Wesfarmers Limited (WES) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Wesfarmers' Annual General Meeting for 2026. My name is Ruth Callaghan and I will be the 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 up your mobile phones. And now before our Chairman, Michael Chaney, commences proceedings, I'd like to begin by 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] We ask the good spirit to keep everyone safe. This is called the Whadjuk section of the Noongar language group. It's a spiritual place, a place where many of us are gathered like we are today to create stories, share stories and pass them on to many generations. And at the end of this presentation, may the good spirit take each and every one of us safely back to our families. [Foreign Language] I do a little song called Bilia calling wide Andy, it's a story of the river, trailing back to the ocean. I'd like to thank you for including and welcome in our culture, it's a sign of respect. Respect is our greatest asset regardless of who we are or where we're from. And we do not take those respect for granted. So thank you very much for your respect. [Foreign Language] May the good spirit with be with us.

Well, good afternoon, everyone, and welcome to this meeting. I'm Michael Chaney, the Chairman of Wesfarmers. And I'm advised that we do have a quorum present, not surprisingly, I might say. And I now officially opened the 45th Annual General Meeting of Wesfarmers Limited. . Can I start by thanking Dr. Richard Walley for his welcome to country on behalf of the Noongar people who the traditional owners of this part of Australia in which we're joining, we're meeting today, and pay my respects to their elders past and present. Richard, like me, is retiring this year. And Richard, I'd like to take this opportunity to sincerely thank you for your leadership in the community and for welcoming us to Noongar country at our AGMs for many, many years, including throughout the last 11 years of my chairmanship at Wesfarmers, and I wish you all the very best for the future. And thank you, everyone, who has joined today's meeting in person here in Perth or is watching us online. We're pleased to be hosting our Annual General Meeting for Wesfarmers in this convention center. And we've got our Board here that I'll introduce in a moment. We've got our executive leadership team and hundreds of shareholders in this room, I guess there are over 1,000 shareholders for those who aren't here who are participating today. On stage with me are Managing Director, Rob Scott, who will speak to us a bit later in the meeting; and Sheldon Renkema, our Company Secretary. And as I said, also joining us our Board of Directors, there are 3 directors standing for reelection today, Bill English, Alan Cransberg and Ken MacKenzie. If Ken is elected to the Board, which I'm sure he will be, the Board's resolved to appoint him as Chairman to succeed me from the conclusion of the meeting. Each of them who are standing today will address you later in the meeting when they seek your support for their election or reelection. But first, I'd like to introduce my director colleagues, who will stand while I introduce them. Firstly, sir Bill English, who's been a Board member since 2018. Long Star Bill is Alan Cransberg, who joined in 2021. Next to Alan, Ken MacKenzie, who joined the Board in June this year. And as I said, as seeking reelection today, then we have Mike Roche joined us in 2019 and is Chairman of the Remuneration Committee. Alongside Mike is Sharon Warburton, the Chair of our Audit and Risk Committee and a member of the Board since 2019. Next to Sharon is Alison Watkins, who joined the Board in 2021. And and then Kate Munnings, who joined us in 2024. Alongside Kate is Tom Oertzen, who also joined in 2024. And and then Julie Coates, who joined us in 2025 just last year. Also, thanks very much, directors. Also in the room, at the front, I think, maybe in the second row there are the group's senior executives, including the managing directors of our divisions. And I welcome them all on your behalf and thank them and their teams for the fantastic efforts for the company throughout the year. As you would have seen on the way in, all of our businesses are represented here today outside and are pleased to demonstrate some of their products and services after the meeting as well as they were before. So hopefully, you'll join us for refreshments that they'll be a bit more stimulating than they were. That is the refreshments after the meeting. If you've got any questions about any operational matter in one of our divisions, please speak to some of the representatives after the meeting. They'll all , as I said, be outside and available to talk to you. Our audit partners from EY. Fiona Campbell and Mike Cunningham are also here to answer any questions on the audit and related matters. And finally, a special welcome to our current team members and former directors, executives and team members who have joined us today either here or online. Onto now some procedural matters. Many shareholders have already taken the opportunity to submit their voting instructions and questions through the Lumi AGM online platform. and we thank them for doing so. 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. All resolutions will be decided by poll. Now so that shareholders and proxy holders have ample time to vote, including those participating in the meeting online. I'll now open the poll on all resolutions. I would like a reminder to submit any outstanding votes before the poll is closed at the end of the meeting. We've got a couple of people from Computershare. Sebastian Earner is our 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. We'll now play a short video on further procedural matters, which save me the problem of having to read them out to you. So enjoy the video. [Presentation]

Well, I hope you found the video helpful. So please submit your votes anytime before from now until I close the poll at the end of the formal items business. Are there any questions on the poll procedure. Okay, fine. As you'll be aware from the notice of meeting, we have 4 items of business today. But before we turn to them, I'd like to reflect on the past year. And as this is my last meeting as Chairman on what I believe has made the company successful over the time of 42 years since it went public. I'll then offer some brief observations on the economy before our Managing Director, Rob Scott will comment on current trading and outlook for the group. I'm pleased to report that Wesfarmers has increased its profit in the 2026 financial year despite quite substantial uncertainty at home because of continuing weak consumer demand and economic conditions and abroad because of conflict around the world as we're all aware. Net profit after tax for the company was $2.9 billion, which was an increase of just over 8% on the previous year, excluding significant items that year. And the Board declared a fully franked dividend for the full year of $2.22 per share, which compared with $2.06 in the previous year. In December, we also paid $1.50 per share capital management distribution that you all approved at last year's annual meeting. profits during the year increased in the Bunnings Group, the Kmart Group, chemical, energy and fertilizers in industrial and safety and in the Wesfarmers Health business. Officeworks earnings fell largely due to restructuring activities. As has often been the case with Wesfarmers, the result this year really does show the value of a diversified portfolio of being a conglomerate in which weaknesses in some divisions made up and offset by strength in others. And I think that's been a key factor in Wesfarmers success over the 42 years since we listed on the stock exchange. My own involvement with Wesfarmers now spans 43 years. And I joined the company in 1983 as Company Secretary and Administration Manager. I became Finance Director the following year and served as Managing Director from 1992 to 2005. I returned to the company in 2015 to the Board, and I became Chairman later that year. I don't believe anyone could have wished for a more enjoyable rewarding career than the 1 I've had with the company. Wesfarmers record since it listed on what used to be called the Australian Stock Exchange. And now as the Securities Exchange is well documented from our float in November 1994, the company, as we heard, for those of you who are here, has outperformed every other company in the stock exchange that was then listed with a compound shareholder return of 19.4% a year. Actually, I think it's 18.8%. The share price fell a bit today. a $1,000 investment in Wesfarmers at the time of our listing would be now worth about $1.4 million if you reinvested your dividends the same amount invested in the all ordinary index would be worth around $62,000. So it's been a really fantastic outcome for our long-term shareholders, many of whom are here today including those from farming families who got their shares through the conversion of cooperative stock, which they received is trading bonuses. And I have to say it's been really gratifying over the years to hear many stories about how Wesfarmers share has helped a lot of farmers through the tough times. It's fair to say that the success of the company and Trevor Eastwood with us here today, the first listed company, the success of the company was beyond the wildest Street, so any of us who were there in 1984. So it's perhaps worth reflecting on how that happens and what lessons we might draw from it. I wrote about this in my Chairman's letter this year in the annual report. It essentially gets down to adopting a clear, unambiguous purpose statement for the company, designing management systems that drive behaviors towards achievement of that purpose and sticking to our guns in an environment where external commentators, frankly, often suggest you should be taking different steps or adopting different strategies or even breaking up the company. It's actually very hard to maintain a consistent approach to running a company over 40 years. It gets down essentially to constantly driving home the corporate culture and doing so through the best people you can find something that we've been really blessed with and a point on which I want to elaborate in a moment. The clear and actually unusual purpose statement we adopted on listing in 1984 was to provide a satisfactory return to shareholders because we recognize that, that was the reason people invested in our shares. That didn't mean we put money ahead of other values. We recognized early on that unless you were a good corporate citizen, the company wouldn't prosper in the long run. So we stressed at the outset that we aim to achieve good returns by looking after the interest of all our stakeholders, our customers, our team members, suppliers the community generally, including through strong environmental practices and through community investment. It shouldn't be surprising, I think, that if you do those things well, the company will be rewarded by support from those stakeholders, and it will prosper accordingly. And it shouldn't be surprising, I think if your stated purpose is about shareholder returns rather than, say, building a particular empire that your shareholders will actually get better returns. The second way in which we've differed from other companies has been in our attitude to capital. At no time have we told any of our divisions that they were in a competition for capital. And that's quite a different approach to what you hear in other companies. Rather, we've stated our firm belief that for a listed company, capital is effectively unlimited except at times like the week after the global financial crisis, but it's effectively unlimited because investors and lenders will be happy to provide it for good investments. What is limited are those good investments where the numbers had up. And if any manager can find one, they get the capital that they need. It's been a combination of those 2 things. The financial objective and the approach to capital that have seen the makeup of Wesfarmers change constantly over the last 40 years with different industry sectors playing an increase or decreasing role as time went by. And I'm sure in the same way that the company will continue to evolve over the years to come, driven by the same philosophies and values that have been so important to us. One of the big challenges of being successful over any period is that it can lead to hubris that is a belief that you'll possessed with a wisdom, which others don't have, that you can do no wrong and most dangerously that you're invisible. Fortunately, we've made enough mistakes over the 40 years to have a sober view about that issue. And the biggest one, you'll recall, was we wrote off about $1.5 billion in the Bunnings U.K. venture but there have been other smaller ones, too. The important thing is to learn from mistakes and to understand that unless you innovate constantly and remain open to taking risk, you're going to go backwards. The way I've always expressed it is if it ain't broke, get ready to change it because if you keep doing the same thing just because it's working, the business will be disrupted through new products and new processes, new competitors and new technology and so on. Now -- and so while it may surely change really is the only constant. It's also pretty common, I think, for companies to attribute their success to good people and a can sound platitudes. But in Wesfarmers' case, the quality of people we've been able to attract and retain over the last 4 decades, has been absolutely key. The visionary cooperative CEO, John Bennison, who some of you will remember, now passed away, unfortunately, engineered the takeover of CSBP. We've made a huge difference to the Wesfarmers coal. Trevor Eastwood, who is with us today, has an engineer's clarity of thinking and he gave us the simple corporate objective. He was the one who really who said, "Why do people buy shares and that must be our objective. " I work to build on Trevor's good work and then Richard Goyder and Rob Scott have both made their own special marks. We've had an outstanding group of chief financial officers and divisional leaders to almost all of them were developed within the group. And we've had an unusually strong business development team that was able to take us down new cars and see the divisions with commercial talent. A huge factor in the company's success has been its half ownership in Gresham Partners Limited. And this, I think, has been unique in Australian corporate history. Apart from being one of the country's most successful investment banks on in its own right. Gresham's close relationship with Wesfarmers has led to some of the most innovative developments the countries see. These included the way the cooperative found its way onto the stock exchange, the formation of the Franked Income Fund, which many years a day will remember as a great generator of wealth. Gresham provided huge support with innovative strategies to navigate regulatory, and has provided great advice many acquisitions and divestments. And I pay tribute to everyone at Gresham and in particular to the founder and the current Chairman of question, James Brand, who's here with us today, who's frankly got the best commercial brain I've ever encountered. Of course, the prosperity of Wesfarmers going forward will be a function not only of how well we operate ourselves. But also of the environment in which we operate. At a national level, a strong and growing economy provides more opportunities for business and attract more investment. And there's a symbiosis here profitable and growing companies support the community. We pay wages to employees, we pay taxes to governments, source goods from suppliers, serve customer needs, pay dividends to shareholders. including millions of superannuation investors and general economic growth is provided to the country through our investment. Today though, our economy is facing real headwinds. We've got low growth, weak productivity, dismal confidence and limited ambition or capacity amongst governments for reform. Taken together, this economic and political environment has a significant impact on companies and on their capacity to find and make investments where the numbers add up. to all of our long-term detriment. Last year at this meeting, I welcome the Commonwealth government's initiative to convene an economic reform roundtable with a focus on lifting productivity. Since then though, we've seen limited if any progress in productivity. In fact, that good steps in business tax under the wholesale tax reform that I spoke about then which remains widely important if we're going to drive investment and remain competitive. Company and personal tax rates in Australia are still too high. And given the state of the budget, lowering them requires governments to stand back and restructure federal and state taxes together. Governments haven't found ways to work together, unfortunately, to take up that task. It's also a real concern that increasingly, populous approaches by governments and our position parties take precedence over effective policies. The prime example of this is the race to the bottom on immigration policy, which acknowledges the central importance that immigration has historically had on our economic prosperity. In this case, a concern about a different issue, housing shortages is driving policy, which would end up having the opposite effect to what was intended as our skill shortages get worse, the casual workers on whom we depend for our care and our hospitality and agriculture sectors are banned from entering and our universities on whom we depend for highly qualified graduates are faced with existential funding challenges. You don't read much about that in respect to the immigration debate. But the universities will be in huge trouble if the number of our international students declined materially. If confidence stays low and productivity stays weak and we failed to really affect real form and about a populous pressures, investment will stall and it will go elsewhere. Wages growth will slow and governments will have less to spend on the services that Australia's value. And in the end, that will hurt us all. Well, what do we do about it? In that context, Wesfarmers will keep doing its best to invest where the numbers add up and we'll ensure that our balance sheet stays strong. So whatever we face within the economy we'll be able to cope with and continue to prosper. Turning now to our Board. Ken MacKenzie joined us in June, as I said, and he stands for election today, and as I did say earlier, subject to your vote he'll succeed me as Chairman at the end of the meeting. Ken had a 23-year executive career at Amcor, including 10 years as managing retran CEO and was a fabulous performance at Amcor, and then he was Chairman of BHP for nearly 8 years. He shares the views on governance and capital discipline and long-term value creation that have underpinned Wesfarmers success. And we're really delighted that Ken accepted our invitation to join the Board and cheer the company, and I commend his election to you. I thank my fellow directors and every director I've had the pleasure of working with over the years for their support and their diligence and commitment. Your company is in great hands. I think with an outstanding Managing Director, outstanding Board and leadership team and employees. And on behalf of the Board, I thank those over 100,000 employees across the group for their efforts and for our leadership team for their dedication to the company. And finally, I thank all of you, our shareholders, many of you have supported Wesfarmers for decades and some since it listed. And that loyalty is part of the story that I've described today. It's been a privilege to serve this remarkable company. First as an executive and leader as Director and Chairman, I look forward to watching its continuing success in the years ahead. And I'll now hand over to Rob Scott for his remarks.

Well, thank you, Chairman, and thank you, Dr. Walley for your welcome earlier. As the Chairman outlined, 2026 was another year of profitable growth for the group with strong contributions from our largest divisions. Our continued focus on operating excellence and disciplined approach to capital allocation helped us grow our businesses keeping our prices low for customers, supporting our teams, partnering responsibly with suppliers, investing in local communities and paying tax to government. . We made strong progress on our strategic agenda, positioning the group for future growth to deliver satisfactory returns to our shareholders. Today, I'd like to talk about 3 of our priorities. Firstly, how we support households and businesses Secondly, how we use technology to benefit customers and our team members. And then finally, how we're investing for the future. And this is all about delivering a satisfactory return. So over the past year, Australian households and businesses have faced persistent cost pressures with elevated inflation and rising interest rates. The Middle East conflict has added to domestic cost pressures with supply side challenges in areas such as fuel, fertilizers and international shipping. And together, these pressures weighed on sentiment and the economy. During this time, our businesses have continued to provide value to customers, including by lowering the prices of thousands of products. And with our everyday low price model in Bunnings and Kmart, customers know they'll get great value all the time, not just when things are on promotion. Now we can only achieve this by running our businesses as efficiently as possible and focusing on productivity to offset the impact of inflation. And when we do that, that is good for customers. Value also matters to business customers. And this year, we served more than 2 million small, medium and large businesses across Bunnings, West, Officeworks, Blackwoods and the Workwear Group. And these customers are critical to our economy, and we provide quality, reliable and competitive products to some of Australia's largest export industries, leveraging our scale and capabilities to deliver better service and quality. During the year, we've continued to invest in our distribution new express delivery options. Now while the retail market remains highly competitive, our divisions continue to grow their addressable markets. Wider product ranges and our new expanded marketplaces at Bunnings and Kmart are providing more choice and adding thousands of products for customers to choose from, including commercial categories at Bunnings. Now turning to how we're leveraging technology to benefit our customers and our teams. Now we continue to use technology, including AI to improve customer service and enhance the jobs of our team. Customers are increasingly choosing to engage with our businesses using technology, and it's critical that we keep evolving our offer to meet their expectations. Now while developments in AI are accelerating, so to a public concerns about implications for jobs, risks to personal data, cybersecurity, and the build-out of data centers, and these are genuine concerns. Now AI provides a singular opportunity to overcome some of the greatest challenges to our economic prosperity being weak productivity and low economic growth. opting out of AI is not really an option, but how companies use AI will be critical to their future competitiveness and importantly, will determine customer and stakeholder trust in their company. Now responsible use of AI will accelerate the strategies that are at the core of our success. Which is why we've adopted what Mike mentioned earlier, is a people-first digitally enabled approach. And this means putting our customers and our team members and other stakeholders such as suppliers at the center of our focus. Now these efforts are a logical extension of the work we've already been doing for years to build out our data assets and to digitize our operations, and we're confident it will help unlock productivity benefits, helping us keep our prices low. Now in Agentic Commerce, our AI shopping assistance, Buddy at Bunnings, Joy at Kmart and Ollie at Officeworks, are making shopping better for customers, driving 2 to 3x higher conversion rates and increasing our average order values by about 20% to 30%. So real tangible value. Now our teams are developing AI skills and using AI to work smarter to help customers more effectively in-store, whilst also delivering productivity benefits across areas such as recruitment, sales forecasting and an infrastructure performance at West. Now finally, investing in our portfolio. The history of Wesfarmers is 1 of continuous improvement, entrepreneurial initiative and portfolio renewal. And notwithstanding the lower economic growth that we're seeing, we also see opportunities to invest capital to create shareholder value in our existing businesses and also some new opportunities. We're investing and developing new revenue streams in ways that address domestic capacity constraints and leverage Australia's natural advantages. A great example is our Lithium business, which delivered its first profit last year with the mine and concentrator operating above nameplate capacity for the year. In July, we announced an expansion of the Mt Holland mine and concentrator, which is expected to double spodumene concentrate production and lower our unit costs by 2030. We've also responded to national challenges such as housing supply investing in the built living joint venture, which will use advanced manufacturing to help make housing more affordable and faster to build. During the year, we also strengthened the portfolio by transitioning our industrial and safety businesses into Bunnings, which provides opportunities for Bunnings to grow and improve its mid-market and commercial offer. We continue to invest in our businesses in the areas of transformation projects such as the ones underway at Officeworks and help to improve returns through growing our sales and lowering our cost base. And we also see opportunities to grow by winning new customers as they focus -- as our customers focus on lower prices, trusted value and widest range. Now Kmart's new furniture offer through the new KHome store concept and the launch of Kmart's marketplace are great examples of this. Across the group, I'm also pleased to report that we see plenty of opportunities to create shareholder value by addressing customer needs and investing for the long term. Now turning to the trading update. I'd like to provide some update on how our businesses have been performing of late. The group has had a reasonable start to this financial year with strong operating performances in WesCEF helping to offset some moderation in retail demand. At our full year results in August, we noted that uncertainty regarding the outlook for inflation, house prices, interest rates and tax settings were weighing on consumer sentiment. Since then, the Reserve Bank has increased the cash rate for the fourth time this year to its highest level since 2011. Elevated inflation and higher interest rates continue to impact demand in parts of the Australian economy and are placing pressure on household and business budgets. Now in this environment, the group's retail businesses are well positioned with their strong value credentials, expanding offers and growing omnichannel and marketplace capabilities. They remain focused on providing customers with even better value, service and convenience, especially as we approach the important Black Friday and Christmas trading periods. Bunnings Group's year-to-date sales growth has moderated since the second half of the 2026 financial year. And despite a stronger start to the quarter, lower sales across seasonal categories and the commercial segment in recent weeks has weighed on overall sales performance. Kmart Group sales growth is broadly in line with the second half of the last financial year supported by strong value credentials and its Anko product range. Construction of Kmart Group's omnichannel supply chain facility in Moorebank in New South Wales. This is expected to reach practical completion in November this year, with commissioning to commence in the first quarter of the 2028 financial year. Kmart Group's earnings for 2027 financial year are expected to include operating expenses of $30 million to $40 million associated with the dual occupancy cost technology implementation and other project expenses associated with the commissioning of that important site. Officeworks sales growth is broadly in line with the second half of last financial year. The transformation program remains on track for completion by the end of next calendar year and the benefits of structurally lowering the cost base are expected to support an improvement in earnings this financial year. In the Health division, Priceline Pharmacy continues to deliver strong network sales growth and the relaunch of the Sister Club loyalty program as Pulse Rewards in August has been well received by customers. Wholesale performance continues to improve, supported by the ongoing automation of the fulfillment centers with the Adelaide Center now live and the Perth fulfillment center opening next year. Now in West, earnings for the first half of the financial year will benefit from the lag effect of ammonia pass-through pricing, recent capacity expansions and improved pricing on the sales of spodumene Spodumene concentrate production at Mount Holland is expected to be in line with our nameplate capacity, approximately 380,000 tonnes a year with WesCEF's share being half of that. Now we expect more than half of our production will be sold to market and sales have been and will be weighted towards the first half of this financial year. Production rates at the refinery are expected to increase through the second half of the financial year as further owner mitigation solutions are implemented. Now I'd like to talk about our team. We have over 100,000 team members, and Wesfarmers has long recognized that the value of an engaged workforce that reflects the communities where we operate are key. Our leadership team and our Board remain in gender balance, and we maintain indigenous employment parity. And this year, we're proud to deliver our ninth reconciliation action plan and the second at the Elevate level focused on leadership pathways and economic participation. We're one of Australia's largest providers of first jobs. And as technology changes, how we work, that responsibility is significant. And we'll keep supporting our team members to build the skills that will serve them well even beyond their time with us. And as always, safety comes first at Wesfarmers, we take very seriously our responsibility to create safe, inclusive and respectful workplaces and group safety improved once again this year. For team members in our retail businesses, customer threatening situations remain a grave concern with over 1,000 physical assaults reported during the 2026 financial year. Now to address this, we continue to advocate for LoRa for to exclude dangerous people from our stores and to better protect team members and customers. Now turning to our leadership team. Our long-standing focus on the development of talent and succession planning remains critical to our corporate objective. I'd like to thank Tim Bolt, who retired as Managing Director of Industrial and Safety after 26 years with the group as the division transitioned into Bunnings. In August, we announced that Mike Schneider will retire as the Managing Director of Bunnings Group in February 2027 and will be succeeded by Rachael McVitty. I'd also like to thank Mike for his exceptional contribution to Bunnings over many years and wish him all the best for the future. Now as you know, today, we hand over. Well, we hope to hand over the chairmanship of Wesfarmers from Mike Chaney to Kem Mackenzie. And it's not because we want to see you go, Mike. It's just that the laws say that it's time for you to go. Now since Mike joined Wesfarmers in 1983. He's made an extraordinary contribution in an executive role and in a nonexecutive capacity. -- as Managing Director from 1992 to 2005 and as Chairman since 2015. in this time, much of the group's success has been shaped by Mike's unwavering focus on disciplined capital allocation, shareholder returns and building businesses for the long term. And I would personally like to thank Mike for his support and counsel to me over many years, and thank you, Mike, for giving me a job back in 1992. Now please could everyone join me in thanking Mike for his contribution. So in closing, Wesfarmers is well positioned to deliver returns through the cycle. Our diverse portfolio of high-quality, resilient businesses and our strong balance sheet gives us the capacity to invest, to adapt in dynamic markets and to take advantage of opportunities. I'd like to thank our Board for their continued advice and support, and our leadership team and team members for their commitment to our corporate objective. I'll now hand back to you, Chairman.

Well, thanks very much, Rob. So now on to the formal business of the meeting. I refer to the minutes of the 44th Annual General Meeting of the company held on the 30th of October last year. I've reviewed those minutes, and I've signed them as a true and correct record of the meeting and they're available to inspect that the shareholder registration desk outside and also at the company's registered office. . Voting on all resolutions today will be carried out by a poll and all resolutions are ordinary resolutions requiring the approval of a majority of shareholders who vote on that resolution. Where as Chairman, I've been nominated as a shareholder's proxy, I intend to vote all undirected and available 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've got an interest in the resolutions and certain of their related parties. So 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 here in person. Or if you're participating online, please refer to the user guide on the Wesfarmers website, or call Lumi on the numbers shown on the slide. 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. As mentioned earlier, the final results of the poll on the resolutions 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 General Meeting was distributed to shareholders on Five 25th of September this year, and I'll take the notice as read. We'll now proceed with the items of business listed in that notice. For each item of business, we'll display the wording of the relevant resolution on the slides. And the first item is to receive and consider the financial statements and the reports of the directors and auditors for the year ended 30 June 2026, which have been included in the company's annual report. As I mentioned earlier, we've got the auditors here Fiona Campbell and Mark Cunningham from EY were the signing partners for the company in that year. And they're available to answer any questions on the audit or related matters. I'll shortly invite shareholders to ask in person or submit online any questions regarding this resolution. And for those shareholders and proxy holders participating online, just remember that there's a brief delay in the broadcast. So please follow the instructions outlined earlier and ask your questions online when you're ready to do so. So are there any questions in relation to Item 1. I must say this would be the first meeting I've ever been at where they were. And Ruth, do you have any questions online?

I do, Chairman. I have a question from Phebe Rountree, who is a shareholder who says Wesfarmers is lacking transparency about its contribution to plastic pollution and doesn't demonstrate adequate product stewardship for its products and packaging. She notes that Kmart's ancodumbelset received a dishonorable mention at Australia's in audio unpacked packaging awards. The set already comes with its own carry case it inside each individual weight was wrapped in single-use plastic. It's an example of the excessive and unnecessary packaging used in Wesfarmers brands. She asks Will Wesfarmers commit to publishing data annually on how much plastic it uses overall, beginning with the 2026-27 sustainability report. And take greater action to reduce unnecessary single-use plastic packaging use.

Well, thanks for that question. We all recognize the plastics issue and -- there's a lot of activity going on around the group in all the divisions to reduce our plastic use and also with regard to making things renewable and recyclable and so on. But there's a lot more I'm sure we can do. I'll take that suggestion on Board and Rob can take it on Board. The sustainability report, of course, gets bigger and bigger every year, and it's now in itself as big as the accounts. And I'm not sure this question relates to accounts, but I'm happy to deal with it. We do publish a lot of information in there, for example, on diverting waste from landfill. And in the last year, we diverted 73% of waste that would go on to landfill to other uses. So it is a big effort, but we'll endeavor to do more and we'll look at the question of whether we can include those sort of statistics in the sustainability report. There's a question at microphone 6.

Mr. Chairman, microphone 6, may I introduce Amanda Holly, who is a proxy holder.

Thank you. Chair. My question concerns Bunnings' timber sourcing and the risk it poses to Wesfarmers' shareholders. Bunnings is responsible timber policy still accepts PEFC endorsed responsible would certified.

Ms. Holly -- sorry to interrupt. This resolution is on the account. So I wonder if you could ask that question during the general question time.

Absolutely.

Thanks. Okay. If there are no further questions, I'll move to the next item of the business. And that is the reelection and election of directors...

Mr. Chairman.

Yes, sorry.

There's a question. Microphone 2.

Microphone 2. Go ahead.

Mr. Chairman, may I introduce Jeff Reed is a proxy holder.

Good afternoon, Chairman, and thank you. My name is Jeff Reed. I'm a proxy holder on behalf of about 1,000 ASA members, Australian Shareholders Association members between and collectively hold 2.3 million Wesfarmers shares. Mr. Chairman, can I thank you for your endeavors over the past 43 years and your stewardship of the company and your unrelenting focus on shareholder benefits. It is very much appreciated, and we thank you for it. I'd also like to thank you for your continued engagement with the ASA, which is the exemplary amongst my experience with corporate citizens. So thank you. My question today is about Wesfarmers Health division. The division has returns, which languish in the range of 4% to 5% and they really haven't changed over the 5 years we've had the health division. And I wonder if you or Mr. Scott could please describe to the meeting what is the plan to turn around the health division to bring it up to a really good level of profitability.

Well, thanks, Mr. Reed. Can I just reciprocate? We've enjoyed our engagement with the ASA. I understand you're about to retire .

Mr. Chairman. I'm not yet .

Must be one of your colleagues, but Ken MacKenzie will have the pleasure of meeting you again next year. I'm not sure your question is about accounts. But I guess if it's return on capital, it is, it could be seen that way. And so let me answer it. The Certainly, the health division's return on capital is low. It's around 5%, as you said. And if you look at their corporate plan, it shows it increasing to a much more receptible level. There have been a number of events occurred -- factors occurred since we acquired the business through Australian Pharmaceutical Industries, and some outside our control and because of regulation changes in government and so on. And so the returns haven't been what were planned. But our expectation is, particularly as we've now put a real retail expert into that side of it. In the retail business, we had probably a $20 million increase in profit last year, and we're budgeting for another 1 this year. We think there's real potential in there, and we do have expectations that the return will improve.

Thank you, Chairman.

If we move on to the next item, Bill English, Alan Cransberg and I are retiring by rotation at this meeting. And Bill and Alan are offering themselves for reelection, and I'll be standing down. And so Ken MacKenzie, as I mentioned, was appointed this year, and he is offering himself for election. The Board has resolved to , as I said, to appoint Ken as Chairman at the end of this meeting if he's been elected by the shareholders. Now displayed on the screen now is the position in relation to direct votes and proxies received on the election and reelection of each director prior to any revocations that may have occurred during the meeting. So I'm going to get each director to come up and speak to you briefly seeking their reelection. The first is Bill English, who the former Prime Minister of New Zealand and was appointed to the Board in April 2018. So we'll hear briefly from Bill.

Mr. Chairman, shareholders, Wesfarmers has an enviable record of performance, and I'm seeking your support to continue to be part of the team delivering that performance. I first joined the Board in 2018 just before the write-off of the BUKI losses and the demerger of Coles. But that was in an economy where high migration, increasing house prices supported much of Wesfarmers subsequent success. The picture is different now, tailwinds that we used to have are fading and in particular, across Australia and New Zealand. Our customers can't enjoy quite the same predictable increase in the house values that underpinned their confidence. . And so that gives a new set of challenges for Wesfarmers under the leadership of Mike Chaney and Rob. Probably the most important changes in recent years have been a new generation of leaders of our divisions for whom the easier conditions of the past are not the natural way of the world. They and the Board are going to be dealing with more economic uncertainty with growing competition and particularly with the disruption that AI is already bringing to not just our business but businesses of all sizes across Australia and New Zealand. So I believe we are well equipped for those challenges and would like to be part of a Board which finds our way of delivering the same kind of performance that you're used to. I've learned much about being a director from our Chairman, Mike. We've already heard reference to his clarity and consistency about economic return to shareholders. But he's all equally focused on maintaining a set of values. And I think he leaves a Board and a management team that have humility that have learned resilience, but have some real ambition. And I look forward to your support in realizing those ambitions.

Thank you, Bill. I invite shareholders to ask any questions in regard to this resolution. Okay.

Excuse me, Mr. Chairman.

Yes, which microphone?

microphone 2. So I want to introduce Jeff Reed, who is a proxy holder.

Thanks again, Chairman, Jeff Reed from the Australian Shareholders Association. In the Notice of Meeting, surveilling niche has a very long list of appointments to other organizations and foundations and enterprises I wonder if you or he could please assure the meeting that he has sufficient time to devote to his role at Wesfarmers.

Yes, sure. Wesfarmers is the only listed company that direct role that Bill has. And like, I guess, most directors, he has interest outside in not for profit organizations and so on. I can assure you, and the bottom line is we've never had a feeling at all that Bill hasn't had time to discharge all these duties properly. The bottom line is that we do have every year an annual assessment individually of each director. And we go through what's called a 360-degree process and the Chair sits down with each director individually and talks about their performance and so on. And if you ever have a situation where a director is not pulling their weight, it's not putting enough time in and so on, they know about it pretty quickly. I frankly haven't had that experience in the Boards I've served on because certainly in large companies, you get people who are very dedicated to it and do put in the effort. And so the answer is, Bill is a terrific director and certainly devotes the time he should to the job.

Thank you, Mr. Chairman.

Okay. Well, I think there are probably no further questions. I'll now introduce Alan Cransberg, who was appointed to the Board in October 2021.

Firstly, to all the shareholders, thanks for letting me be part of the Board for over the last 5 years. In my time on the Board, I've been really impressed by the company, my fellow Board members and the executive leadership team led by a very capable Rob Scott. Just as background in my executive career, I worked with a company called Alcoa. I spent there 37 years, starting as a civil engineer, which I didn't like. and then work through the organization of running individual operations in Australia or in the U.S. to finally ending up as President of Global Manufacturing, based in New York, for 8 years running all of Alcoa's, global mining, refining and smelting operations in 12 different countries. After 8 years in the U.S., along with the child was born in the U.S. and is still a U.S. citizen. My wife and I made the decision to return to Australia to lead the Australian operations as well as to continue to manage global mining and refining operations. In my executive career, I learned a lot about people I learned a lot about operating to a set of values that define us. And similar to Wesfarmers making sure that we made the right return for our shareholders, satisfactory return and making tough decisions if we didn't. I sort of retired when it was 57 because I got sick sitting on airplanes going to different countries. And my post-executive here has been about working in organizations and businesses I care about. They include a private equity company, Swarn Suns in Australia, which had a diversified range of operations in Australia, a lot of fun working in a couple of start-up companies, which I both invested in and help them grow. I was also on the Board of West Coast Eagles for 9 years. We haven't been going that well lately, but we're going okay when I was there. And weathering it for 6. In an offer profit space, while as a West Coast, we set up an organization called the Wallet Foundation, which started off with 3 people. and now is 137 people helping indigenous members in our society and get jobs and maintain those jobs and set up businesses. Finally, I've been with Wesfarmers for 5 years and, frankly, very, very impressed with the company. My background helps the board assess opportunities to support and challenge management and contributing to making whatever decisions we have to continue to make sure we get that acceptable return to shareholders. It's a very collaborative Board, and with your support, I'd love to continue to help grow the group and continue to provide the right returns. Finally, I want to thank Mike Chaney, who invited me on to the Board was the outstanding leadership of the company. I've seen lots of great leaders, and we're very lucky as a company that had Mike lead our company. And finally, Mike, while we miss you, I think we've got a really good leader coming in, in Ken Mackenzie and look forward to both working with him and the learning time. Thank you.

Thank you, Alan. Are there any questions on this resolution. It looks like there are none, none from you, Ruth. And so I'll now introduce Ken MacKenzie, who, as I said, was appointed to the Board on the first of June.

Thanks, Mike, and good afternoon, everyone. I was pleased to join the Board as Michael said, in June this year. And today, I seek your support for my election as a director to your Board. This is the first time I'm standing for election. So I thought I'd tell you a little bit about myself. First, my interest in Wesfarmers. I mean Wesfarmers is an iconic Australian company that I have long admired and it's an honor to have the opportunity to contribute to its ongoing success. Now if you think you've detected an accent, you'd be correct. I was born and raised in Canada, both of my parents were academics, but they grew up on the land. In fact, I am the first Mackenzie in our recorded history that was not born on a farm. And I'd like to think that the values that come from a life on the land, hard work, practical thinking and looking after one another are in my DNA. I trained as an engineer and have spent much of my career in the manufacturing sector. I spent 23 years at Amcor, including 10 years as Chief Executive from 2005 to 2015. And Amcor is a global packaging business that services the health care, food and beverage sectors, and it operates from more than 40 countries. More recently, I served as the chair of BHP for nearly 8 years. Now across my 40-year business career, a few priorities have remained constant. The first priority has always been the health and safety of the people that I work with. Everyone should go home safe at the end of the day. Second, understanding how businesses operate and how they create value from the needs of customers to operational productivity, the complexity of global supply chains and of course, the importance of having great talent. Third, disciplined capital allocation with a clear focus on return on capital and the creation of long-term shareholder value. Finally, a belief that enduring shareholder value depends on how well you look after your customers, your coworkers, your suppliers, the communities in which you operate and the environment. These are the priorities and the experience that I hope to bring to your Board. So thanks for your consideration, and I would welcome your support and Mike, I would also echo Alan's comments, I really appreciate the opportunity to join the Board. Thank you.

Thank you, Ken. I invite shareholders to ask any questions in relation to Ken's appointment.

Chairman, I have a question from Mr. Stephen David Mayne, who is a shareholder, and the question has 3 elements. Firstly, how much have we agreed to pay new chair Ken MacKenzie, Will there be an increase on what Michael Chaney received in 2025, 2026. Secondly, regarding AGM practice, could Ken please undertake that he won't try to introduce BHP style AGMs at Wesfarmers where live online voting and questions have been banned for the past 5 years. And thirdly, Woolworths got with the program at its AGM this morning and disclose the proxy votes early to the ASX along with the formal addresses. Michael Chaney has never done this in 43 years of involvement with public companies when it is becoming best practice. Will Ken Mackenzie undertake to look at early proxy disclosure next year as market practice moves led by the likes of Woolworths ASX Group, Qantas Computershare and others.

Well, thanks, Mr. Mayne. Firstly, the directors fee payable to the chair in the next year will be the same fee that I've been receiving. As far as an introducing any BHP style things, that will be up to him and the Board as we go forward. We've got a formula that works pretty well, but everyone has their own views, and we'll leave it to Ken. As regards to your third question, you're right. I don't think we've ever released the proxy votes in the morning, a bit like governments releasing all the postal votes before the polls close, and I can't really see the logic of it. you described it as best practice, and there are a couple of companies apparently doing it, but it seems to be the most logical thing is to put the votes up at the meeting when other people are voting. And and leaving it at that. But again, that's something I won't be involved in. By the way, I've never been -- it's never been suggested to me before that we do it. So it's not like 40 years, 43 years of strong resistance. Anything else Ruth?

No Chairman. I apologize Chairman. I do have a follow-up from Mr. Mayne. Mr. MacKenzie will be the first non-Perth resident to chair Westbans. How much time is he planning to spend in Perth and will the company maintain a dedicated office for him in Perth and/or in his hometown of Melbourne. Are we supplying him with an executive assistant. How much contact has Ken had with CEO, Rob Scott so far? And how frequently is he expecting to be in touch with him each week. Is his style to have daily interactions with the CEO with regular texts and e-mails or is he more hands off. Also, does he have any plans in mind for changes to the committee structure or leadership and is he likely to Chair any committees.

I think the answer -- I could answer all of those with a simple, Don't worry about it. He -- Ken lives in Melbourne, and we'll be here as often as he needs to be here. My practice with Rob has been, there are some weeks I don't come into the office in some weeks, I'm in the office all the time. But we have religiously have a time each day is at where we catch up, and that's in the diary and we catch up in every day if we need to, depending on what's happening. I've always had a very hands-off style that is Boards govern management runs the company, Chairman is available 24/7. Rob can call me any time and wake me in the middle of the night. But I'm not going to be there trying to interfere. Ken's style, I think, is exactly the same. And it's one of the things we looked at and talked to people about on other boards and some of that Ken's been involved in. And I have no doubt that Ken will spend the time that he needs to spend. He will have an office in Melbourne and it will be near the Wesfarmers office there, and he will have an executive assistant as I have. And I'm sure it will work very smoothly. What happens now, particularly after COVID, is that a heck of a lot of our communications are on Teams or Zoom on video conferences, and that's made it much easier to be remote. And given the majority of our operations are now outside Western Australia, it's quite handy having a chair who's in Melbourne anyway. So I think it will go very smoothly and no differently really to how it's gone over the last 13, 11 years. anything else, Ruth?

Not online.

Okay. So we'll move on and ask that you vote on resolutions through A to C, each of them, of course, are independent and should be voted on separately. Shareholders voting in person should place the mark in the for, against or abstain box on your green voting cards. And similarly, proxy holders who are voting in person who've been given open votes should place a mark in the appropriate box on the blue voting card to indicate whether you -- which way you're voting on those resolutions. Shareholders who have already voted and have received a yellow card, and they don't need to do anything further. So if you need any assistance with voting, just till up your hand, and a Computershare person will come along. And if you're voting online, just follow the instructions that are being provided. If you need any assistance, just call Lumi on the number shown on the slide. Item 3 relates to the company's remuneration report for the year ended 30 June 2026. And displayed on the screen is the position in relation to direct votes and proxies received on this resolution prior to any revocations that may have occurred today. Now the rem report provides information regarding the remuneration of directors and senior executives to be key management personnel of the combined group. And you can see all the details of that on Pages 114 to 142 of the company's annual report. We do appreciate engagement from shareholders in relation to the executive remuneration and I can assure you that the Board remains committed to a remuneration framework, which is underpinned by our guiding principles. It's focused on driving leadership performance and behaviors to deliver satisfactory shareholder returns over the long term. The total remuneration of our executives is set out in the report and it's set at a level that reflects their contribution and their competencies and capabilities and to make sure we can attract and retain the best people we can find. The remuneration report in the annual report, including the covering letter from Mike Roche, the Chair of the Remuneration Committee provides a detailed explanation of the outcomes for the 2026 year. And I won't go into any detail on those here, but I do invite shareholders to ask any questions regarding the remuneration report. Now there are no questions from the floor. Ruth, do you have any online?

No, Chairman.

Okay. So if there weren't any questions, I'll ask you to vote on Resolution 3. [Voting]

So we're now moving to the final item of business, which I'll take the opportunity to remind those eligible to vote at the meeting who haven't yet cast their vote that I'll close the poll shortly after this final item of business. So please ensure that you cast your votes before this time. This item 4 relates to the grant of deferred shares and performance shares to the Group Managing Director. So displayed on the screen is the position in relation to the votes received, as I've described before. The Board believes that it's in the shareholders' interest to provide the Group Managing Director with remuneration incentives that ensure there's significant alignment between the executive and the shareholders and rewards the executive appropriately. So approval is sought for the grant of deferred shares and performance shares to Mr. Robert Scott, under the 2026 key executive equity performance plan on the notes set out in the Notice of Meeting. And I invite any questions on this item. I think there are no questions here. Ruth, have you got any questions?

No, Chairman.

Okay, fine. Well, that now concludes the formal business of the meeting, and I intend to close the poll. So if you're eligible to vote and you haven't yet cast your vote, please ensure that you do so, for those of you here in the room, please complete your voting cards. And if you haven't already done so, hand them to somebody from Computershare, and you'll see them coming down the aisles with their purple boxes. And so we'll just leave that for a moment. Okay. Are there any further voting cards not yet in boxes perhaps if there are, you could just raise a hand and somebody will come to you. But it looks like they're all in. And so thank you all very much for taking the time to cast your votes. And I'll now declare that the poll has closed. And shortly, we'll move to general questions and but to allow you to raise any matters for general discussion, but there are a couple of other things I wanted to highlight. Firstly, we've got a great turnout today, which means we've got a lot of shareholders may like to ask questions about our businesses. And for those shareholders and proxy holders who are in the meeting room, representatives of our divisions are available outside for your general customer queries at their respective both. So I'd encourage you if that specific to go out after the meeting and have a chat with them. We also have an information desk which is in the exhibition pavilion for more information about Wesfarmers and staff members and so on. And people will be out there available to answer any general queries you may have about your shareholding. Please note that light refreshments will be served at the conclusion of the meeting in the room next door and if you need to leave before that, thank you very much for your attendance. So we'll now move to general business, and I invite shareholders to ask any questions regarding general business. And there was one, I think, about wood heaters at the back, which I did interrupt. I guess we could start with that one.

Gentlemen, microphone 6, may I introduce Amanda Holly, who is a proxy holder.