Wesfarmers Limited (WES) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Wesfarmers' Annual General Meeting for 2024. 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, should you 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. May the good spirit give those who are presenting, the ability to articulate the message. Those who receive the message pass it on to those who require it. At the end of the day, may the good spirit take each and everyone of you safely home to your families. This is called Whadjuk section of the Noongar language group. We call this Boorloo, traditional name for Perth. It's by the river called that the Beeliar Boodjar and it's a significant place in spirit of the place we call the [indiscernible] Boodjar. I'd like to thank you for including the welcome. In our culture, a welcome is a sign of respect. And the greater the respect, the greater the community. So we don't take this for granted. I will finish it with a little song. This is called the Beeliar [indiscernible] Wardandi. It's a story of the river traveling. Like us, we get older, wiser, slower and we go to this beautiful place where we do a circle in the ocean and start the whole journey again. And this is called Beeliar [indiscernible] Wardandi. [Foreign Language] May the good spirit keep everyone safe.

Good afternoon, everyone and welcome to this meeting. I'm Michael Chaney, the Chairman of Wesfarmers. I'm advised that we have a quorum present, and I now officially open the 43rd Annual General Meeting for Wesfarmers Limited. Can I start by thanking Dr. Richard Walley for his welcome to country on behalf of the Noongar people, the traditional owners of this part of Australia, for which I'm joining here today, and I pay my respects to their Elders, past and present. And thank you to everyone who's joined us in today's meeting in person, online or listening by phone. Can I extend a particular warm welcome to Mrs. [ Mrs. Beryl Smith ], who's here with us today, who's aged 97, here with her 2 daughters, and she was insisting on coming along. And Mrs. Smith has been a shareholder for over 60 years. One of the original farmers' shareholders. That's wonderful, Mrs. Smith. We're pleased to be hosting a hybrid Annual General Meeting for Wesfarmers from Perth and our entire Board and executive leadership team and hundreds of shareholders are in this room with us, and other shareholders are able to participate online. I'm joining you all -- for those of you who aren't here today, from the Perth Convention and Exhibition Center. And on stage, with me, are: our Managing Director, Rob Scott; and our Company Secretary, Sheldon Renkema. Also joining us are the Board of Directors. There are 3 directors standing for election today: Alison Watkins, Kate Munnings and Tom von Oertzen. And you'll be hearing from each of them later in the meeting when they'll be seeking your support for election or reelection. But first of all, I invite my director colleagues to stand while I introduce them. First, Vanessa Wallace, our longest-standing director, who joined the Board in 2020 and will retire at the conclusion of today's meeting. Next to Vanessa is Jennifer Westacott, a Board member since 2013, and Jennifer will retire next year's AGM. And then Sir Bill English, who joined the Board in 2018. Mike Roche, next to Bill. He joined the Board in 2019, and he's Chairman of the Remuneration Committee. Alongside Mike is Sharon Warburton, the Chair of Audit and Risk Committee, and a Board member since 2019. Next to Sharon is Anil Sabharwal, who joined the Board in 2021 and is also retiring at the conclusion of the meeting today. And then Alison Watkins, who joined the Board also in 2021. Alan Cransberg, who joined in 2021. And Kate Munnings, who's on Alan's -- your left there. Kate is one of 2 new Board meetings seeking election today and she joined the Board in August this year. And finally, is Tom von Oertzen, who joined the Board earlier this month and is standing for election today. Thank you very much. Also with us today, seated at the front of the Group's senior executives, including the managing directors of our divisions and some of you heard -- some of those in this room a little bit earlier, I welcome them on your behalf and thank them for their efforts and fantastic efforts really through the year. As you would have seen coming into the meeting, all of our businesses are well represented here today. And I know how pleased they all are to have been able to demonstrate some of their products and services outside before the meeting. So if you have any particular questions that you wish to raise to go into detail of these operations, please make contact with them after the formal meeting, and they will all be outside having a drink and able to talk with you. We also have in attendance Wesfarmer's audit partners from EY, Trevor Hammond and Mark Cunningham, who are available to answer any questions on the audit or related matters. And lastly, I extend a welcome to all of our current team members and also to all the former directors and executives and team members who've joined us here today. Now on to some procedural matters. Now 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 proxy holders may vote and submit questions during this meeting either in person or using the Lumi AGM online platform. We've also provided shareholders and others who may not be able to be present in person or -- to participate online with the opportunity to -- and also the opportunity to listen to the AGM by telephone. Please note that shareholders and proxy holders meeting -- joining the meeting by telephone will not have the ability to vote or ask questions. But obviously, if you're online, you will have that ability. All resolutions will be decided on a poll. And to provide ample opportunity for shareholders and proxy holders, including those participating in the meeting online, to submit their votes, I now open the poll on all resolutions. I'll provide a reminder to submit any outstanding votes later in the meeting before the poll is closed. Sebastian Erna from Computershare will act as the returning officer for the purposes of conducting and determining the results of the poll in each resolution, and the results will be announced through the ASX company platform later today and will also be available on the Wesfarmers website. EY, the company's auditors will act as scrutineer. Now we'll now play a short video outlining further procedural matters, mainly because you'll get bored with my voice, but you'll see it all up on here. [Presentation]

Well, I hope you found that video helpful. It's terrific that we're able to provide access to the meeting online. It does introduce a lot more administrative detail as you saw, but I know it's appreciated by those who aren't able to get to the meeting in person. So please submit your votes anytime from now until I close the poll at the end of the formal business. Are there any questions about the poll procedure? Okay. Well, 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'll make some general observations about the last 12 months and the business environment. And then our Managing Director, Rob Scott, will provide us with some reflections on current trading and on the outlook for the group. I'm pleased to report that despite some external challenges in the economy, higher interest rates and inflation, for example, your company produced an increase in profit and the directors declared high dividends in the year ended 30 June 2024. This financial performance demonstrated, I think, the great benefit of being a conglomerate, where a downturn in one part of the business or leveling off is compensated for by increased earnings in another part. Details of the financial results for the 2024 year are in the annual report, and I don't propose to repeat all of that here. But in summary, the Group's net profit from continued operations was a record $2.6 billion, up 3.7% on the prior year. Our fully franked dividend rose the same 3.7% to $1.98 per share. Kmart Group was the standout performer over the year, recording a 25% increase in profit, but increases were also recorded by Bunnings, Officeworks, Health and Industrial and Safety. While earnings from the Chemicals, Energies and Fertilizer business fell largely as a result of reduced international ammonia prices. Your company continues to be in sound financial health with a strong balance sheet and businesses that generate solid cash flows. In spite of the challenges and uncertainties that face all companies doing business in Australia. We continue to maintain a focus on future growth and on generating superior long-term returns to our 0.5 million shareholders. Next month marks the 40th anniversary of Wesfarmers listing on the Australian Securities Exchange. And in terms of long-term returns, we have a lot to celebrate. Many shareholders here today will remember that day, the 15th of November, 1984 when a small farmers cooperative with a value of $28 million spun off its businesses into a listed company in which it retained a 60% shareholding. Over time, the original -- all of the original co-op shares were converted to Wesfarmers shares and the company grew and grew. That growth, I must say, has been beyond the wildest dreams of everyone involved at the time. With your company now having a value almost 3,000x higher than that $28 million at $80 billion today. Expressing it another way, if you bought $1,000 worth of Wesfarmers shares on the day of listing and you reinvested the dividends, you now have an investment of about $1.1 million. And if you held that amount in the original co-op stock that is $1,000 worth of co-op stock, it will be worth over $2 million today. It's instructive to reflect on the benefits that have flowed to Australia over that time, not just through dividends and capital gains for shareholders, but through job creation, taxes paid, the support of suppliers, customers and many, many community causes. There is, I believe, too little appreciation of the huge contribution that large businesses like Wesfarmers make to the Australian economy. And it's worth pointing out just how significant that contribution is, using Wesfarmers as an example. In the year just completed, Wesfarmers generated revenue of just over $44 billion. Almost all of this revenue was received proudly, I must say, by providing everyday low prices and great value to our customers. Well, where did all that revenue go? $29 billion or 65% went to our suppliers, whom our businesses rely on for raw materials and inventory and services. And in turn, our more than 27,000 suppliers rely on our custom for their growth and prosperity. $6.3 billion or 14% went to our 120,000 team members in wages and salaries and benefits. And of course, some of that went on to the Commonwealth as personal income tax. $4.4 billion or 10% went on rent, freight and other services, again, supporting numerous large and small businesses as well as individuals. Approximately $0.5 billion went to governments in payroll taxes and other charges. $200 million went to our lenders as interest payments. About $0.7 billion was depreciation and amortization expenses really for replacing equipment. And that left about $6.3 billion of profit before tax or about 8% of the original revenue. Now for some external parties, profit seems to be a dirty word. But it's important to understand how profitable businesses are essential to our economy, and to our future prosperity. For one thing, companies have to be profitable in order to continue to operate. To do everything I just listed, like employing people and sourcing products and services from suppliers, providing customers with what they need and supporting their communities. But where do our profits go? That last element. The first $1 billion of Wesfarmers profit before tax in the last year or 29%, went to the federal government as income tax. That's corporate tax to support all of the services that government provides. The next 61% or $2.2 billion went to our 490,000 shareholders, including individuals and superannuation funds, where the individuals are concerned, much of it was no doubt spent on consumption. In other words, supporting other organizations, individuals and government. The last 10% of profit or about 1% of the original revenue went to retained earnings in the balance sheet. So in other words, almost all of the profit ended up at -- all of the revenue ended up outside the company, supporting the economy and the community in different ways. It would be good to hear political leaders of all persuasions acknowledge their understanding of these facts. That large companies like ours constitute a vital part of the economy that generate enormous benefits to the community and make a huge contribution to society. Companies large and small deserve political leaders support. Such an understanding, I believe, would lessen the chances of governments enacting laws, that as we pointed out in the annual report, work against national productivity, productivity improvements that Australia so urgently needs. And I'm referring here to the many changes we've seen to employment laws, payroll taxes in some states and some proposed environmental laws. It's only through a prosperous, vibrant, growing private sector that Australia is going to be able to provide the sort of support to our children and grandchildren that in the past, we've taken for granted. In the context of the external environment, we continue to focus on what we can control, running our business as well. And as I said earlier, notwithstanding the challenges we face, the company is well positioned to continue its history of success. At a Board level, we're well served with an appropriate mix of experience and skills. Today, we farewell 2 directors, and we welcome 2 new faces. I invite Vanessa Wallace and Anil Sabharwal to stand, if you wouldn't mind and perhaps face the audience. Vanessa Wallace leaves us after 14 years, during which time she's provided invaluable guidance on strategic issues. And Vanessa has a background in management consulting and extensive experience in online matters and start-ups and so on. It has been fantastic having her on board. Anil Sabharwal is an executive at Google and has been a wealth of knowledge on all matters digital. Anil is leaving us because he's so flood out at Google and other commitments that he didn't feel he could -- he was able to continue, but he's been a terrific contributor over the last 4 years, and we thank them very much. And we welcome Kate Munnings, who, amongst other experiences, been a Chief Operating Officer and CEO of a number of companies. Tom von Oertzen, whose background includes senior consulting roles in technology loyalty program and new ventures. Thank you, Kate and Tom. We'll hear from them in a moment. At the AGM in October next year, Jennifer Westacott will retire from the Board after 12 years of service, and we'll have an opportunity to thank her for her great service at that time. But we're very pleased to announce today that Jennifer's replacement will be Ms. Julie Coates, who will join the Board on May 1 next year. Julie was most recently Chief Executive Officer of CSR Limited. And she was previously Managing Director, Australia and New Zealand of Goodman Fielder, and also had senior roles at Woolworths. While at Woolworths, Julie was Managing Director of BIG W, and she'll bring pretty valuable retail and senior management experience to the Board. In closing, I acknowledge the great contribution made by our 120,000 team members who led so ably by CEO, Rob Scott, whom I now invite to address you.

Well, thank you, Chairman, and thank you, Dr. Walley earlier for your welcome to country. As the Chairman has outlined, this year saw our businesses operate in a more challenging trading environment. Despite this, they adapted well and maintained their focus, implementing growth strategies and benefiting from proactive efficiency initiatives. These measures helped our retail businesses keep prices low for consumers and business customers. In turn, this supported growth in sales, profits and dividends for the year. Our Chairman has already spoken to the Group's performance and the significant contribution that Wesfarmers provides to the community and our many stakeholders from being a profitable company. And I wanted to ensure -- assure shareholders that we are steadfast in our commitment to our corporate objective, and that is to deliver a satisfactory return to shareholders over the long term. A business that isn't profitable isn't sustainable. And in the 40 years since Wesfarmers listed on the ASX, we've seen many companies fail, unable to adapt to changing environments with disruptions in technology, consumer behavior and regulatory landscapes. And today, we're seeing an acceleration of many of the disruptive changes that impact businesses, particularly through new technologies, global competition, geopolitics and regulation. Now the Wesfarmers model of active portfolio management, combined with divisional autonomy, together with very strong commercial and financial discipline provides an excellent platform to adapt and prosper in the new world. In discussing the group's performance this year, I'll outline how our approach to portfolio management and key divisional strategies delivers satisfactory returns to shareholders while also helping to address some of the big issues facing our nation at this time. And then I'll conclude with an update on our recent trading. To start, our retail divisions are helping address cost of living and cost of doing business pressures. Inflationary pressures and higher interest rates are placing significant stress on many households and businesses. Businesses, big and small, are facing cost pressures with rising wages, skill shortages, higher cost of energy insurance and rents and increasing regulation. Together, these are putting further pressure on prices. Now as you know, Bunnings, Kmart and Officeworks have long focused on everyday low prices. Bunnings commitment to lowest prices is supported by an ecosystem of regular price monitoring to maintain the lowest prices possible and a price beat guarantee that delivers an additional 10% saving in the unlikely case that a competitor has a lower price on a similar item. The ability of Bunnings, Kmart and Officeworks to offer low prices is due to their relentless focus on managing their costs and always looking for ways to be more efficient and more productive. In the past year, there have been many examples of this that I'd like to talk to. Kmart Group has started to realize the benefits from its implementation of RFID technologies and robots to monitor apparel inventory. This has freed up our team to focus on customers, make their jobs easier, improved stock management and also delivered higher sales. Kmart's direct sourcing capabilities provide unique products through the Anko brand at low prices and sourced in an ethical and sustainable manner. Kmart has focused on digitizing many of its product design, sourcing and inventory processes, which further reduces our costs. Bunnings have also made significant improvements in areas of range expansion, rostering, development of digital tools that are used in store and online, and this allows it to deliver upon its 3 strategic pillars of lowest price, widest range and best service. As Bunnings has expanded its offer into areas such as consumables, auto accessories and commercial tools, it has brought more value, more competition and more choice to the market. And Officeworks last year commissioned its second automated fulfillment center. This one right here in Perth, delivering lower cost and faster delivery speed for e-commerce. Importantly, we have the capacity to make these kinds of investments, delivering benefits to customers and other stakeholders because our businesses are profitable, as our Chairman has noted. And while I have highlighted ways that we are taking initiative to improve productivity, many people running a business in Australia will tell you that it is getting harder and more expensive to do so. It takes longer to get approvals for projects and the volume and complexity of regulation is increasing in all aspects of business. There are shortages in key skills especially in certain trades that are essential for many residential and commercial developments. And in this environment, it is riskier than ever to invest. This is most obvious for anyone trying to renovate or build a new home. But it also holds for businesses like ours, looking to invest and evolve to meet the changing context, I spoke about earlier and also importantly, to realize opportunities. And with the federal election next year, there needs to be a constructive debate and a commitment to action to find ways to ease the regulatory burden in Australian businesses, if we are to build prosperity and improve living standards for the future. Now turning to our Industrial businesses. Our Industrial businesses in Wesfarmers are supporting some of Australia's key export industries. Australia's prosperity relies on the strength and the competitiveness of our export industries. And as the world demands new sources of critical minerals to support global decarbonization and development goals, Australia has a unique opportunity. Wesfarmers continues to pursue opportunities that support decarbonization, reporting a further 5.4% reduction in our operational Scope 1 and Scope 2 emissions. And I'm pleased that Bunnings, Kmart and Officeworks retail businesses are on track to use 100% renewable energy by the middle of next year. And WesCEF is continuing to make good progress towards its interim target to reduce emissions by 30% by 2030 relative to its 2020 baseline. In WesCEF, we're evaluating expansion opportunities for sodium cyanide, ammonium nitrate production and also moving into the production of lithium hydroxide. These kinds of investments will be critical for Australia if we are to expand and diversify our exports in the decades ahead. Alongside our joint venture partner, we've commenced the commissioning phase of our lithium hydroxide refinery here in Kwinana and are working towards achieving first product in the middle of next calendar year. We know that many other countries have similar aspirations and our ability to be internationally competitive will be impacted by the speed at which we can gain approvals, undertake developments access critical skills and offer cost competitive and sustainable products. Now turning to another key challenge and an opportunity for Wesfarmers, making healthcare more accessible and affordable. The aging population and the growing care economy is placing significant pressure on government budgets. And we need to think differently if we are to maintain and hopefully improve the quality of our healthcare system. Wesfarmers Health has the ambition to make Australian's healthcare, beauty and wellness experiences simpler, more affordable, more accessible and to build a trusted consumer healthcare business that delivers satisfactory returns to our shareholders. Now Wesfarmers Health recently published a detailed report on Australia's cardio metabolic health, drawing on over 3 million free de-identified health checks at our SiSU machines that are found across most Priceline pharmacies in many other locations across the country. And you may have seen a SiSU station outside of the Wesfarmers Health booth. Now this important report highlights significant opportunities to build awareness of risk factors and to make healthcare more accessible and affordable for patients and the community. It highlights the important expanding role in community health for pharmacists and pharmacies alongside our businesses such as Priceline, InstantScripts and SiSU as we invest in technology for health monitoring and clinical care with very strong clinical governance standards. Now let me comment about our most important asset in the group, which I think are our team. We cannot hope to build sustainable and profitable businesses without harnessing the talents, the ingenuity, the passion of our 120,000 team members. Across Wesfarmers, there are thousands of stories of people developing skills and building rewarding careers. Now alongside our mature, highly experienced team members, we also employed tens of thousands of younger team members. Many doing casual work, often a first job, learning valuable skills to set them up for the future. Now a job should be much more than a paycheck. And it has been fantastic to see many of our younger team, including our indigenous team members develop careers and progressing to managerial roles. Now one example of this is a young chemical engineer who joined CSBP back in 1984. And that young engineer is called Ian Hansen. Now over the next 40 years, Ian built a remarkable career, culminating in his current role as Managing Director of WesCEF. Now as we announced in May, Ian retires next month and will be succeeded by Aaron Hood. Now this is Ian's last AGM as an executive. I do expect we will see him back here as a shareholder. But on your behalf and on behalf of the executive team, I'd like to thank Ian for his immense contribution to Wesfarmers over 4 decades. Okay. I'd now like to provide some comments on the recent trading of the Group. Now elevated inflation and interest rates continues to place pressure on household and business demand. In this environment, the everyday low price positioning of our retail businesses is resonating with customers who are seeking better value and also supports growth in customer numbers and transactions. In Bunnings, year-to-date sales growth remains resilient with positive sales growth in both consumer and commercial segments, albeit weakness in residential construction is weighing on commercial sales. Growth in the Consumer segment has been pleasing, and Bunnings has seen a continued increase in transactions driven by ongoing demand for repairs and maintenance. Bulk pack quantities, own brand and entry-level ranges continue to perform well. Kmart Group is benefiting from the strong value credentials and the uniqueness of its Anko products. The strength of the Kmart offer is evident through ongoing growth in units sold, transaction volumes and customer numbers. However, customers are increasingly seeking value and items per basket and the average sell price have both experienced minor decreases. Kmart and Target continue to improve and innovate their offer and are both well positioned to deliver even greater value in choice to shoppers in the lead up to the important Christmas trading period. Officeworks sales growth continues to be supported by higher technology sales, which now represent around 59% of its overall sales. But demand from business customers, particularly small and medium-sized businesses, has been impacted by the challenging business conditions. In the Health division, the transformation program is gaining pace with pleasing sales growth in Priceline, following recent improvements to pricing on key value lines and an expansion of the health and beauty offer. E-commerce growth in the retail and health divisions has been strong and is benefiting from recent investments in our omnichannel capabilities. This has also been supported by the ongoing growth and engagement of our OnePass members, which is translating to incremental sales. Catch's gross transaction value continues to be impacted by weaker discretionary demand and increased competition in the online space. Plans are underway to increase the utilization of Catch's e-commerce distribution centers to support the growth and improve the efficiency of Kmart and Target home deliveries. Opportunities are also being evaluated to leverage Catch's marketplace capabilities across our other retail divisions. In WesCEF, strong plant operating performance has continued as has their safety performance. Losses associated with depressed global lithium prices on spodumene sales that we're pursuing before we commission the hydroxide refinery will impact their earnings this year. In the Industrial and Safety division, trading conditions in Blackwoods and Workwear Group have become more challenging with customer demand impacted by a softer market environment. These businesses are focused on delivering cost reduction and efficiency initiatives to offset the slower sales growth. Coregas, however, continues to perform well and win market share. So in closing, Wesfarmers is well positioned for the future. While the outlook for the economy remains uncertain with some ongoing challenges, Wesfarmers is well positioned with resilient businesses, a strong balance sheet and various platforms for future growth. I would like to thank team members across the group and a special thanks to our group leadership team for the commitment that they show to our corporate objective. And also a special thanks to our Board for their continued advice and support. I'll now hand back to you, Chairman.

Well, thank you, Rob. And now to the formal business of the meeting. I refer to the minutes of the 42nd Annual General Meeting of the company held on the 26th of October last year. I've reviewed the minutes and I've signed them as a true and correct account. And the minutes are available for inspection at the shareholder registration desk and the company's registered office. Voting on all resolutions today will be carried out by a poll. All resolutions are ordinary resolutions requiring approval by a majority of the shareholders who vote on that resolution, at least the majority of the shares of the shareholders. Where as Chairman of the meeting, I've been nominated as a shareholder's proxy, I intend to vote all proxies in favor of each of the resolutions. There are also voting restrictions for some resolutions, as outlined in the notice of meeting, which apply to those who have an interest in the resolutions and certain of their related parties. A reminder that if you are having any issues casting your vote or submitting a question, please speak to a Computershare representative if you're attending in person. Or if you're participating online, refer to the user guide on the Wesfarmers website or call Lumi on the numbers shown on the slide, and that's at the bottom there. 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 I'll provide details of the percentage for the benefit of those listening to this meeting through the telephone line. As mentioned earlier, the final results of the poll on each resolution will be available on the ASX company announcements platform and on the Wesfarmers website later today. I'll now proceed with the formal business of the meeting. The Notice of Annual General Meeting was distributed to shareholders on the 27th of September, and I'll take the notice as read. We'll now proceed with the items of business listed in the notice. And for each item of business, we'll display the wording of the relevant resolution on the slides. And for those listening in on the meeting on the telephone, please refer to your notice of meeting for the relevant wording. 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 2024, which are included in the company's annual report. Trevor Hammond, as I mentioned, from EY was the lead audit partner for the company in that year. And Trevor and his co-signing partner, Mark Cunningham, are here and available to answer any questions on the audit or related matters. I note that this was Trevor's final year as Wesfarmers' auditor and as the law requires him to rotate off the audit having served as the lead partner for 5 years. And Trevor, I want to thank you and acknowledge your diligent efforts as the company's auditor over that time, and we wish you all the very best for the future. I'll shortly invite questions -- Yes. Thanks, Trevor. I'll shortly invite shareholders to ask, in person or submit online, any questions regarding this resolution. For those shareholders and proxy holders participating online, just a reminder that there is a short delay in the broadcast. So please follow the instructions outlined earlier to ask your questions online. Now are there any questions on this Item 1. None from the floor, I think. Sorry, is there one over there. Yes, microphone 3.

Mr. Chairman, microphone 3, may I introduce Mr. Reid, who is a proxy holder.

My apologies. Thank you for your time. I'd like to -- I'm here today as a proxy holder representing the 1,200 members of the ASA who have given me their proxy. So between them hold about 3 million Wesfarmers shares. Congratulations, Mr. Chairman and Mr. Scott, on the results of last year, especially the Kmart result. it's great to see and very much appreciated by all of us. Mr. Chairman, I've got 2 questions. May I ask them both at once?

Yes. Sure.

The dividend we just received was paid on the 9th of October. In our family's portfolio, that's the last dividend we receive. Most of our dividends are paid in September. One is even paid in August. Mr. Chairman, could you please find a way to pay the dividend earlier in September sometime?

Thanks, Mr. Reid. Do you want to ask your second question?

Second question, this is a local question for WA listeners. Here in WA, we have some rather restrictive rules on retail trading, which, for example, prevent Bunnings from selling safety boots and pet supplies. Mr. Chairman, what is the financial impact of this restrictive trading arrangement we have in WA on Bunnings profitability? And can we do anything about it?

Yes. Well, thanks, Mr. Reid. Firstly, on the dividend. All of us are shareholders, and we would all love to have received -- to receive our dividends earlier than the 9th of October. We had a good look at this because Mr. Reid foreshadowed this question with us a bit earlier. And the short answer is that it's not possible. We really -- I hope we could bring it forward a couple of weeks, but there are some pretty compelling reasons why not. One of them is that, as you all know, we have a dividend reinvestment plan, and it has quite a large take-up of about 15% of our dividends come back in the dividend reinvestment plan. And we have, in order to make sure that those who reinvest aren't victims of sudden volatility in the price, we calculate the reinvestment price on a 15 business day average. So that's over 3 weeks. And one of the reasons -- well, the second reason we do that is that when we don't need the capital that's reinvested, we buy shares on market. And in order not to disrupt the market because we're dealing with a large number, call it, $150 million. We have to stretch that over a period. And so that's the reason we pay the dividend when we do. And when we looked at it in detail, it may be possible to bring it forward a day or something, but it's in that week. On the -- but thank you very much for the question. The main thing as far as we're concerned, is that we do maintain a very high payout ratio. So we pay out 85%, 90% of our profits because we know that the franking credits are valuable to our shareholders and not to us. Rob, you might like to comment on the restricted trading hour point.

Sure. Thanks, Mike. And we have the CEO of Bunnings here as well, which you could get some perspectives from afterwards. But you're correct that there are very restrictive trading rules -- retail trading rules in Western Australia. And for Bunnings, to benefit from the longer opening hours that a lot of our customers and particularly the trades in Bunnings desire, so this is from 6:30 to later at night. If we are open for those longer hours, then we are prevented from selling certain products, notably the pet products, indoor lighting. Actually, we could even list another -- a whole lot of other unique products out. So look, unfortunately, the consequence of that is not only that Bunnings misses out on an opportunity for sales, but it actually means that West Australian shoppers have and businesses have less choice and they're probably paying more for those products. For example, with the pet offer, we have seen enormous growth in the pet offer in Bunnings outside of Western Australia because we're offering phenomenal value. But unfortunately, under the current retail trading laws, we can't offer customers that benefit in WA. The other frustrating thing is that these retail trading laws were set up at a time before e-commerce was a thing. In fact, I think they were set up before the Internet had been invented. Now we would say that for the benefit of consumers and businesses in WA would be timely to reflect on those rules because the frustrating thing is that at a time when our shops are either shut or not able to sell you things, you're still able to buy products online and have them delivered from groups like Amazon or others, not that we want you to buy things from them. So we think it would be timely and for the benefit of West Australians to review those trading laws.

Yes. Thanks, Mr. Reid. Are there any other questions on this resolution? Okay. very well. As there are no further questions, I'll move on to the next item of business, which is the reelection and election of directors, Alison Watkins, Anil Sabharwal and Vanessa Wallace are retiring by rotation at this meeting. Alison is offering herself for reelection. Well, as I mentioned, Anil and Vanessa will conclude their positions as directors at the end of this meeting. I want to again thank them and acknowledge the great contribution that they've made over the years. And so Kate Munnings was appointed director in August this year, and Tom just earlier last month, and both are offering themselves for election today. 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 this meeting. But for the benefit of those who are listening on the phone, there are a bit over 65% -- sorry, 96% of the votes in favor of Alison's reelection, 98% of the votes in favor of Kate's election and 98% -- a bit over 98% in favor of Tom's election. So I'd ask each of the 3 to just come up and give us a brief address about their background and why they make a contribution to the Board. So Alison, would you mind coming up to the stage first, please. Thank you.

Thanks, Mike. Fellow shareholders, I'm honored to stand for reelection as a director of Wesfarmers. I've had the privilege of contributing to your wonderful company during my first term, and I hope to be able to build on that in the years ahead through a second term. As the former CEO of ASX-listed Coca-Cola Amatil and ASX-listed GrainCorp, I've been fortunate to gain quite a lot of experience in leadership. And I've also been able to gain quite a lot of experience as a nonexecutive director through my roles in major ASX-listed companies like ANZ, Woolworths and CSL, where I'm currently a Director. My background in consumer businesses retail and supply chain fits well with the Wesfarmers operations. And I'm also a member of the Reserve Bank of Australia Board, which gives me a good connection to the economic trends that impact our businesses. What draws me most to Wesfarmers is its commitment to delivering shareholder value while also meeting the needs of all stakeholders. That's a philosophy that I strongly support. And I also think that being a good director is about both head and heart. And for me, growing up on a farm in Tasmania and now being involved with our family property in Victoria, I really feel very closely connected to Wesfarmers' rural roots and values. So I appreciate your support for my reelection. Thank you.

Thank you, Alison. Well, I now invite shareholders to ask any questions in relation to this resolution. [ Sheldon ], you could keep an eye out in case...

We have an online question.

What?

We do have 1 online question. Yes.

So we have 1 online question.

Chairman, this is a question from Mr. Stephen David Mayne. Did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and ASA recommend a vote against any of today's resolutions, including the reelection of Alison Watkins? If so, what reasons did they give? And will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons if there have been any protest votes. Finally, on the proxy votes lodged 48 hours before the meeting, why not disclose them with the formal addresses like many other companies, such as Brambles, NAB, JB Hi Fi, Carsales and Origin Energy do in order to make a more timely disclosure to the market and avoid AGM questions such as this one.

Well, thanks, Mr. Mayne. On your -- the first part of your question, all of the proxy advisers advised in favor of all the resolutions very pleasingly. We do display the votes on the screen. We've never felt it necessary to put them out a couple of days earlier, but they are there for shareholders to see either here or online, prior to asking questions. So hopefully, that will continue to suffice. Are there any further questions? Okay. If not, I'll now introduce Kate Munnings. Kate was appointed to the Board in August 2024 and Kate will come up to the stage and provide the meeting with some details of her experience.

Thanks, Michael. Thank you, and good afternoon, everyone. I joined the Wesfarmers Board in August this year. And today, I seek your support for my reelection to the Board of your company. Wesfarmers is an iconic Australian company, and I'm honored to have the opportunity to serve you on your company's Board. Given this is my first time speaking with you, I thought I would share what I hope to bring to the Wesfarmers Board and the broader Wesfarmers family. I started my career as a registered nurse. So I bring to Wesfarmers frontline experience and a belief in empathy that comes from caring for people while at their most vulnerable. As a registered nurse, I specialized in HIV and AIDS nursing. AIDS patients in the 1980s were ostracized and isolated, often for reasons that had nothing to do with their disease. That experience led me to study law. And I left one of the most loved professions and joined one of the least loved professions when I became a solicitor in the 1990s. I spent 12 years in private legal practice specializing in construction law. And I progressed to partner in a leadership role in the construction practice at international law firm, Baker McKenzie. So I bring to Wesfarmers experience in dealing with complex and commercial issues that arise from large infrastructure projects. I then left private practice and spent 8 years at ASX-listed Transfield Services as their Chief Risk and Legal Officer and Company Secretary. So I bring to Wesfarmers experience and an understanding of corporate law, risk management and corporate governance. When I eventually moved into operations, I was responsible for Transfield Services construction, logistics and project management business across Australia and New Zealand. So I bring to Wesfarmers operational experience, in running a large international logistics business as well as running a large construction business. After 20 years of working outside of healthcare, I returned to the sector, first as Chief Operating Officer at Ramsay Healthcare, then as Chief Executive Officer at Virtus Health and now as CEO of Vitrafy Life Sciences. So I bring to Wesfarmers operational leadership experience in running complex health services and biotechnology organizations. And finally, coming from a family of tradies, home renovators and having 6 grandkids, I bring to Wesfarmers a lot of free advice from regular customers at Bunnings, Kmart, Priceline and Officeworks. I commit to you that I will bring all that I have learned to the Wesfarmers Board as I support Wesfarmers' objectives of delivering satisfactory returns to shareholders while treating all stakeholders with respectfully and fairly. Thank you.

Thank you, Kate. Well I invite shareholders to ask any questions regarding this resolution. Are there any from the floor? I see there's 1 online. So Ruth, we'll go to that online question.

Thank you, Mr. Chairman. This is from Mr. Stephen David Mayne. Could new director, Kate Munnings and the Chair comment on the recruitment process that led to her appointment to the Board, which headhunting firm supported the process and did the full Board interview any unsuccessful applicants for the role. Also, do Kate know any of our directors before engaging with the recruitment process?

Well, perhaps I could -- we won't have individual directors popping up and down because it tends to open the floodgates. But I'm sure I can answer the question for Stephen. We did, in fact, engage a search consultant this year. It will be pretty unusual to name the consultant because all the other search firms would be up -- jealous. But it was one of the biggest search consultant firms. And we actually said we're looking for certain skills and we need to replace 2 directors over the next 18 months. And I would appreciate if you could see what's around. We actually said to them, please include Kate Munnings name because we're considering her now, but let us know whatever else you can find. And eventually, we decided we've got a short list, a long list and a short list -- eventually decided that -- we'd love to have Kate join us now. And as part of the process, Kate had the opportunity to go and sit one-on-one with all of the other directors, and just to make sure that they all thought it was a good idea. And at the end of that process, we were delighted to be able to invite her to join the Board and she accepted. The director that I mentioned, Julie Coates, who will join us next May actually came through the headhunting process, and she was known to a number of our Board members already. And so we contacted Julie, she was really at the top of the list of the people that were there, and we're delighted after the CSR takeover that she was able to agree to come on board next year. So the search for directors varies a lot. Often, it's word of mouth because somebody knows a very good director that may be available. In the case of Tom von Oertzen, we didn't involve a search consultant at all. We come across Tom -- we originally actually came across him when he was Head of BCG Ventures, and we -- the Board visited BCG Ventures, the start-up organization of Boston Consulting Group in Berlin, and Tom had organized that. And so we kept in contact and I then introduced him to the rest of the Board. He met all the directors, and we all felt that he'd be a terrific replacement and we could let Anil go. And so that was a different sort of process, but I think it's -- both of them have ended up with very high-quality people. Are there any further questions on that item? Very good. Thank you very much. So I now would introduce Tom von Oertzen, who, as I mentioned earlier, joined the Board on the 1st of October. Thanks, Tom.

Thank you, Chairman and fellow shareholders. Turned it up a little bit. I'm really honored to stand here for election today at this AGM. I started out as an apprentice on a broad acre farm in Germany. So I have got some affinity with Wesfarmers roots. I completed my degree, a Commerce degree at Munich University and then arrived in Australia in the early '90s, where again went to university here to do my MBA. I joined the Board after 25 years with the Boston Consulting Group, an international strategy consulting firm. During that time, I worked with CEOs and leadership teams in the aviation, retail and mining industries. As a senior partner and Managing Director, I led the Asia Pacific aviation and tourism practice with a focus on loyalty in airlines, retail and hotels. I was a member of BCG's Global Partnership Board for 18 years. In 2014, I joined the Australian part of Digital Ventures as a Director. And as Mike mentioned, I helped companies to innovate and accelerate the digital efforts. I work closely with data scientists, UI/UX designers, software engineers, people that I have not worked with before to build disruptive digital solutions for the corporate clients that we serve. As Mike mentioned, I met every director in the interview process, and I learned from them, the key ingredients, a secret sauce for Wesfarmers incredible shareholder value creation history, 4 decades of top quartile performance. I also learned about the great progress the company has made in OneDigital, and I'm looking forward to working with the Board and management to supporting that incredible value creation opportunity on the way forward. Thank you.