Orora (ORA) 2015 AGM Report

Company/ASX Code : Orora Limited (ORA)
Venue :
10.30am Hawthorn Arts Centre,
360 Burwood Road
Melbourne, Victoria
Monitor : Mr Gavin Morton
AGM Details / NoM : Thursday 15th October, 2015
# of Attendees : Approximately 100
# Holdings represented by ASA : 267
Value of Proxies : $4 million
# Shares Represented by ASA : 1.6 million
Market Capitalisation : $2.9 billion

Board receives applause from shareholders

Chairman Chris Roberts said that the company would focus on innovation in 2016. $45 million had been allocated to a global innovation fund. Australasian sales would show some growth in 2016.

Sales of $3.4 billion were up on the prior year by 7.3%. NPAT of $131.4 million was an increase of 25.9% as compared with the previous year. Operating cash flow increased to $260 million. Dividend payment had increased by 25% to 7.5 cents. North American operations achieved a 16.6% increase in sales in 2015, and had the potential to continue similar sales growth in 2016.

All of the foregoing was good news for shareholders. CEO Nigel Garrard said that merger and acquisitions in 2016 were a high priority. He said that new acquisitions had a ROI hurdle rate of 20%. He said that the first quarter results were ahead of last year and that higher earnings were likely in 2016.

In response to a shareholder question, the Chairman said that franking credits per share would probably decline in coming years, due to increased overseas earnings. In response to a question from the ASA monitor in regard to currency risks, the Chairman said it is company policy to borrow in the country where the funds are invested, and this is a natural hedge. Orora does not hedge overseas earnings.

In relation to the re-election of the Chairman and independent non-executive director John Pizzey, the ASA monitor said that both directors had suitable experience and had less than five directorships in listed companies. He also mentioned that both directors held Orora shares, whose value were greater than their annual fees. Both directors were re-elected with an approval vote of 99%.

In relation to the grant of options and rights to CEO Nigel Garrard, the Chairman said that it was in the interests of the shareholders to retain his services. He said that Mr Garrard had performed well in his position, and that shareholder value had increased. The issue of options and rights to Mr Garrard was approved by 99% of votes cast.

On the Remuneration Report, the Chairman said that company performance had improved. The transition from Amcor had been handled well. The company was focussed on delivering increased shareholder value. The remuneration scheme was important in regards to motivating management to achieve superior results.

The ASA monitor said that the STI met most of ASA policy requirements. Performance was based on EBIT, ROFE, cash flow and safety. Long term incentives are based on relative TSR with other companies and half based on ROFE starting at 11.3% in 2016. Sufficient of the remuneration report conformed with ASA’s voting guidelines to justify its approval. The resolution received a 99% approval vote.

A resolution was put to shareholders to increase the non-executive director fee pool from $1.6 million to $1.9 million to allow for Board planning in the future. It would also allow for adjustments to Director fees in line with market conditions. The ASA monitor spoke in favour of this proposal, which received a 99% approval vote.

In summary, Orora has had an excellent year. The transition from Amcor is now complete. At the end of the meeting, shareholders spontaneously applauded the Board and company management