Wesfarmers Limited (WES) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Wesfarmers' Annual General Meeting for 2021. My name is Ruth Callaghan, and I will be your moderator for today's meeting. In relation to some housekeeping matters, in the unlikely event of an emergency, you'll be asked to leave the room in an orderly fashion through the exits, which are clearly marked around the room. Convention center staff will be available to assist you if you should need them. If you have not already done so, may I remind you to please switch off your mobile phones. Now before our Chairman, Michael Chaney, commences proceedings, I'd like to begin today by introducing Dr. Richard Walley OAM to perform a welcome to country on behalf of the traditional owners of this part of Western Australia, the Whadjuk Noongar people. Ladies and gentlemen, please welcome Dr. Walley.

[Foreign Language] So may the good spirit keep everyone safe. This is a place where we've been meeting for many generations to create, share and pass on stories. We hope you have some good stories from today that you can share and pass on. At the end of these proceedings, may the good spirit take each and everyone of you safely and your families. This has got many names. Mooro is one of them, the traditional name for Perth. It's Whadjuk section of the Noongar language group, placed by the river, a significant place. [Foreign Language] May the good spirit be with you. I finish up by saying thank you for including our welcome. We do not take these welcomes for granted. They are significant for us each and every time we do them. They may sound the same with a slight difference, but we're opening up the portals to our spirituality and ancestry to keep everyone safe and watch over everyone. [Foreign Language]

Well, good afternoon, everyone, and welcome to this meeting. I'm Michael Chaney, Chairman of Wesfarmers. I'm advised that we now have a quorum present, and so I officially open the 40th Annual General Meeting of Wesfarmers Limited. Can I start by thanking Dr. Richard Walley on his Welcome to Country on behalf of the Noongar people, who are the, of course, traditional owners of the part of Australia from which I'm joining you today, and we pay our respects to the elders past, present and future elders. And thank you to everyone who's joined today's meeting both in person and online. Well, as we're all well aware, life for all of us changed very much in early 2020. At all times since the commencement of the COVID-19 pandemic, Wesfarmers has been focused on the health and safety and well-being of its team members and customers and the communities in which we operate. We're very pleased that we're able to hold our 2021 Annual General Meeting here in person today with the appropriate COVID-19 safety measures in place, but also to offer those of our shareholders who weren't able to attend in person the ability to participate online, a so-called hybrid AGM. As you would appreciate, for everyone in this room, when we were planning this meeting in advance, we weren't able to know what sort of restrictions would apply today. And so that's constrained the sort of usual level of hospitality that we provide, and I hope you'll bear with us. Hopefully, next year, we can get back into the sort of carnival before the AGM and a full range of refreshments afterwards. I'm joining you, those of you online today, from the Perth Convention Center, along with our Managing Director, Rob Scott; our Company Secretary, Vicki Robinson. Also joining us are our Board of Directors, both here visually and our divisional managing directors. And I'd like to start by introducing the Board members sort of with me in person today. Firstly, Wayne Osborn. And it said that is going live, is it? Okay, great. Wayne chairs our Audit and Risk Committee -- sorry, Wayne chaired our Remuneration Committee until quite recently, and he'll be retiring at this meeting, and I'll say a few more words about Wayne a bit later on. Sharon Warburton chairs our Audit and Risk Committee. And our newest director who joined us on the 1st of this month, Alan Cransberg, and I'll say a few words about these directors in a moment or a bit later in this meeting. As I said, Wayne will retire and has had a fabulous experience here for the Board, and we really appreciate his efforts, but I'll say a few more words about that in a moment. Joining us today from various locations around Australia and New Zealand, we have the rest of the Wesfarmers independent nonexecutive directors. And I'd like to welcome them individually. Firstly, Vanessa Wallace; Jennifer Westacott; Sir Bill English in New Zealand; Mike Roche, who chairs our Remuneration Committee; Anil Sabharwal; and Alison Watkins, who joined the Board just last month. Now while all those directors are present and listening, to minimize the risk of technical issues, only the directors who are standing for election or reelection will be speaking at the meeting. Also joining us in person today are Ian Hansen, who's the Managing Director of Wesfarmers Chemicals, Energy and Fertilisers; Tim Bult, who's the Managing Director of Wesfarmers Industrial and Safety; and Anthony Gianotti, our Chief Financial Officer. And joining us from other locations within Australia are Mike Schneider, who is the Managing Director of Bunnings; Ian Bailey, the Managing Director of Kmart Group; and Sarah Hunter, who is the Managing Director of Officeworks. And they're joined by other senior members of the group and other employees of the group across the country. We've also got in attendance Wesfarmers' audit partners from EY, Trevor Hammond and Jemma Newton, who are available to answer any questions on the audit or related matters. And now onto some procedural matters, which I regret to say are quite lengthy because of the fact we've got a hybrid meeting. Many of our shareholders have taken the opportunity to submit their voting instructions and questions through the online voting platform, and we thank them for doing so in advance of the meeting. As outlined in our Notice of Meeting, shareholders and proxyholders may vote and submit questions during this meeting either in person or using the Lumi AGM online platform. All resolutions will be decided on a poll. And to provide ample opportunity for shareholders and proxyholders, including those participating in this meeting online, I now open the poll on all resolutions. I'll provide a reminder to submit any outstanding votes later in the meeting before that poll is closed. Now for those shareholders and proxyholders who are joining us in person today who are eligible to vote at this meeting, you'll have a voting card which has a voting paper printed on one side. If you're acting as a proxy and you've been directed how to vote, we ask that you sign and lodge your blue voting card. If you don't, the vote will default to me, and I'll vote in accordance with the shareholders' instructions. And if no instructions have been given in regard to a resolution, I'll vote in favor of the resolution. When you've completed your vote, please place your voting cards in one of the boxes, which will be handed around by Computershare representatives at the conclusion of the formal business. Now for those shareholders and proxyholders who are participating in this AGM online through the Lumi AGM online platform and who are eligible to vote at this meeting, a voting icon will appear on your device or navigation bar. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options for each resolution: for, against or abstain. There's no need to press submit or click because as -- or click the enter button because as you vote -- as you mark your vote, it will be automatically recorded. Now you may change your vote during the meeting until I declare the poll closed. Given the complexity of all this, it's a big ask, really. Please submit your votes at any time from now until I close the poll before the end of the meeting. Barry Azzopardi from Computershare will act as the returning officer for the purpose of conducting and determining the results of the poll on each resolution. And the results will be announced through the ASX company announcements platform later today and will also be available on the Wesfarmers website. Lisa Ahwan from Computershare's Perth office is in attendance in Perth to assist with this process. And EY, the company's auditor, will act as scrutineer. Consistent with the approach taken at our previous AGMs, we'll respond to questions relating to a particular item of business during discussion on that item, unless those questions have already been addressed through earlier remarks. I'll also answer general questions at the end of the meeting while voting results are being counted. In the interests of all participants, please ensure that your questions are relevant to all shareholders and to the motions before you. A number of shareholders also submitted questions in advance of the meeting. And individual responses have been sent to those shareholders ahead of the meeting, but we'll also address the key themes of those in my address and in Rob Scott's address. If you wish to ask a question, you must be a shareholder or their attorney, a proxy or authorized company representative. This year, attendees will have the option to ask questions both orally and by submitting them in writing through the online platform. If your question has already been asked by another shareholder and answered or otherwise addressed during the meeting, please don't ask it again because that will give us a chance to make sure that all shareholders have the opportunity to be heard. When I call for questions, if you're in the room, please proceed to one of the microphones that are in the aisles there and show your green or yellow card and -- or your blue card and give your name to the attendant, and they'll introduce you. If you're representing an organization, please state who you represent and we'll take it from there. And you'll see we've got 6 microphone points around the room. In order to ensure that all shareholders have a reasonable opportunity to be heard, if you've got a number of questions, it's a good idea to ask them all at the same time if they're on that particular item of business. If you're a shareholder or proxyholder participating in this meeting online, I encourage you to submit any written questions on any item of business as early as possible in the meeting. If your question relates to a particular item of business, please refer to that item when you submit your question. To minimize repetition and to maximize the number of questions that we can respond to during the meeting, written questions submitted through the Lumi AGM platform may be moderated, for example, by amalgamating into one question or choosing the broadest question that covers things on the same topic. As our time is limited, it may not be possible to respond to all questions during the meeting. And if that's the case or if there are questions might be better addressed outside on an individual basis, we'll respond to these after the meeting. If you are online and wish to ask a question in writing, press or click on the messaging icon that can be found, as I said, on the navigation bar on your screen, and this will open a new screen. There's a section for you to type in your question. And once you finish typing it, press the arrow symbol to submit it. Following our formal addresses, written questions submitted online, which we'll take during the meeting, will be read to us by our external moderator, Ruth Callaghan, who is up here at the start. If you're online and you wish to ask a question orally, there's a bit of a delay in the broadcast. So you'll need to pause the broadcast on the Lumi online platform and then click on the link under Asking Audio Questions. A new page will open where you'll be prompted to enter your name and the topic of your question. If you submit your request, you do so by clicking Ready and allowing microphone access, and then it connects you to the meeting. You'll then listen to the meeting on that page in real time while -- with no delay while waiting to ask your question. When it's time to ask your question, there'll be a beep, and you'll be asked to proceed with your question. So I'm really curious as to whether we get any of those questions because if we do, it will be somebody who's really tech savvy. If you're attending the AGM in person and you need assistance with how to vote or ask questions, just put your hand up and speak to one of the Computershare representatives around the room. If you're participating in the AGM online, a user guide is available on our website that sets out instructions. And if you're having any issues with the online platform, please refer to the user guide or call Computershare on the number shown on the slide. Transcripts of my address and Rob's address are available on our website and the ASX platform. And a recording of the meeting will be made available on the Wesfarmers website after the close of the meeting. As you'd be aware from the Notice of Meeting, there are 5 items of business to be discussed when we move into the formal proceedings. But before that, I wanted to make some general observations about the last 12 months and the business environment. And then Rob Scott will provide us with his observations and reflections on current trading and on the COVID-19 response and the outlook for the group. Well, it's fair to say that 2021 year proved as challenging as the previous year, principally, of course, due to the ongoing spread of COVID-19 and the rolling shutdowns across Australia. It was really gratifying that your company was able to come through the year with an increased profit result and a strong balance sheet. That outcome was due in part to the type of businesses that we operate, but also very much to the great efforts of our management team to keep those businesses running in the face of external challenges. And the management put a huge amount of effort into talking to governments and persuading, for example, that Bunnings was an essential service outlet. And the results, I think, speak for themselves. Details of those financial results for the year are contained in our annual report. And I don't propose to repeat all of that here. But in summary, our net profit from continuing operations rose 16% to $2.4 billion. Our ordinary dividend rose 17% to $1.78, and the company's strong balance sheet has allowed us to propose to shareholders, as we'll consider later in this meeting, a return of capital of $2 per share. This decision by the Board is very much in line with the shareholder return focus that has characterized Wesfarmers since our public listing 37 years ago, seems like yesterday to many of us in the room. We've always had a philosophy that when we have surplus capital, we'll return it to our shareholders because we're confident that they'll be happy to return it to us again if we find good uses for it in the future. A highlight of the year was the strong and, in most cases, improved performance in earnings across every division, as we've described in the annual report. I'd like to pay tribute here to the efforts of all of our employees, from Rob Scott down and to each and every member across the group for going above and beyond their normal efforts to bring about this result. And pleasingly, they did so without the company making any recourse to the Australian government's JobKeeper program. During the pandemic, companies like ours have been faced with some difficult choices, including whether to stand down team members during lockdown if there wasn't any work for them and whether to keep paying them. We were in the fortunate position of having the financial capacity to do the latter. And I must say, we didn't find this a difficult decision, and it really wasn't influenced by the effect that it might have on our annual profit. We saw it as an investment, not as an expense, but an investment in our people in maintaining our skills base and engendering loyalty amongst our team and making sure that they enjoyed working for Wesfarmers and appreciated it and that they'd be with us in the long run. It was really just like a traditional investment. And we've continued this practice of paying our team members during the current financial year, where, of course, we've had widespread lockdowns in New South Wales and Victoria. And Rob Scott, a little later on, will update you on how that practice and policy has affected our trading and our results in a moment. As I stated in our annual report, while Wesfarmers' performance in a particular year is important, and it's fair to say this is the principal focus of market commentators and company analysts and journalists, it's frankly not what drives your Board or management team. Rather, we're focused on the long term. Short-term performance is invariably affected by events outside the company's control. And the current pandemic is a perfect case in point. Long-term corporate success often requires foregoing immediate profits in return for growth and delayed earnings, an issue that I think is not often appreciated outside the company. This philosophy has held Wesfarmers in good stead over the 37 years since we went public, with our shareholder returns being more than 12x higher, that's 1,100% higher, than the returns achieved by an investment in the All Ordinaries index. The key to that has been openness to innovation. When we went public in 1984, around 60% of our profits came from our fertilizer operations. And today, we still have those fertilizer operations. They're really excellent business, but they account today for just 2% of our earnings. The company's followed a philosophy called logical incrementalism, expanding where there are opportunities to do so, trying new things, going forward when they worked out, retreating when they didn't, moving into new businesses and new geographies, all the time with that primary shareholder return focus. That doesn't mean we do anything for a buck. The company has done this knowing the criticality to long-term success of looking after all your stakeholders, of looking after and developing our team members, anticipating the needs of our customers, treating suppliers fairly and ethically, investing in the community, taking care of the environment and behaving honestly and with integrity. It's that growth philosophy that has underlain developments over recent years, including our move into the lithium industry with the acquisition of Kidman Resources in 2019 and the Final Investment Decision earlier this year to support the development of the Mt Holland lithium project. Likewise, it's informed our very large investment in the data and digital space, including the acquisition of Catch. It's informed Bunnings' expansion into new product lines with the acquisition of Adelaide Tools and the proposed acquisition of Beaumont Tiles. And it's informed the rationalization of the Target business along with Kmart and the disposal of our coal businesses. In recent years, the risks and opportunities associated with climate change have been front of mind for your Board. Our annual report details the proactive action that we're taking to this important issue. We're particularly pleased to be the inaugural -- in Australia, the inaugural issuer of sustainability-linked bonds. We issued one late in the 2021 financial year and another one just this week. And the margins on those bonds, the interest rate, if you like, is linked to our ambitious climate change targets. Innovation requires investment. And as our Federal Treasurer has quite rightly stressed, the future prosperity of Australia relies on companies like ours making significant investments. We're certainly doing that with almost $900 million of capital expenditure in the 2021 financial year and more than that planned this year. And in addition, we're making substantial expenditures in data and digital activities to ensure that we're equipped to compete in the online world. I want to take this opportunity on behalf of my fellow directors to thank our outgoing Director, Wayne Osborn, for the great contribution he's made to the company over his 11 years on the Board. Wayne joined us after retiring as Managing Director of Alcoa Australia. His broad experience in senior management and Board roles has showed through his wide counsel on human resources, his -- on management issues, on technical issues and so on. He chaired the Board's Remuneration Committee for quite a few years. And he's always had a very firm but supportive manner. And it's been a great pleasure for all of us to work with Wayne, and we wish you very well in the future, Wayne. You'll be sadly missed. But I wondered if you'd give me a round of applause for Wayne. We welcome 3 new faces to the Board in this year, which add further diversity and skills and experience and perspectives. Anil Sabharwal, who's from Google, with his extensive experience in the technology world, in data and digital and so on; Alison Watkins, who recently retired as the CEO of Coca-Cola Amatil Australia, who's got significant management and consumer experience; and Alan Cransberg, who actually succeeded Wayne as Head of Alcoa Australia and was in charge of Alcoa's international smelting business previously. He's obviously got great resource experience and project management and so on, and that will be very useful for us when we're looking at the development of the lithium assets. In closing, I again pay tribute to the outstanding Wesfarmers management team, led so capably by our Managing Director, Rob Scott. In what's, again, been a hugely challenging year, they've given their all to the achievement of the company's success. We think that with Wesfarmers' strong asset base, its financial position and its dedicated team members, the future looks very bright. And I'd now invite Rob to deliver his address as Managing Director. Thank you.

Well, thank you very much, Chairman. When we last met a year ago, I didn't expect that today, we'd still have cities in lockdown and that some of our businesses would be unable to open to the public. And despite these challenges, our dedicated teams have found new safe ways to work, to meet our customer demands and to support the communities where we operate. Fortunately, with increasing levels of community vaccination, we now see a path to regaining many of the freedoms that are so critical to our quality of life and prosperity while also managing the COVID-19 risks, including for those most vulnerable. Now Wesfarmers has demonstrated that we'll step up and support the community when times are tough. And I'm incredibly proud of the resilience, the ingenuity, the empathy that was on display across all of our businesses and thank our teams for their efforts in a very demanding year. And a special thanks to our group leadership team and divisional managing directors, many of whom have been living and working through the extended lockdowns in Melbourne. Without them, Wesfarmers simply wouldn't have achieved everything we achieved in the last year. Now I'd like to start with our response to COVID. At Wesfarmers, our commitment to providing a COVID-safe environment has enabled our businesses to meet the changing needs of customers and retain the trust of the public. In the 2021 financial year, we were pleased to extend support to our team members through commitments to pay all those that are permanent and many casuals when there was no meaningful work available. And we've extended this commitment until the end of December, by which time we expect to see the lockdowns behind us. Now while this will impact our earnings, as the Chairman said, we know it's the right thing to do and it will be good for our businesses in the long term. At the same time, we've been at the forefront supporting vaccination efforts across the country, providing paid vaccination leave and encouraging people to get vaccinated as quickly as possible if they can. Now our teams are getting vaccinated at pace, and I expect that we will have a fully vaccinated workforce in the new year. We will also be requiring new team members joining our businesses to be vaccinated. We understand that some people can't be vaccinated for medical reasons, and we will, of course, support them. This is all about creating a safer workplace for our team and our customers. Vaccination clinics at Bunnings have now delivered around 80,000 vaccinations for the general public. This is one of many examples of ways that our businesses and teams have stepped up to help and the fantastic outcomes that can be achieved when business and government work together. Now this year was not just a year about responding to the pandemic. It was also a year where we made significant progress with our strategic agenda and laid foundations for future growth. Now we benefit from taking a long-term approach, as the Chairman said, and I'll talk to some of the highlights in a moment. We achieved meaningful outcomes in many areas like safety, decarbonization, ethical sourcing, diversity and well-being. Our progress in these areas improves our operational performance, builds deeper trust with the community and also creates platforms for future growth. We continued our efforts to make our workplaces even safer, and it was very pleasing to see an 8% improvement in our reportable injury frequency rate during the year. At Wesfarmers, we're also truly committed to advancing reconciliation. And last financial year, we increased our teams' diversity with the proportion of Aboriginal and Torres Strait Islander team members increasing from 1.9% to 2.8%. At the end of this month, global leaders will meet to discuss the need to respond to climate change. And I'm very pleased that our retail divisions continued to make significant progress addressing their emissions footprint, adding new targets to achieve net zero Scope 1 and Scope 2 emissions by 2030 and to source 100% of their electricity from renewable sources by the end of 2025. In our industrial businesses, where decarbonization is more challenging, we have the aspiration to achieve net zero emissions by 2030. I'm confident that our efforts to reduce emissions intensity and to improve disclosure will encourage our customers and competitors to join us in efforts to further reduce emissions. Group-wide, our disciplined focus is reflected in a 9% reduction in reported Scope 1 and Scope 2 emissions for the year. And this evidences a decoupling from emissions and business growth and performance. I would now like to provide some comments on recent trading. Lockdowns, government-mandated store closures and other restrictions have significantly impacted trading conditions for the group's retail businesses in recent months. There have been periods during which almost half of our retail stores were either closed or restricted from trade in some way. At our full year results in August, we provided trading results for the first 8 weeks of the financial year to give some context around the impact of the lockdowns. Since then, sales growth has improved in Bunnings, Officeworks and Catch, while results in Kmart and Target have continued to be impacted by the temporary store closures. Overall, sales growth remains impacted by these restrictions, but our businesses are very well positioned for the resumption of normal trade as restrictions continue to ease. We've seen strong sales growth across stores in affected areas that have started to reopen, including in New South Wales last week, demonstrating a level of pent-up consumer demand in these areas. Trading performance in states and regions less impacted by restrictions has been resilient through the financial year-to-date. Online sales has also remained strong despite some capacity constraints in online distribution channels. And it's pleasing to see that the investment and focus that we've put into these capabilities in recent years has enabled our businesses to continue to serve customers even during periods of significant disruption. For example, on a year-to-date basis, over half of Officeworks sales have been online. And Kmart and Bunnings had online penetration of 21% and 6%, respectively. While additional costs have been incurred as a result of our commitment to pay our team members during lockdown, this important investment in our people is already creating benefits for our retail businesses as teams are reengaged when stores have reopened. Our retail businesses have been effective in managing the disruptions in global supply chains, and we're well positioned with inventory for the important Christmas trading period. In Bunnings, sales results for the year have remained robust in the context of these trading restrictions. Sales growth from commercial customers has been strong, which, combined with elevated levels of online sales, has partially offset the impact of lower consumer sales growth. Of the group's businesses, Kmart and Target have been the most impacted by store closures, with many stores either closed or only operating for click and collect orders. Sales via the Catch marketplace have benefited from a shift to online channels during periods of lockdown and are in line with the elevated levels experienced in the prior corresponding period. Sales in Officeworks have benefited from strong demand to support customers who are working and learning from home. But the shift in sales mix towards technology and furniture products has continued to impact margins. The Chemicals, Energy and Fertilisers division has made a solid start to the year. Demand for ammonium nitrate from mining customers has remained robust. And the Kleenheat business has benefited from favorable LPG pricing as a result of broader strength in global energy prices. And performance in Industrial and Safety has continued to improve with pleasing growth in Blackwoods and the Coregas business. Now as you'd be aware, Wesfarmers has made an all-cash proposal to acquire Australian Pharmaceuticals Industries for $1.55 per share. We continue to progress our proposal with API. And a fortnight ago, we announced that we had acquired a 19.3% interest in the company. We remain of the view that Wesfarmers' offer will deliver an attractive premium and a certain cash return for API shareholders and will also benefit API's community pharmacy partners. We will, of course, continue to keep the market informed as the proposal progresses. Now turning to our strategic priorities. At our Strategy Briefing Day in June, I provided some detail around 3 areas of renewed strategic focus across the group, supporting a more ambitious growth agenda for the future. The first priority is to develop a market-leading data and digital ecosystem, which will better connect our great brands with the public, deliver better value and experiences to all of our customers and create new growth opportunities. In the last 4 years, we've attracted 400 experts in advanced analytics and digital solutions to our businesses, and we're now building on these capabilities for the years ahead. We've committed to spend around $100 million to develop the data and digital ecosystem this financial year, and we'll provide further details of this at our half year results in February. The second priority is to increase our investments in platforms for long-term growth. And our Chairman talked to some of these earlier. This follows the repositioning of the portfolio and recent moves that have enabled us to scale up in areas with good growth prospects and build successful businesses over time. Much of this growth in investment will be organic, although some may come through portfolio moves. Selected recent examples include the Mt Holland lithium project, the Catch marketplace and Bunnings commercial bolt-on acquisitions. And then thirdly, we will accelerate the pace of continuous improvement across the group, further integrating sustainability into our strategies. So in closing, I wanted to assure you that in the months ahead, including as vaccination rates increase and as COVID becomes less defining for all of us, Wesfarmers will continue, as it long has, to support our people, our customers and the community. We'll continue to invest for the long term in our existing businesses and where we see new and emerging opportunities. And we'll continue to maintain a strong balance sheet to provide the flexibility to withstand a range of economic outcomes. And while the future will continue to present challenges, I'm confident that Wesfarmers' best years lie ahead. I'll now hand back to you, Chairman. Thank you.

Thank you, Rob. Well, now to the formal business of the meeting. I refer to the minutes of the 39th Annual General Meeting of the company held on the 12th of November last year. I've reviewed the minutes and I've signed them as a true and correct record of that meeting. The minutes are available for inspection at the shareholder registration desk and at the company's registered office. Now voting today on all resolutions will be carried out by way of a poll. All resolutions are ordinary resolutions requiring approval by a majority of the shareholders who vote on that resolution. Whereas Chairman of the meeting, I've been nominated as the shareholders' proxy, I intend to vote all undirected and available proxies in favor of each of the resolutions. There are also voting instructions -- restrictions for some of the resolutions, as outlined in the Notice of Meeting, which apply to those who've got an interest in the resolutions and certain of their related parties. A reminder that if you're having any issues casting your vote or submitting a question, please speak to a Computershare representative, or if you're attending online, please refer to the user guide, which I referred to earlier. The proxy votes and direct votes that have been submitted in advance of the meeting will be set out on the slide shown for each resolution. And as mentioned earlier, the final results of the poll on each resolution will be available on the ASX company announcement platform and on the Wesfarmers website later today. So I'll now proceed with the formal business of the meeting. The Notice of the Annual General Meeting was distributed to shareholders on Friday, the 17th of September this year. I'll now take the notice as read. And we'll now proceed with the items of business that are listed in that Notice of Meeting. And for each item of business, we'll display the wording of the relevant resolution on the slides. The first item is to receive and consider the financial statements and reports of the directors and the auditor for the year ended 30 June 2021, which are included in the company's annual report. Trevor Hammond from EY was the lead audit partner for the company. And Trevor and his co-signing partner, Jemma Newton, are here and available to answer questions on the audit and related matters. So I now invite shareholders to ask in person or submit online any questions regarding this resolution. And for those shareholders and proxyholders who are participating online, just a reminder, there's a short delay in the broadcast, so please follow the instructions outlined earlier. They're also contained in the user guide on the website, and you can then ask your questions online. Are there any questions on item 1? Is that a question? Microphone 5.

Mr. Chairman, microphone 5, may I introduce John Campbell, proxyholder.

Chairman, my name is John Campbell, I'm representing the Australian Shareholders' Association. We have -- I have proxies from just over 1,400 shareholders, 3.5 million shares. That represents less than 1/3 of 1% of your capital, but I think we'd climb into your top 20 list, just about. I haven't really got any comment on the accounts themselves. I think we should congratulate Board and management on the excellent results achieved in difficult conditions, and also on the pleasing strategical moves that have been outlined, including the digital ecosystem, which we look forward to serve customers and shareholders to seeing how it works. Chairman, the question I have is in relation to lithium. You mentioned that Mt Holland had been given the go ahead during the year. Like is it covalent or covalent, I'm not sure quite how you pronounce the word for the joint venture for the processing of lithium, is what interests me. I guess the -- I looked -- I Googled the word covalent, and I got an answer, which I didn't understand. But I think it probably implies a different process to sulfation and the route that the other 2 refineries that are being built are taking. Can you confirm that? And will it result in less pollutant type tailings and waste? What will you do with the large volume of waste and byproduct that comes from it? What will it cost? How will you finance them?

Sure. It's -- and it's pronounced covalent, which is a chemical -- a chemistry term. It's a long time since I've done chemistry, and I can't actually remember what covalent means, but it's all about valence and so on. Anyway, that's why the company is called Covalent, it's an appropriate term. The -- it's very -- a very exciting project, actually. And as you know, Mr. Campbell, the price of lithium hydroxide which we'll produce is fairly volatile at the moment. It's risen dramatically in the last months. And our hope is that given the projections of a supply shortage of lithium for batteries, particularly for the automotive sector, in the next decade, that the price will be strong and we'll make a good return out of it. The mine operation at Mt Holland is a typical sort of mine where you dig up the ore and you process it through crushers and you have a tailings dump there, as you'll see at any mine in Western Australia. There are rules and regulations around the construction of tailings dumps so that, for example, you don't have a wall failure. And suffice to say, we've got, I think, the best engineering advice across the whole project, not just in that area. The concentrate will then be shipped to Kwinana, where we're building a lithium hydroxide plant, and we'll turn that into the final product, lithium hydroxide, which we'll then sell into the battery market. In terms of the costs, obviously, when we embark on a project like this, we do a full economic analysis. We make assumptions about future prices and costs and so on. And on the basis of that, the numbers added up and will make a good return for our shareholders. Time will tell. The -- as I say, it depends on the prices, the most sensitive variable in any project like this. But all of the projections people are making around the place tend to say there will be a shortage of product over this decade, and we should do well out of it.

Is it possible to be specific on the cost?

Well, I think we've announced, Rob, the -- originally, we spent about $800 million buying the company, and then the total cost of the project is what, $1.7 billion, is it?

It's about $950 million.

Each?

[indiscernible] share.

Your microphone is not working, but it's about $1.9 billion for the project of which we have half. Is there another question? Okay. If not, we will proceed and move on to the next item of business, which is the election of directors. Sir Bill English, Vanessa Wallace retired by rotation at this meeting, and they're offering themselves for reelection today. Anil Sabharwal was appointed a director in February this year. Alison Watkins, as I mentioned earlier, was appointed on the 1st of September and Alan Cransberg on the 1st of October, and they each offer themselves for election today. So displayed on the screen is the position in relation to direct votes and proxies received on the reelection and election of each director prior to any revocations that may have occurred during the meeting. The first director to speak today is Sir Bill English. Bill was appointed to the Board in April 2018. So Bill, I now invite you to address the meeting from New Zealand.

Thank you, Chairman. It's been a privilege over the last 3 years to be part of the Wesfarmers team. [indiscernible] with big changes for an organization and has a long tradition of generating good cash flow and adequate returns for shareholders and not taking excessive risks. I've been particularly interested in the way that Wesfarmers is grappling with the digital and data world. It's where our competitors are going, it's where our customers are going. And for a large organization, I believe we've developed some real momentum. Alongside that, there is the challenge of the decarbonizing world and Wesfarmers' role in that through its industrial investments. There's no doubt that organizations that can keep their heads at a time when there's so much being said about ESG investing, impact investing, decarbonizing, that organization is going to thrive despite the uncertainty. I believe that the Wesfarmers Board is a group of people who can handle these challenges. I'd like to continue to make my own contribution to it, and I look forward to your support.

Well, thanks, Bill. And Bill is a fairly modest guy. But for those of you who don't know, he was Finance Minister in New Zealand under John Key as Prime Minister and then became Prime Minister of New Zealand and is a really valuable director to have on the Board when we're thinking about the bigger picture, economics and politics and so on. I invite shareholders to ask any questions on this resolution. Okay. Thank you. As there are no questions, I'd like now to introduce Vanessa Wallace. Vanessa was appointed to the Board in July 2010. And Vanessa is in Sydney, so she'll now address you.

Thank you, Chairman, and good morning, ladies and gentlemen. As noted in the Notice of Meeting, this is my 12th year on the Board and will be the last time I seek reelection. It has been an honor to serve you during this time. Given my tenure and the fact that many, if not most of you, are long-term Wesfarmers shareholders, you have heard from me on a number of occasions. So respecting this, maybe just a few comments on how I might continue to contribute in this next period. For a [indiscernible], one of our roles is to bring perspective on the outside world into the decision forums and debates within our companies. As we all have experienced, the world is as dynamic as it has ever been. My portfolio of interests and connections keep me up to date and relevant, able to contribute as together, we aim to understand, to anticipate, to see opportunity and make good choices and decisions. After decades as a business adviser, investor and Board director, my current portfolio of business academic and research activities is of specific relevance to Wesfarmers in 3 areas: firstly, digital businesses and data analytics; sustainability; and more recently of relevance, health and wellness. Wesfarmers continues to seek out innovation and growth in all the businesses. I spend my time working across a range of different types of businesses, from start-ups that aim to bring novel ideas and business models to market; faster-growing innovative small businesses working hard to globalize and build market access; and also more mature businesses with established market positions that are self-disrupting at scale. These interests and connections are in Australia, the U.K., North and South America, Southeast Asia and Japan. And learnings from each contribute to what I can bring into the Wesfarmers boardroom. I look forward to continuing to contribute to Wesfarmers' growth, working alongside management and with my colleagues on the Board. Thank you very much for your support.

Well, thanks, Vanessa. I invite shareholders to ask any questions regarding this resolution. All right. Thank you. As there are no questions, I'll now introduce Anil Sabharwal, who was appointed to the Board in February this year. And Anil, please address the meeting.

Thank you, Mr. Chairman. Hello, ladies and gentlemen. It has been an absolute honor and privilege to have served on the Board of this organization for the last 6 months, and I'm grateful for the opportunity to stand before you today for election. I sincerely believe the role of a director is in service to all of you, the shareholders. And our responsibility as directors, to ensure that you receive superior returns over the long term, is not one to be taken lightly. So thank you again for this opportunity. As many of you know, my background is in technology, innovation, data and digital. I continue to serve as an executive at Google, where I've been for the last 12-plus years. In that time, I've had the fortune of founding and leading several successful multibillion user products, including Google Drive, Google Photos and Chrome. I've managed profit and loss statements in the billions of dollars, worked closely with important external stakeholders, including customers, partners and government organizations, and been involved in all aspects of corporate governance, from financial risk management to talent acquisition and succession planning. Prior to Google, I was General Manager of Talent2's Management Consulting division and cofounded Desire2Learn, one of the world's largest online learning companies. I graduated as valedictorian from the University of Waterloo in Canada with an honor in Bachelor of Mathematics and Computer Science. And while you likely can't tell from the accent, Australia is my home. My wife was born in Dubbo, New South Wales, and she brought me here in 2006. I became a citizen not long after, and we started our family where I am today, in Sydney. I sincerely believe one of the most impactful things I can do now is serve this great country and help us be a global leader in technical innovation. There is no company in Australia better equipped or with a better track record than Wesfarmers, no company that is more of the fabric of Australia than Wesfarmers. And I'm thrilled to have the opportunity to do my small part to contribute and serve all of you. Thank you.

Thank you very much, Anil. And are there any questions on Anil's election? Okay. If there are no questions, I will now introduce Alison Watkins, who was appointed to the Board, as I said, on the 1st of September this year. Alison?

Thank you, Chairman. Ladies and gentlemen, I'm honored to be standing for election today to represent you as a director of Wesfarmers. If elected, it's a role I'm committed to fulfill to the very best of my ability and excited to contribute to the outstanding Board and executive team, which leads this great Australian company. My 35-year executive career has given me a lot of experience in ASX-listed companies across several industries. I've had a combined 11 years as CEO of 2 ASX companies, GrainCorp, an international agribusiness; and most recently, Coca-Cola Amatil, which was acquired by Coca-Cola Europacific Partners earlier this year. I've served on top ASX-listed Boards, including ANZ, Woolworths, and I'm currently a director of CSL Limited. In particular, I hope my exposure to a range of retail sectors and businesses will be relevant and helpful for Wesfarmers. This includes specialty retail as a director of Just Group, now part of Premier Investments; grocery and discount department stores during my time as a director of Woolworths Limited; as well as my experience as a Coca-Cola bottler, supplying beverages to pretty much every kind of outlet you could imagine, including e-commerce customers. In addition to Wesfarmers and CSL, I'm also a director of The Reserve Bank of Australia, which keeps me close to current views on the economy, the consumer and our recovery from the pandemic. My farming background gives me an additional affinity with Wesfarmers with its rural origins and values. I grew up in Tasmania on a farm, and I've since lived and worked in Melbourne and Sydney. These days, I live in Victoria and spend as much time as possible at our family cattle and cropping property. I hope you will support my election to director. Thank you.

Thank you, Alison. Are there any questions on Alison's election? Okay. If there are no questions, I now introduce Alan Cransberg, who was appointed to the Board on the 1st of this month. Alan, would you like to address the meeting?

Thank you, Mr. Chairman, and good afternoon, ladies and gentlemen. I actually attended my first Board meeting today, but I know a lot about Wesfarmers. A quick bit of my history and then why I think I can help Wesfarmers achieve satisfactory -- ongoing satisfactory returns for shareholders. I'm trained as an engineer and I spent most of my time in operations and management, including an 8-year stint in the U.S. based in New York, where I ran their mining, refining and smelting operations. As a commodity business, we had lots of ups and downs, and it taught me a lot, and I think that can be applicable to this company as well. I learned the importance of continuously managing and insisting on operational excellence and continuously improving in the operation that we're part of. I learned a lot about never deviating from your core values. I learned a lot about the fact in a cyclical business that you invest for the long term and make the right decisions in terms of investments and divestments. I learned what fantastic things an organization can do when the organization is aligned and has a common purpose and engages all of its employees. Part of my portfolio was working in R&D group. And as a mining, refining and smelting operation, we used a lot of natural resources, including energy, and one of my proudest achievements was what the group could do to harness technology with people to reduce the amount of inputs we needed to maximize outputs. What excites me about Wesfarmers is not only the businesses and the reputation it has but also the fact that it's an organization with a heart. And if you think about a large company in our midst, it accepts that it has some responsibilities towards working on things that are important to the community, and I share that. While I'm in many business Boards or while I have been on other business Boards and continue to be on business Boards, I continue to also focus on roles that help us -- help the community. I've been Deputy Chair of the Black Swan State Theatre Company for 12 years. I chaired the West Coast Eagles for 6 years, which will prove 50% of you. And I currently chair an Aboriginal corporation, which helps Aboriginal kids get through school, gets them into employment, mentors them and helps indigenous businesses grow to run their own businesses. So I look forward to your endorsement and helping the company continue to deliver satisfactory returns to shareholders. Thank you.

Thanks very much, Alan. Are there any questions in regard to Alan's election? All right. Thank you very much. If there are no questions, I ask that you vote on resolutions 2(a) to 2(e). Each of those resolutions is independent and should be voted on separately. Shareholders who are voting in person should place a mark in the for, against or abstain box for each of the resolutions on your green voting cards. Similarly, proxyholders voting in person who've been given open votes should place a mark in the appropriate box on your blue voting card to indicate whether you're voting the open votes for, against or abstaining. If you need assistance in completing your cards, a Computershare representative will help you. Shareholders and proxyholders who are voting online should follow the instructions on the user guide available on the website. If you need any assistance, as I said before, please call Computershare on the number shown on the slide. Item 3 relates to the company's remuneration report for the year ended 30 June 2021. And displayed on the screen is the position in relation to direct and proxy votes that have been received on the resolution prior to any that may have been revoked. The remuneration report provides information regarding the remuneration of our directors and those senior executives considered to be key management personnel of the company and can be found on Page 94 of the company's 2021 annual report. The Board remains committed to an executive remuneration framework underpinned by our guiding remuneration principles that is focused on driving leadership performance and behaviors to deliver good returns to shareholders over the long term. The total remuneration of our senior executives is set at levels that reflect the executives' contribution and competencies and capabilities and at a level that enables the company to attract and retain the best people. The remuneration report in our annual report, including the covering letter from the Chair of the Rem Committee, Mike Roche, provide a detailed explanation of the remuneration outcomes for the 2021 year. So I need not repeat them here. But it does -- the report does address the general desire in the market for greater transparency regarding our variable remuneration, including more information why measures are used and how assessment decisions are made, particularly in relation to the individual performance objectives set for our senior executives. The report also provides some details on operational changes to the executive remuneration plan to make sure that it remains efficient and fit for purpose. So I now invite shareholders to ask any questions regarding the remuneration report. Microphone 5.

Mr. Chairman, microphone 5, may I introduce John Campbell, proxyholder.

Mr. Campbell.

Chairman, my question is simple, really. I got to be adding most of those 3 million votes that are open and present to the votes in favor, but we continue to query why Wesfarmers doesn't disclose take-home pay for the executives. Most other large companies do disclose take-home pay. Most shareholders, I think, would have difficulty understanding the complexities of the accounting process for remuneration that goes into what's disclosed in the remuneration report, the summation of remuneration by employee, by executive. And I think most of us would appreciate a more simple example of how the pay is composed and what their real result was for the year.

Thanks, Mr. Campbell. Well, we had this discussion each year with the representatives of the ASA and Mr. Campbell, particularly over the last few years. And I'd be the first to agree that the statutory reports, the table on remuneration, which is required by law, is absolutely hopeless. I mean it doesn't inform properly because the variable remuneration gets amortized over a number of years. And for example, in this year's report, it shows Rob Scott's remuneration going down when it actually went up. So Mr. Campbell's point is, well, if you showed take-home pay, that would solve the problem. The problem is take-home pay -- firstly, there's no standard for that report. And so each company adopts a practice it thinks is appropriate. But secondly, I think it's -- and we think it's even more misleading than the statutory report. For example, you could have a variable award that was awarded 4 years ago or 5 years ago that vested this year, and it may be this year was a terrible year for the company when actual remuneration awarded was low, but the take-home pay would show that it was high because something that happened 5 years ago vested this year based on various measures. So we found when we've modeled it, and we've said this is how we report it, we found that it actually is a bit like this compared to performance and it is even more misleading. So Mr. Campbell has told me in the past that many companies are adopting it. I think they've succumbed to the entreaties of the ASA. But we don't want to put something in that can be misleading to shareholders, basically. Are there any other questions? Ruth, there's one online, apparently.

Thank you, Chairman. We've received 2 questions on the remuneration report of a similar nature, and I'll read them both before handing over to you for an answer. The first is asked by [ Mrs. Catherine Cripps ]. "Can you provide shareholders the ratio of average executive remuneration to the average wage of staff?" And the second is asked [ Mrs. Helen Hasen ]. "When will Wesfarmers limit the remuneration packages of the staff and Board to no more than 10x the annual wage of the lowest paid employee, including contractors?"

Well, thanks to those 2 shareholders. Can I just repeat, firstly, what I'd said in my comments, and that is that the Board sets remuneration, and not just senior executive remuneration, sets remuneration at a level to attract and retain talented people. And by the way, today, that's a bigger challenge than ever because of what you've all heard about, and that is the shortfall of skills and the fact that there are more jobs than people around at the moment. So that's the basic principle. We don't calculate average wages across the group because it would actually be a meaningless statistic. We've got some employees who work 6 hours a week and others who work much longer. And so averages don't tend to mean much. I thought it might be useful just to describe how we do go about this. We've -- we -- for example, we -- for a start, we have many employees who are on awards and agreements. And we, in many, if not most cases, are paying above the awards. For salaried employees, we use a system called the Hay System. And that system allows you to quantify, if you like, each job. It's got 4 elements. They are, you look at the know-how or the skills required in that particular position, whether it's 10 levels down from the top or at the top. So it's know-how. The second is accountabilities, what sort of freedom to act do people have and what sort of impact can their particular job have on the organization, how complex is the job. And so each grade in the Hay System comes up with a range or a grade number, and remuneration is based on that. And so obviously, as you get more senior, you get much more complexity in each of those factors. So at the senior level, we've got that process, but also we benchmark against all companies in Australia and sometimes internationally so that we make sure that if we're looking to attract somebody who actually have a realistic remuneration structure in line with the market. And that's really the most relevant comparison. So in answer to the second question, there's no way we would consider adopting that sort of formula. If we said -- if we actually calculate it an average wage, notwithstanding people work different hours and different jobs and so on, and we then said, we'll limit the CEO to 10x, we'd find ourselves today without the CEO or with a CEO that we didn't feel had the necessary skills and experience and abilities to do the job. I must say -- I should add as a sort of post script that shareholders may have noticed that incoming CEOs over the last, call it, 5, 6, 7 years have tended to be paid less than their predecessors. So Rob Scott's fixed salary is about 30% lower than his predecessor, and it stayed the same since 2017. And that's been an industry-wide trend as remuneration has come down, albeit the numbers are still large, but I think they reflect the competitive situation and the skills and experience needed for those jobs. Are there further questions on the remuneration report? Okay. Well, if not, I ask that you vote on resolution 3. The next item on the agenda is item 4, which relates to the grant of deferred shares and performance shares to the Group Managing Director. Displayed on the screen is the position in relation to direct votes and proxy votes, that will be coming up shortly, that have been received prior to any revocations that maybe have occurred during the meeting. Now the Board believes it's in the best interest of the company to provide the Group Managing Director with equity-based incentives to ensure there's real alignment between satisfactory long-term returns for shareholders and rewards for Mr. Scott as an executive director. So approval is sought for the grant of deferred shares and performance shares to Mr. Scott under the -- what we call the Key Executive Equity Performance Plan on the terms summarized in the explanatory notes of the meeting. So are there any questions on this resolution? All right. If not, we'll move to the final item of business, and I take this opportunity -- sorry, yes, could you please vote on that resolution, that fourth resolution? And we're now moving to the final item of business. And I take the opportunity to remind you that those eligible to vote at the meeting and who have not yet cast their votes that I'll close the poll shortly after the final item of business. So please ensure you cast your vote before that time. So the next item on the agenda relates to the return of capital to shareholders. And displayed on the screen, that's the resolution itself, and that's the votes and proxy votes that have been received to date. Not surprisingly, there aren't many against it. We're proposing to undertake that return of capital to Wesfarmers shareholders, that's $2 per share subject to the approval of this resolution. It's being undertaken to return surplus capital equitably to shareholders and to ensure that we've got an efficient capital structure. We've done a lot of modeling on whether this is good for the company, and we have enough balance sheet capacity and so on. But it's made possible by the group's strong cash flow and the receipt of about $4 billion in proceeds from the sale of a number of assets over the last few years, including the divestment of our interest in Angola coal mine, the Curragh coal mine, Kmart Tyre and Auto, Quadrant Energy and 10% of our 15% holding in Coles. So as I say, it reflects the strength of the balance sheet, and the balance sheet was in the annual report that you've all seen. On completion of the capital return, we expect that we'll still be able to maintain our very strong credit rating and to have the balance sheet capacity to take advantage of any value-accreting -- accretive opportunities that might arise. And I think it really demonstrates, as I said in my opening comments, our commitment to efficient capital management and our focus on returns to shareholders. So I invite any shareholder to ask any question. If you have a strong objection, please jump up. All right. There are no questions on that. And so that concludes the -- sorry, I'd ask you to vote on that resolution. That concludes the formal business of the meeting, and I intend to close the poll at the end of any items of general business. So please cast your votes and the -- I guess Computershare will be coming around, Vicki, with the boxes shortly.

So for all of those who are here, please note that afternoon tea this year will be served at the rear of this room. And we're now going to open up for general questions. So if you need to leave the meeting, please feel free to do so. But we'd love you to stay and have a cup of tea. There is no wine this year, albeit, and we can blame COVID and the uncertainties around today for that. But hopefully, next year, as I said, we'll be back in normal mode. So I now invite shareholders to ask any general questions that they might have. Ruth, there's one online.

We have several questions on the group's actions, targets and policies in relation to climate change. I'll read the question from [ Dr. Paul Cartwright ] and note that some similar questions were submitted by [ Mr. Timothy Hackney ], [ Mrs. Pamela Lee ] and [ Mr. Alan Han ]. [ Dr. Cartwright ] asks, "What actions, plans and deliberations are there for ongoing policies that address climate change and global warming?"

And do they, Ruth -- are the other questions similar to that?

We have a second question, and I believe a third as well, that are separate.

But if they're on climate change, maybe -- or they're not. Okay. All right. Well, firstly, can I say that this whole issue of climate change is very front of mind for the Board. And there's an increase in focus and intensity on this issue right across all of our businesses. And we do publish a climate change policy that's available for you to read on our website. This is the fourth year now that we've been reporting using the Task Force on Climate-Related Financial Disclosures, so-called TCFD framework. And that provides details on, as far as we're concerned, governance, strategy, metrics, the way we measure things, setting targets, risks and opportunities. And we actually have ambitious targets in the group. As Rob mentioned earlier, our retail operations have set a target to be using 100% renewables by 2025 and to be net zero in their emissions by 2030. Our WesCEF, our fertilizer, chemicals and gas operations, have an ambition of net zero by 2050, but I'll mention something about that in a moment. As shareholders will know, we've moved out of coal, both steaming coal and coking coal, and we've moved into lithium, which is a really important element in the future development of electric cars and manufacture of electric cars and reduction of emissions from what's now the burning of hydrocarbons. In the last year, as I mentioned, we've issued 2 sustainability-linked bonds, and they really demonstrate our tangible commitment because the interest rate on those bonds is linked to progress on the use of renewable energy that I've mentioned in the retail operations and emissions intensity in ammonium nitrate production down at Kwinana. And if we fail those targets, then we pay higher interest. So there's every incentive in the company to meet those targets. In the last year, Wesfarmers had a 10% increase in turnover that is revenue and a 9% decrease in emissions, a really terrific outcome. And I think it reflects the focus across all of our businesses, from Bunnings putting solar panels and all the operations putting LED lights and so on, to what's happening down at Kwinana. And I think that's -- the CSBP operation is a very good illustration of what one might do with technology. People often say, well, there will be technological developments that will help us reduce emissions. We've put one into practice down there where we've added a catalyst to the nitric acid plant, and that's the plant that goes on to produce ammonium nitrate. That catalyst has reduced our nitrous oxide emissions by the equivalent of 800,000 tonnes of CO2 each year. And that represents about 40% to 45% of that division's total emissions. So in just a year or 18 months, we've managed to -- and actually, it's longer than that because there have been various stages of development of the plant, and each one has got better equipment and so on. But by adding the catalyst, we've made huge inroads into the main emitting division in the company, and we see further developments like that going forward. So it is a very important focus for the group. In all of our project evaluations, new investments, we impute a carbon price on the assumption that it will occur at some stage. And we continue to, as I say, really have this as a front-of-mind issue. Is that microphone 5? Yes.

Mr. Chairman, microphone 5, may I introduce [ Chong Chen ], shareholder.

Mr. Chairman and directors, I've got 3 questions today. Self-declaration, I'm actually pro choice when it comes to vaccinations. There are some people in my family who are vaccinated, there are others that aren't. As a company with a heart, you've got to make sure that all new entrants get vaccinated. And with government announcements, I presume most people in Bunnings, and you're probably the biggest employer in Australia when it comes to your 4.9% stake in Coles. So my first question is, what percentage of directors in Wesfarmers have been vaccinated? I'm not interested in individuals naming or shaming, but just what percentage of Board directors? Second question is what percentage of Division Managing Directors have been vaccinated? I'm talking about double doses here. And my third question relates -- as a shareholder, I'm concerned about liability. Has the Board thought about any class action or repercussions for employees that have adverse reactions? On the vaccine adverse effect reporting system, just in the U.S. as of this week, there were 16,000 deaths, 23,000 disabilities, 10,000 myocarditis cases, 87,000 urgent care visits, 75,000 hospital stays and 775,000 total adverse events, just in the U.S. If all employees in the future are getting -- have to be vaccinated, is there a legal liability from Wesfarmers?

Well, thanks for your question, [ Mr. Chen ]. Suffice to say, I think we agree with everything you said. As far as the percentage of our directors who have been vaccinated, I can't give you an answer because I believe it's 100%. I believe it's 100% because we've discussed vaccination and our incredulity at people who will not get vaccinated, the slow pace of vaccinations here. And so I have no doubt our directors are all vaccinated. As far as Divisional Managing Directors, Rob, you might like to comment. But also, I wonder if you could comment on the -- this complex issue of mandating and the different -- the variation of policies around the country and so on.

Sure. Thanks, Chairman. And yes, look, it's a good question and a complex issue. So from a leadership team point of view, my understanding is that everyone is vaccinated, and that is critical because many of our businesses need to comply with public health orders. And most -- all of our management team as well is required to travel. And we -- in order to do so in the future, that will also be a requirement. So in terms of the considerations we've had, first of all, as the Chairman said, we start from the basis that we want to comply with the government's health advice and we also need to legally comply with government public health orders. And it's fair to say that there's an enormous amount of difference and complexity in terms of how different states are setting those public health orders. So for example -- and it depends on how a particular business is defined. So some but not all of our businesses in New South Wales need to -- were only allowed to let vaccinated team members work in those businesses by certain dates over the next couple of months. Western Australia, I think, has just made a positive announcement yesterday requiring vaccination in a number of industries. And that will apply to all of our businesses, but in some businesses only in partial operations, for example, through click and collect in lockdowns. Why are we treating this so seriously? We're treating it so seriously because as an employer, we have an obligation to create a safe working environment for our team members. And that is very much front of mind. And when the government is mandating this, we have no choice but to comply. And all the data that we've seen, credible government data does suggest that the higher the levels of vaccination in our workforce, in our workplace, the lower the risk. And also, the data also shows that there are significant risks and significant consequences of not being vaccinated. So we have adopted, we think, a responsible, sophisticated approach by supporting our existing team members on the journey to be vaccinated, providing support to those team members that may have medical reasons for not being vaccinated and also providing a lot of educational sessions for our team members that have questions. In terms of -- as many, many employers are mandating vaccination as the government is doing so, we didn't want to create a risk of being the employer of last resort to people that were refusing to be vaccinated, which would also create a risk for our workforce. So that was another reason why we're very keen to create a requirement for new team members. And we'll continue to monitor the situation. We'll continue to comply with the public health orders with the #1 focus of creating a safe working environment. Then finally, on the legal side. Yes, as you would expect, we've taken very detailed legal advice on this issue, and that has informed our strategy.

Okay. I'll go to Ruth and then Steve, to you next. Ruth?

Chairman, I have an audio question from [ Frank Thompson ] in relation to the supply of goods and materials to Wesfarmers. [ Mr. Thompson ], can you please go ahead with your question?

I guess what I'm concerned about is 2 issues. One is the current relationship progress with China and which will probably cause supply issues out of China into the future. I guess the first question is what is happening with this as far as Wesfarmers is concerned? And are you looking to diversify your supply chains to other places over in China? Second part of the question is around logistics issues. There are currently large shipping disruptions, choices of shipping, et cetera, which is even more complicated by shortages of containers worldwide. How is Wesfarmers affected by this? And again, how Wesfarmers are working around to minimize these issues?

Thanks, [ Mr. Thompson ]. And hopefully, you can hear the response. The -- I had a bit of difficulty hearing, but the second one was on containers and supply. And the first one...

[indiscernible]

I think diversified source.

On diversifying, yes. Well, there's been a lot of talk about China -- sourcing from China and diversifying. And certainly, we've been focused as a company on diversifying our supply chain. And it's fair to say that it varies from product to product. So for some products, like toys, there's a heavy dependence on China. For others like clothing, there are plenty of other companies providing it to us. We've got as a group 8,000 -- so 28,000 suppliers across 40 different countries. And so -- I mean where we start from is what products and services do our customers want? Can they be produced at a competitive cost and quality level? And are they produced in ethical and sustainable ways? And there's a lot of detail in our sustainability report about ethical sourcing, modern slavery, about all the audits we do and so on. Some of our major supply locations are Australia, Bangladesh, China, India, Indonesia. And China is major, but the others are growing. I mean to give you some specific examples, Bunnings sources about 35% of its products in Australia. And Wesfarmers itself manufactures various products like [indiscernible] in Kwinana, for example, fertilizers and all those chemicals for the mining industry, ModWood in our business in the eastern states. The bottom line is that suppliers have to be cost competitive and of sufficient quality, and that's what drives our decision. And of course, some people say, well, you should manufacture everything in Australia. Firstly, with the cost structure here, you can't if you're going to satisfy your customers. But secondly, the ability for a developing country to supply to a country like Australia is very important for the economy of that country. And we're very pleased to support those countries and those suppliers where they're acting in the most ethical way. So that's my response to that. In terms of containers, and this is a huge problem worldwide, we hear examples where the cost of bringing something in a container has gone up five or sixfold in the last year. And all around the world, shipping rates have just rocketed. In our businesses, we're feeling the effect of that. We -- in things -- places like Kmart, we're a low-cost, high-quality supplier -- or retailer, we have very good relationships with suppliers and large inventories. And so while we're feeling the effect, it's not as great as it might be for some other companies and products. Rob, would you like to add anything to that? Comment?

I'd say that we've spent a lot of this year really understanding and scenario planning around how we manage the disruptions, the constraints, the increase in shipping rates. And I think our teams have done a fantastic job of ensuring that we've got -- that we will have adequate inventory for this important Christmas trading period. It's also an area where our scale and our networks has enabled us to secure better-than-average arrangements around availability and pricing. And even though the prices have gone up, we won't need to pass as much of that cost onto our customers, so you can ensure that you'll get the best deal when you come to our retailers.

And that's just the beginning. Microphone 1?

Thank you, Mr. Chairman. Microphone 1, may I present Mr. David Wood, who is a shareholder.

Mr. Chaiman, my thoughts go through to the tradies that are under pressure and the availability of them due to time constraints. Now if the guy is on site and he runs out of material consumables that are fairly light, has Bunnings given any thought as far as drone deliveries to site in a very short period of time to save the tradies driving down there and back at $125, $130 an hour? The second question was, can you explain the protocol of getting interim directors -- appointing interim directors? And the third is just a general comment. With the high level of bonuses and remuneration to corporate Australia wide and global, you're getting a very large disparity between have and have not. And the -- we've seen in America the rights and so forth there that's been exacerbated by that sort of protocol.

Yes. Thanks, Mr. Wood. Well, perhaps I'll answer the second and third question and then hand to Rob for the tradies question. I understand your second question is about how we go about appointing directors in between meetings, isn't it? And the answer is it varies in each case. Sometimes, we appoint a search consultant, so-called headhunter, to look at what's available, and we give them a brief. We might say we're looking for someone with IT, digital experience who's been there at a senior level and so on. And they'll come up with a list of 10, and we whittle it down and eventually find someone. On other occasions, and this is more common, it's word of mouth or someone, someone knows. So if you look at Anil Sabharwal, Paul Bassat, who used to be on our Board and was one of the founders of SEEK, called me one day and said, hey, there's a fellow named Anil Sabharwal at Google who could be interested in joining the Board, and the rest is history. So I called Anil and went from there. In the case of Bill English, as soon as he lost the election to the current Prime Minister in New Zealand, I called him because I've met him before and had a lot of respect for Bill and asked him if he'd be interested. And after some months, he decided -- he got a lot of offers actually and decided to join the Wesfarmers Board. In the case of Alison, who you saw earlier, as soon as I saw the takeover of CCA and the fact that she'd be going, I called her because I knew her well, Rob knows her well through the business council. And fortunately, she agreed to come on board. So it's often -- and in the case of Alan, Wayne Osborn actually suggested that it would be worth looking at Alan. Not sure we could get him, but he's got sort of background and experience that Wayne has seen to be a very good replacement. And fortunately, Alan agreed to join us. So my experience is it's more often the latter. But I've certainly been involved in appointing headhunters to look for suitable directors. On the inequality issue, it is a big issue, and it's a looming issue around the world. Interestingly, if you look at the statistics, the -- there's been a real increase in inequality in the U.S.A., but a far smaller one, if any, in Australia over the last period up until COVID at least. I haven't seen any figures. And I think COVID has affected the lower paid parts of the workforce more than the higher paid in many cases. And maybe it has had an increase -- caused an increase in inequality. It is a real concern, I think, and that's why the Reserve Bank is constantly talking about the need to get real wages growth in the economy because wages have been, in real terms, pretty flat for quite a long time. And I certainly share that view. It's -- one hopes that with economic growth coming out of COVID, we'll get some inflation in due course that will lead to higher wages and higher economic activity and inequality will diminish, but time will tell. I mean, in the meantime, frankly, it's a fiscal issue. It's an issue for government policy, if they are finding that to do things like they have in the past with revising tax rate so that the tax-free threshold now, which used to be $5,000, is closer to $20,000 and so on or through fiscal support measures.

Mr. Wood, the question you asked around how can we better support tradies is a really good one. And I know the Bunnings team are doing an enormous amount of work to try and make the life of the tradies easier. I'm not sure drone deliveries are going to be the approach in the short term, but we are -- but it's actually a good question because we are seeing that in some other markets internationally, that drones are being used to deliver product. There are some regulatory issues that need to be addressed with aviation authorities in terms of using drones on a commercial basis across cities and so forth. So those things would need to be sorted out. But for example, we've developed -- we're developing the PowerPass app, which our tradies can use, which enables them to find products easily in store, to actually check out and pay for products themselves using their app and also looking at other services to help tradies either get in and out of the store quicker or to get the products delivered to their sites when they need them. So we'll continue to focus on that to ensure we can offer a compelling proposition.

One of the big issues at the moment is this issue of skill shortage and the availability of services and delivery services, for example. [Audio Gap] even with shutdowns that occurred through click and collect. And Robert might be instructive to mention some statistics about bags of cement and...

That's right. Well, I think -- and this kind of goes to the issue of how we get -- how we pick products and get product to customers. But as you know, the product we sell in Bunnings cannot -- not always easily be fit into a small Australia Post envelope or box. Through the Victorian lockdowns that we've been living through in September, going back a year or so ago, we'd do a couple of hundred online deliveries a day where we pick the product and either have it for click and collect or home delivery. Well, through September, we were doing about over 25,000 a day just in Victoria, and that required -- just in the month of September, when you think about the amount of potting mix and 25-liter bags of compost, it equated to the weight of over 300 blue whales that our team in Melbourne were shipping around the warehouse. So look, there are some unique complexities there. But the team are working rapidly to try and streamline the processes and rapidly improve the offer to our -- both our retail customers and, importantly, our tradies.

Rob, that statistic, that comparison would be useful if people knew how much a blue whale weighed.

A lot.

Mr. Chairman, is there any in-house schooling or training in Wesfarmers to bring employees up to senior management or into chair positions?

Yes, there are extensive programs, and Rob could go into some detail, but they go right across the board. Rob, do you want to summarize that?

I think there are a range of programs. And I think something that we're aware of is when you have 120,000 team members, we don't need to look much further than the fantastic talent and capability we have all over the group. And that's where we start in terms of looking at the future leaders of our organization. I think we have a pretty good track record of promoting internally. So we run a number of leadership programs at a divisional level. We run group leadership programs, but probably more broadly offering new skill development programs. So increasingly, our team members across our retail businesses are learning more about the use of digital -- new digital tools and technologies, which are becoming increasingly important, better service capabilities and skills in our industrial businesses. We are working to support graduate development, internships, cadetships and so forth. So many programs across the group.

Ruth?

Chairman, I have a number of questions from online. I'll first read the question from [ Mr. James Matcott ] and note that a similar question was also submitted by [ Ms. Rosemary Anne Dauer ]. [ Mr. Matcott ] notes that BirdLife Australia petition was launched in September with over 14,000 signatures calling on Bunnings to remove second-generation anticoagulant rodenticides from its range. He notes that these products are already restricted from sale in Canada, the U.S. and the EU, given their known threat to nontarget pets and wildlife. And he asks, "Will Wesfarmers commit to working to remove these products from sale given the risk posed from consumer backlash? If it becomes known that Wesfarmers businesses knew of the dangers to pets and wildlife and yet still sold these products, will Wesfarmers executives commit to discussing this risk with Bunnings executives to move towards solutions to remove these products from shelves before they are either regulated here in Australia or consumer backlash grows?"

Thanks, Ruth. Rob, would you like to address that?

Sure. Thanks very much for the question. So we are aware of the BirdLife Australia petition, and we know it's a topic that our Bunnings team have been looking at very closely, and it's something that we've also discussed with our Bunnings team from a Wesfarmers point of view. Importantly, Bunnings does offer a range of rodent control products, including a number of nonpoisonous options. From our point of view in Bunnings, we -- there is a strong customer demand for a range of products, and they are very focused in Bunnings complying with the Australian regulations. So they do follow the advice of the Australian pesticides and Veterinary Medical -- Medicines Authority, which is the key regulator in this space. And also, importantly, complying with the disclosures and the risks that are disclosed as part of the products. But a couple of things that we are doing in Bunnings. So first of all, working with the suppliers to include additional information on packaging. And also, Bunnings are undertaking training for their team members so that team members are informed and can help customers about the choices that they make. And in many cases, different nonpoisonous products may well be better suited to the customers' needs. But there will be cases where for personal and business use, the other products are considered in the best interest of the health of the customer and the business environment that they work in. So the Bunnings team are continuing to try and improve their education and disclosure in this area.

Thanks, Rob. Ruth, did you have another question there?

I do, Chairman. I have 2 questions from [ Jillian Southgate ], who is a shareholder, in relation to the Mt Holland lithium project. I'll ask them both and pass to you for a response. The first question is, "How many years before lithium will no longer be available? Or is it an endless supply?" And the second question is, "Can lithium be recycled or reused if or when supplies run out?"

Well, firstly, my understanding, and actually, I used to be a geologist, is that lithium is one of the most abundant elements in the world. There are lithium deposits all over the place. The number of deposits in Western Australia are what are called pegmatites, hard rock lithium deposits, which are favored in terms of converting to -- ultimately to lithium hydroxide. A lot of the lithium hydroxide and carbonate has come in the past from brine sources in South America and elsewhere. But even in the last 6 months since the price of lithium has gone up, the -- we've read reports of various start-ups in Australia and Western Australia who've got deposits of lithium. So I don't believe it's likely that we'll see a shortage of lithium. The challenge is actually finding, producing, building plants and so on. And that's why we think there'll be a shortage over at least part of this decade until people get up. The world is moving towards battery-operated cars, electric cars and maybe in due course, to hydrogen-powered cars. But it does appear there will be strong demand. And at this stage, we haven't seen any evidence that there'll be shortages of lithium to the extent in due course that people won't be able to develop batteries. There are other companies recycling batteries and recovering the various precious or valuable metals that are in batteries. And I think if the price of lithium and other things like rare earths continue to rise, we'll find that recycling gets ahead of steam, and there'll be more and more of it. And your other question, Ruth?

Chairman, I have a number of environmentally related questions. So I'll read them, and I think they might be able to be responded to that way. The first is from [ Fiona Deutsche ] who asks, "Will Wesfarmers set Scope 3 emissions reduction targets to its businesses and commit to net zero by 2050 targets as opposed to aspirations for WesCEF and Industrial and Safety?" That question is very similar to that asked by [ Mr. Michael Hopkins ], who notes that 95% of Australia's coal reserves cannot be burned if we were to limit global warming to less than 2%. And he asks, "Can the Board commit to no longer having any involvement in fossil fuel-related activities?"

Well, on Scope 3, I understand the question was a commitment to net zero Scope 3 by 2050. At this point, we're focusing on Scopes 1 and 2 and Scope 3 is -- includes things like the ultimate use of products we sell or produce. There's an interesting overlap here. I mean Scope 3 emissions for us are Scope 1 or 2 emissions for others. And if they're reduced to 0, then our Scope 3 would go to 0. Of course, it's very hard to often quantify but also to have any control over Scope 3 emissions because they're in the hands of someone else. Rob, do you want to add anything on that?

Sure. Well, look, it's a good question. We've made a lot of progress in recent years improving our disclosure and -- our understanding and disclosure of Scope 3 emissions, and you can start to see that on -- or you can see that on our website. And a good example of our Scope 3 emissions. So we produce ammonium nitrate that is used in the farming sector and in the mining sector. And then those Scope 1 and 2 emissions that we produce then become the Scope 3 emissions of our mining customers, for example. So by improving our disclosure of things like emissions intensity, we're already starting a dialogue now with our customers on how can we work together to reduce those emissions. So we are actively engaging in discovery and work with our end customers on Scope 3. We still need to better understand the issues and the opportunities to improve, but we're already actively engaged in ways of reducing Scope 3 emissions, and I'll hopefully have more to report on next year because we're continuing to improve every year our disclosure and understanding of Scope 3 emissions.

As far as the second part of that question goes, I've always had the view that if you try to predict what Wesfarmers would look like in 10 or 20 years, no one would be able to tell you because 10 or 20 years ago, we wouldn't have predicted the makeup of our businesses today. The expansion of the group has been driven by a desire to acquire businesses that could give good returns subject to meeting all those stakeholder requirements that I mentioned. Specifically, though, in relation to -- and so it's not possible to say this won't be part of Wesfarmers in the future. What I can say is that it's highly unlikely, if not totally unlikely, that we'll be evaluating or getting into heavy carbon intensity industries that we're not involved in, coal mining or oil and gas. Did you have any further questions, Ruth?

I do, Chairman. I have [ Fiona Deutsche ] asking in relation to the sustainability-linked bonds, which require Wesfarmers to limit average emission intensity to 0.25 tonnes of CO2e per tonne of ammonium nitrate produced. "Can the Board confirm the average intensity of ammonium nitrate production, what it was in financial year '20 and financial year '21?"

I may -- if I get this wrong, I'll call on Ian Hansen from the front row. But my understanding is that our intensity is about half that of major competitors. Is that a signal to me?

No. Sorry, Chair.

It's about half that of similar companies that are producing ammonium nitrate. And Ian, is it about 0.3 at the moment?

It's lower than 0.3, but it varies around that.

It's lower than 0.3, but it varies around that. I understand that some of other companies who are producing these products are more in the range of 0.5 or 0.6.

Chairman, just on the -- add further clarity on that question. The Chairman is right that the emissions intensity of the ammonium nitrate we produce is materially lower than many of our competitors and industry peers. And the fact that we've disclosed this emissions intensity number is quite significant at an industry level, and that's why we've had such strong support for our sustainability-linked bond, both in Australia [indiscernible] markets. The target is 0.25. And to deliver on that target requires a constant and regular investment in catalyst technology that, obviously, the effort to go through all the changes that are required. It's reported over a 2-year period. So in order for us to achieve that, we'll continue to need to make that investment and do that work. In the last year -- in the last couple of years, it's actually been performing pretty well as a result of some significant investments we have made at about between 0.25 and 0.26. So to deliver on that 0.25 target, we'll need to continue to invest and increase our investment in the coming years.

Now there are no questions at microphones. But Ruth, you have 2 more, do you?

I do, Chairman. This is from Queensland Investments Pty Limited. "I've shopped frequently online with Bunnings using the drive and collect facility, which is excellent, however, limited. I would think that there is a great opportunity for an enormous increase in sales if the website was more user-friendly and diverse in its presentation. For example, you highlight a particular product and a video pops up showing the product's attributes. Is there any hope in the near future of a more sophisticated site?"

Well, Mike Schneider is not here, so I can answer on his behalf. The drive and collect offer at Bunnings, Bunnings did a phenomenal job of bringing that proposition to life within a matter of days. And they did so going back 1.5 years ago, where the whole of our country and New Zealand was going into lockdown, and they were thinking of ways in which they could get product to, particularly, vulnerable customers that were concerned about coming into a store with COVID. And they did a fantastic job of doing that. But they did it pretty quickly. It was a pretty rudimentary offer. We have been really excited about the demand for it. And there is no question that Bunnings will continue to improve their offer. But really, they've been prioritizing other investments in our digital channels, and the drive -- and the curbside collect type offer was very much a COVID-related initiative. But Bunnings are continuing to improve on that for the longer term.

And one more, Ruth.

Thank you, Chair. The final question I've received is from [ Mr. Ian Bennett ]. "When will Wesfarmers stop using plastics in all of its stores, including requiring suppliers to not package products in plastics?"

Well, this again is a major focus in the company because it's obviously a very topical issue with our customers. And there are a lot of initiatives going on across the group to reduce our packaging and plastics and the use and disposal of products and to increase recycling. The company is a signatory to an organization called the Australian Packaging Covenant Organisation. And we have targets like by 2025 targets on waste reduction and recycling, having 100% reusable, recyclable or combustible packaging material and so on. Kmart, for example, is phasing out plastic products and removing PVC packaging from its underwear range and is on track to remove 80% of polystyrene packaging by July next year and to remove all problematic plastic by 2025. And there are several other targets. In Officeworks, they've had tremendous success in recycling, and they're recycling over 90% of their operational waste. And in many Officeworks stores, their waste is down to one wheelie bin per week. So -- and if you think of all the packaging that comes into an Officeworks store, it's a tremendous achievement. But it is an area of real focus in the company, and I think we've made some real inroads. Okay. It looks like there are no further questions. Thanks very much for those and for taking the time to cast your votes on the resolution and has -- raise your hand if somebody has not yet submitted their votes. Okay. That's fine. So in that case, I declare that the poll has now closed, and thank you all very much for joining us today and also those who are online. And I invite you all to join us, those who are here in Perth at the back. I'm really impressed that so many people have continued to ask questions when we've had the smell of sausage rolls wafting through there. But I can declare that all resolutions have been passed, and the announcements, as I mentioned, will be up on the web and the ASX platform. Thank you very much, and I now close the meeting.