Europe, Brexit and North America outsourcing jobs to Mexico and China, partly offset by growth in China and India. However despite these conditions, he advised that the company has four key drivers of the business, being its global brands, emerging markets, innovation and new product sales, and channel and distributor development. Mr Nicolin emphasized that the signing of an Agreement with Ranger, the number 1 distributor in the world at the start of 2016, will ensure that the company is at the forefront of channel and distributor development.

The CEO advised that the FY17 EPS guidance range of US$1.00 – US$1.12, which is an underlying increase of 4%-17%, based upon Q1 results, outlines that the company results are on track. The CEO was confident of delivering a good result to shareholders.

General discussion - Q&A

The Chairman advised that the general discussion with any shareholders questions were held prior to the vote. However the Chairman Mr Barnes said that this format may change for future Ansell AGM’s, as some shareholders wanted to ask questions ahead of each resolution.

The question of unfranked and franked dividends was mentioned. The Chairman advised that prior tax losses from Pacific Dunlop were running off. He mentioned that once this has been finalised, then the opportunity to pay franked dividend will become available.

Another question was pitched around the company’s activity regarding buy-backs and the likelihood of buy-back activity in FY17. The Chairman advised that the company has a strong record of capital management which has been actively invested into buy-backs. Whilst the Chairman could not comment on the FY17 buybacks, history seems to suggest that the company will continue to be actively involved in buy-backs.

The longevity of directors was also discussed, given the different guideline timeframes held by the ASA (12 years) and Ansell (15 years). However it should be noted that an external agency is responsible for reviewing the Board and their independence. The Chairman advised that from now until 2020, the composition of the Board is likely to see some significant changes.

Agenda items

The ASA voted FOR all the resolutions and each was approved by more than 98%. The spill resolution was not required to be put to the meeting. The Chairman's address and results of the meeting are available on the ASX website.