Woolworths Group Limited (WOW) Earnings Call Transcript & Summary

Good morning, everyone. My name is Gordon Cairns. I'm the Chair of Woolworths Group, and I'd like to welcome you to the 2022 Annual General Meeting of Woolworths Group, and look forward to engaging with you during the course of today's AGM. Now before I start today, I'd like to introduce [ Tommy Cockhill ] to deliver Welcome to Country. Tommy's aboriginal family connections extend across the greater Brisbane region. This is the first time Tommy has joined us at our Annual General Meeting, and I thank him for making the time to join us today. Incidentally, Tommy used to work for Woolworths, which I discovered today. And if I prevail on him, he might even play the[ dig ] for us. So Tommy, welcome. .

Hello and welcome. Thank you for that introduction. For those who don't know me, my name is [ Bundane Bujia ]. It's Yuggera language name that was given to me by the Yuggera elders and translated from Yuggera direct to English, meaning [indiscernible] belonging to a Ya or Ja as the Hebrew name of the creator. I'm also known as Thomas with the [ Koegel ] family and Thomas with the Bonner family, and I'm a descendant of the a Yuggera language speaking nation. I'm a descendant of the Yuggera language speaking nation through 2 family lineages that belong to 2 different clans. On my father's side, we can trace our accessory back to grandfather, [ Maltagra ], and grandfather [ Maltagra ] was a recorded patriarch in the 1800s, early 1800s and his stomping grounds or where he was from where the planes from Ipswich out to get out to the foothills of Toowoomba and Warwick, such as Gatton, Rosewood, Laidley and Helidon. Grandfather [ Maltagra ] was also recorded to lead the Battle at One Tree Hill, which is Mt Tabletop and it was against the early convict settlers when they had a battle out there. One of Grandfather [ Maltagra's ] direct descendants is my grandfather Neville Bonner. Neville Bonner was the first aboriginal Senator of Australia, and he identified as a Yuggera man, which is the belonging to the Western clans of the Yuggera language speaking nation. When my dad speaks about Grand Daddy, he says that Granddad was born in the traditional fashion on a traditional birthing grounds, which is an island situated on the Tweed River, and it was shared by Kombumerri, Yugambeh and Bundjalung people. That also said that granddad grew up with song and dance, and he also was the lead rower when they went out to Hunt Turtle dugongs out in the bay, indicating practicing his old customs and also indicating leadership skills. On my mother's side, we can trace our accessory back the grandfather [ Mookin]. Grandfather [ Mookin ] was another Patriot that was recorded in the late 1800s. And Grandfather [ Mookin ] was born in a traditional fashion as well, our full blood from this area. And he could speak at least 15 different aboriginal languages throughout the Southeast corridor. Grandfather [ Mookin ] was also the last message stick carrier of the Yuggera language speaking nation. And at that time, the authorities knew that he could speak 15 different languages and also could read and write English in the early 1900s. Because of that, they made him the first official mayor of Barambah. Those who don't know where Barambah is, it's commonly known as Cherbourg today and it's aboriginal mission located northwest of Ipswich. That's what qualifies me to speak on country. What is a Welcome to Country. Prior to settlement, we used to have a lot of festivals throughout this region. Through that spring to mind is the [indiscernible] Festival, which is held on North Stradbroke Island. [indiscernible] And also a more well-known festival known as the [ Wunya ] Festival, which was held in Kabikabi country and that area is where the glasshouse mountain is. When we held these festivals, they'll send out their invitation, and these festivals were invitation only. It will extend past Yuggera country. and those who were invited, they will post their message to carrier to ask for us for permission to travel through Yuggera country to attend these festivals. Once they send forth their messages through carrier and ask for permission, we will grant them permission and then conduct a Welcome to Country ceremony, which is just laying down the law of the land of Yuggera country. We'd also immediately follow up with a smoking ceremony which we call [indiscernible] . To my best of my knowledge, the origin of the smoking ceremony [indiscernible] is -- it's a spiritual ceremony being the oldest culture in the world, it is probably the first spiritual ceremony. And it's designed to get rid of a particular spirit. And that particular spirit is called [ Mugai ] -- it's a negative spirit. And that leaves the room open for the [ good Noru ] to come and join us. What is the country I'm welcoming you to is Yuggera [indiscernible] , Yuggera [indiscernible] is Yuggera Country, and it extends from the mouth of the Brisbane River. It has 2 central locations that gathering on points on the North banks of that river where botanical gardens is located, is known as [ Meangen]. Meangen means the tip of the field or the spike of the spear. Our second location and gathering point is where we stand today. This place is known as [ Kurilpa ]. [ Kurilpa ] means the place of water wrap and it essentially goes from the Kangaroo point Cliffs down to Davies Park at West End. We still gather here once a year to celebrate our annual native festivities and also for -- sorry business for Elders of Brisbane. You follow the Brisbane River or in our language, we call it Maiwar; -- you follow it as it branches into Ipswich and then the planes from Ipswich out to the foothills of Toorbul and Warwick, that's our western border. Our southern border is the Logan River itself, which begins at Beaudesert, travels through parts of Logan. Logan's traditional Yuggera name is [ Berimbau ]. It means dwelling place to the south. You followed Logan River out to the Moreton Bay. In our language, we call it Quandamooka and it means Dolphin storm. And there's a Dreamtime story that's attached to that area that developed that landscape. Our Northern Border is the Caboolture River. Cabool, meaning half a snake and ture meaning belonging to. We have the Toorbul and [indiscernible] connection. These are Northern clans that belong to the Yuggera language speaking nation as recorded and also they belong to the Kabikabi people as well. That's the extent of Yuggera Country or Yuggera[indiscernible] . Yuggera would like to acknowledge our neighboring language speaking nations to the north, north of the Caboolture River is the Kabikabi people. West to the Toorbul range is the Wakawaka people, South of the Logan River is the Yugambeh people and East of the Bay of Quandamooka is the Jandai people. Yuggera would like to also acknowledge our [indiscernible] the community here living on Yuggera. And also our South Sea Islander community here, living on Yuggera. All that being said, I'd like to welcome you on behalf of my 2 family lineages, the Mookins and the Bonners and that's to... Sorry, I've left something out about Grandfather Mookin. Grandfather Mookin, this is a bit of local knowledge as well. Grandfather Mookin was the first Mayor of Barambah, Cherbourg and that's a 2 hours' drive -- 2.5 hours' drive from Northwest of Ipswich. This area before was called Brisbane and when it collectively the township came together in the 1920s, this area was considered Moreton. Still on the north side, it's considered the Moreton region. It began as a penal colony for convict settlers that reoffended. The prime real estate where they were headed for was New South Wales. Those families that reoffended, they got -- they couldn't send them back to England, so they sent them to this region here. And that's where the Moretons get our last name from Charlie Moreton, his Grandfather Mookin, when he became Mayor, it was Mookin and then when he became Mayor, they changed it to Charlie of Moreton and later on, Charlie Moreton. That's the extent of Yuggera country, I'd like to welcome you on behalf of my 2 family lineages. The Bonners and the Moretons are in the old tongue is year [Foreign Language], which means hello and welcome! I welcome you and also good spirit. I'd just like to make you feel welcomed by playing this instrument in front of me. Throughout Australia and the world it is commonly known as didgeridoo. To the Yuggera people and surrounding clans, we call this instrument, [indiscernible]. It's not traditional from this area. Where we believe that it originated from is the Yerukala people in the Northern Territory, and they call this instrument Yadaki or -- and how we got it was through the trade routes that went along the coast lines of the East Coast of Australia, and we traded the Fire sticks or the [indiscernible] from North Stabroke Island. When we received this instrument, we also received the law of this instrument and the law of this instrument is this is strictly a men's instrument and a men's instrument only. Women are forbidden to play this instrument or even touch this instrument, also saying that women have their own instrument in this area, which is a [indiscernible] that they stretch over their legs and play to the rhythm of the beat, and men are forbidden to play that instrument or even touch that instrument. I'd like to welcome you. I'd like to play this instrument to make you feel more welcome here on Yuggera[indiscernible]. Traditionally, we would have the smoking ceremony, then we'll break into song and dance. But I think from the crowd, I wouldn't want to get you up to do a song and dance. So instead, I'll play this instrument for you and hopefully it makes you feel welcome. [Presentation]

Thank you. On behalf of the Yuggera language speaking nation and my 2 family lineages, the Moretons and the Bonners, I'd like to thank you for inviting me out here, our Woolworths Group. And I used to work for Woolworths a couple of years ago as a night fill at Everton Park. And thank you for inviting me out here, and I hope you've learned something about the Yuggera language speaking nations. [Foreign Language] Welcome to Yuggera Country. Thank you.

Thank you, Tommy. That was very special. Thank you. I would also like to acknowledge the traditional owners of the special place where the Brisbane convention and exhibition center is located, the Yuggera and the Turrbal People. I pay my respects to elders past, present and emerging. -- and recognize their enduring contribution to the culture and spirit of the land. I would also acknowledge Woolworths Group's ongoing support for the Uluru statement from the Heart. We are delighted to offer Woolworths Group shareholders the option of participating in today's meeting in person and online. I encourage shareholders to use the various platforms available to participate in the meeting today. Our Group Company Secretary has informed me that a quorum is present, so I now declare our 2022 AGM open. For those attending in person, I'd like to outline the emergency procedures for this venue. Please take a moment to identify the emergency exit closest to you. In the event of an emergency, 1 of 2 alarms may sound. The left alarm is a series of warning beep. If this alarm sounds, please stand for further instructions from the BCEC wardens. If the evacuation alarm sounds, a whooping alarm, all occupants will be directed by the BCEC wardens to leave the nearest emergency exit quickly and calmly. Everyone must follow the directions by the BCEC wardens to the nearest and most appropriate assembly point. You're asked to remain at this location until the BCEC staff advise you it is safe to return to the venue. If we are required to evacuate, please leave your voting handsets and smartcard on the chair. I'd now like to briefly introduce my colleagues on the stage today. Starting on my right is our Managing Director and Chief Executive Officer, Brad Banducci. Next to Brad is Holly Kramer, who is the Chair of our Sustainability Committee. Holly is standing for reelection at this meeting, and she will address the meeting later today. Next to Holly is Siobhan McKenna, Chair of our People Committee. Today, we sadly say farewell to Siobhan, who will retire as a Director of the Woolworths Group after close to 7 distinguished years on the Board. Siobhan has made a superb contribution to the Board, including as Chair of the People Committee, and retires with our sincere thanks and best wishes for the future. Next to Siobhan is Scott Perkins, Chair of our Audit Committee. And on my far right, after Siobhan is Maxine Brenner, Chair of our Risk Committee. Starting on my left is Kate Easter, our Group Company Secretary. Next to Kate is Jennifer Carr-Smith, who is standing for reelection at this meeting. Next to Jennifer is Kathee Tesija, who is also standing for reelection at this meeting. And you will hear from both Jennifer and Kathee later today. And finally, on my far right is Phil Chronican. Also in attendance today, sitting in the front row is Tom Imbesi and Taralyn Elliott, the company's lead audit partners from Deloitte and members of the group executive team, including our Chief Financial Officer, Stephen Harrison, and Chief Legal Officer, Bill Reid. I'd now like to talk through the procedural matters for this meeting. They are lengthy -- I apologize, they are lengthy, but important. Instructions to assist you to navigate the online platform are available in the Notice of Meeting and the online portal guide, both of which are available on the AGM page of our website. The Notice of Meeting also sets out the business of the meeting and the explanatory information for each resolution. If you're having trouble using the online platform, please check the online portal guide or call Lumi on +612 80750100. Let me repeat that. +612 80750100. And the number is shown on the screen of your webcast. If we experience a significant technical issue or in the event we are required to evacuate this building, I will suspend the meeting until we're able to recommence. Or if we are unable to recommence within a reasonable time, I will adjourn the meeting to another day and time. We will provide shareholders with details of the announcement of the adjournment via the ASX and our website. Those of you participating online today will see a split screen with your instructions on the left and the broadcast and presentation slides on the right. You can maximize the broadcast window by clicking on the full-screen icon on the top right-hand side of the window. Now to voting. To vote at today's meeting, you need to be registered as a shareholder, and this includes body corporate representatives and attorneys or as a proxy. We will vote on each resolution by way of a poll. The final votes for and against each resolution will be released to the ASX after the meeting is closed. For those participating online, you can vote by clicking on the voting tab at the top of the screen, which will open a list of all resolutions and our voting options. You can vote for, against or abstain by selecting the option for each resolution once the poll is open. If you change your mind, and wish to change your vote, simply select another option. If you wish to cancel your vote, please press cancel. There is no need to press a submit or send button. Your vote is automatically counted. Once again, you can vote at any time while the poll is open. If you've got multiple holdings, you'll need to log in separately with each individual holding to lodge your vote. For those in the room eligible to vote, you will vote using electronic voting handsets. Those of you entitled to vote should have received a handset and a plastic smart card and instructions on how to submit your vote. If you have not already done so, please insert the smart card into the top of the handset, with the barcode at the bottom and facing towards you. Your name should now be displayed across the top of the screen of your handset. If you are voting and do not have a handset or your name is not displayed on your handset, please raise your hand now and one of the assistants will help you. I'll just give a few moments to see if anyone needing help. Okay, using your handset, select 1 to vote for, 2 to vote against, or 3, if you wish to abstain from voting on any resolution. Confirmation that your vote has been received will appear on the screen. You can change your vote at any time while the poll is open. If you wish to cancel your vote and have no selection recorded, press the X button. Press the green square to move on to the next resolution or the red triangle to return to the full list of resolutions. Only shareholders or proxy holders may ask a question during today's meeting. And I will ask that all questions be directed to me to allow me to get through the questions submitted. And to give shareholders an opportunity to voice the largest range of questions, I've asked the moderator to take the following steps for the smooth functioning of the meeting. Firstly, shareholders who have not already asked a question on the relevant item of business will be prioritized. Secondly, if there are multiple questions that are substantially identical, one of those questions will be read and answered. Finally, we will conduct the meeting in a responsible manner and ask that shareholders are respectful when asking questions as we will be when we answer them. There are 2 ways to ask questions, by using a microphone in the auditorium or written an audio question submitted via the online platform. For those attending in person, please see the attendant at the microphone nearest you. We have 2 fixed microphone stands in the middle of the auditorium for ease of access. In the interest of giving all shareholders a fair opportunity to have their questions addressed, I ask all shareholders to please, please, please ask 1 question at a time. And please limit your questions to 1 question per item of business. If you've got more than 1 question to ask, for those of you in the room, please ask the initial question and then see the microphone attendant for another turn if we have time. For online attendees, please separately submit each question. If you're asking your question as a representative of an organization or a group of shareholders, please include that information in your question. To submit a written question, click the messaging tab at the top of the screen, type out your written question and select to send icon. To submit an audio question, select the home tab and allow the asking audio questions instruction, enter the requested details and click submit request to join the audio questions queue. Shareholders will be able to listen to the meeting while waiting to ask their questions. If you do have questions, I encourage you to submit them as soon as possible. A member of our internal communications team here at Woolworths Group will read aloud questions to the meeting. I will deal with questions in accordance with the item of business that they refer to. Every year, we receive a number of questions about individual customer service, product or store-related matters. For those in the room, you can chat to one of our customer service team members in the foyer area after the meeting finishes. For those of you online, if you submit a question about an individual customer or administrative share register matter, I've asked the team to inform you that the best way to get resolution of your matter is through our customer service channels or through the share registry. Those contact details can be found in the Notice of Meeting and also on the group website. Now ladies and gentlemen, on to my final AGM address as Chair of Woolworths Group. I've enjoyed every minute over the last 7 years, and I've tried to give it my best. There were lots of things that with the benefit of high sight, I would have done differently. And there are some things that I am immensely proud of, but I will allow others and history to judge which was which. But I do know that which whatever we did achieve was never done to me as an individual, but to the collective contribution of the Woolies team. And I want to take this final opportunity to say a few thank yous. Firstly, to you, as shareholders, who appointed me to the Board and have continued to put up with me and support me through the last 7 years. I hope I have lived up to your confidence in me in always representing your voice to the Board at the Board table and focusing on creating shareholder value. Secondly, I wanted to thank all 200,000 Woollies team members, who have been magnificent in their response to bushfires, droughts, COVID, the war in Ukraine with supply chain disruptions and now, significant inflation. They are the real heroes and their stories deserve to be told here today. Next, I wanted to thank my Board colleagues for their unwavering support, who through their words and actions have made me a better leader but more importantly, a better person. Finally, some special mentions, if I may. First, to the company secretarial team, Kate, Michelle, Amanda and Virginia whose efficiency and dedication made me look so much better and made my job so much easier. Secondly to Melinda, who's been my EA for over 20 years, whose professionalism, values and care made me a better Chair. And finally, to my wife, Jane, who's here today, who believes in me, by the way, I'm losing my voice because I had an operation on my throat, who believes in me and whose wise counsel taught me that the Chair of Woolies is what I do, not who I am. So thank you for your attention. I now invite Brad to address the meeting.

Thank you, Gordon, and good morning, everyone. I would also like to acknowledge the traditional owners of the land, the Yuggera and the Turrbul people. I pay my respects to Elders past presence and emerging and recognize their enduring contribution to the culture and spirit of the land. I also acknowledge Woolworths Group's support for the Uluru Statements of the Heart. The F '22 financial year marked the third year of challenging operations for our group. The disruption from both the Delta and Omicron variance materially impacted operations across our supply chain and stores, and resulted in elevated levels of team absenteeism, particularly in the first half of F '22 and the start of the second half. This was further compounded by inclement weather and flooding events, including the severing of the railway line to both Western Australia and Queensland. These disruptions led to an inconsistent customer experience and material incremental costs, particularly in the first half. What cannot be faulted, however, is the continued amazing effort of our team and the way they have responded to each new challenge. I couldn't be prouder of the resilience of our team and their continued focus on our customers and the communities we serve, which is reflected in our customer care scores remaining at record highs, along with our reputation score, which said likewise. Looking forward, we have a renewed customer-first, team-first focus and are working hard to get back to providing the consistently good customer and team experiences for which we want to be known. Our group financial performance in F '22 reflects the challenges I have just described. However, we had a strong Christmas trading period and the group's underlying operating performance improved steadily over the second half with a gradual return to a more stable operating rhythm. On a continued operations with four significant items. Group sales for the full year grew by 9.2%, to $60.8 billion or 5.1%, excluding the recent acquisitions of PFD and Quantium. Group sales in the second half increased by 10.5%, with improved momentum in all segments other than New Zealand Food. It was another record year for e-commerce with group e-commerce sales increasing by 39% to $6.3 billion, and sales penetration reaching a record 11% during the year. Group EBIT before significant items for the F '22 financial year declined by 2.7% after that difficult first half, where EBIT declined by 11%. EBIT growth was much improved in H2 and increased by 8.1%, driven by 9.7% growth in Australian Food. Group net profit after tax before significant items increased by 0.7%, due to lower finance costs and income tax expense. Reflecting the group's financial strength, we were able to return a total of $3.2 billion to shareholders in F '22, which includes the successful $2 billion share buyback in October last year. The Woolworths Group Board declared a final dividend of $0.53 per share, bringing the F '22 total dividend to $0.92 per share. Excluding the $0.17 related to Endeavour Group in the prior year, the total dividend has increased in line with earnings. Turning to current trading. Sales in the first 8 weeks of F '23 for Australian Food were down 0.5% as we cycled 2 consecutive years of elevated sales growth. On the other hand, BIG W sales growth has been very strong in the first 8 weeks, increasing by just under 30% as we cycle store closures in the same period last year. In New Zealand, sales declined by 1% in the first 8 weeks. And we said in August that New Zealand EBIT for H1 was expected to be materially below the prior year, reflecting the residual operating impacts of COVID, the growing impact of inflation and the challenges of commissioning new processing and supply chain assets in a very competitive trading environment. Further detail on our first quarter trading performance will be shared next Thursday when we release our Q1 results to the market. In the last 18 months, the shape of our group has changed significantly as our food and everyday needs ecosystem continues to evolve, with each segment continuing to reinforce the others with a customer-first, team-first focus at the center. Despite the operating challenges during the year, we made good progress on our group strategic agenda. As part of our cornerstone, B2C Food segment, we focused on reimagining the retail experience as we rolled out our core value and up store segmentation across Woolworths stores, Woolworths supermarkets and metro stores, each with unique features tailored to the local community and their needs. We also continued to roll out our direct-to-boot offer in both Australia and New Zealand to provide customers more convenient pickup solutions. In F '22, we had an average of over 19 million customer visits per week across our group digital platforms. As more and more customers continue to visit our websites and apps, we continue to improve our digital platforms. To provide better and safer online experiences. To provide our 13.7 million Everyday Rewards members with more every day, we are focused on personalizing value for our members and introducing new services such as the launch of Everyday Pay in May, which supports QR code payments within the Everyday Rewards app. While we are working hard to embed our position as Australia and New Zealand's largest first-party e-commerce retailer, we're also focused on growing our third-party marketplace presence through Everyday Market and more recently through the acquisition of MyDeal. The sales -- the share of sales through marketplaces in Australia is well below other mature countries. And the addition of MyDeal to the group in September expands our marketplace ambition, particularly in furniture, homewares and an extended range of everyday needs. Unfortunately, a little over a week ago, we were informed that MyDeal's customer relationship management system or CRM system had been compromised, impacting 2.2 million MyDeal customers. We unreservedly apologize for the considerable concern that this has caused our affected customers. Importantly, no payments, driver's license or passport details were accessed. There was also no compromise of any Woolworths Group platform as the MyDeal data is on a completely separate platform. We took swift action once notified of the breach, completing an assessment of what has occurred, notifying affected my MyDeal customers, the ASX, media and the office of the Australian Information Commissioner, and importantly, shut down opportunities for further unauthorized access. While this was an isolated incident, we take cybersecurity and data privacy for the entire group very seriously, and we need to remain vigilant when it comes to the protection of our customers' data. Moving on to B2B. PFD sales improved. Sales momentum improved over the year as COVID restrictions eased and operating conditions improved. While PFD was the biggest contributor to sales and EBIT in Australian B2B, all of our B2B businesses delivered sales growth over the prior year. The establishment of our retail platforms moving on to that continues to grow to gather pace. We launched [ VIC ] in April last year, which brings together the best of Woolworths Group and Quantium to create a leader in retail advanced analytics. Retail Media is also an important opportunity for the group. Retail Media business, Cartology, has doubled its revenue since its establishment in F '20. Cytology recently expanded across the group completing its first full year in New Zealand and launching BIG W this current financial year. In July, we announced a proposal to acquire out-of-home media screen specialist, Shopper Media Group. Shopper Media currently operates over 2,000 screens in over 400 shopping centers, which will be highly complementary to Cartology's existing in-store screen network and supports our ambition to become the trusted media partner of choice for brands and retailers alike. Primary Connect is another key retail platform for the group. And during the year, we materially progressed our multiyear supply chain transformation. We have opened 6 major facilities since June last year, including in Queensland, our Heathwood Chilled and Frozen DC, which opened ahead of schedule in H1 and a new state-of-the-art Auckland Fresh DC, which opened in June of this year. Construction is also well underway at our automated e-store in Auburn, which will materially increase e-commerce fulfillment capability and capacity in Western Sydney as well as our new regional and national distribution centers in Moore Park in Sydney. Our stakeholders have told us that they want us to remain focused on creating better tomorrow, and we are able to make -- we were able to make good progress on our sustainability agenda during the year. Our total recordable injury frequency rate, or TRIFR, was down 9% compared to the prior year. We also maintained our gold tier status as part of the Australian Workplace Equality Index, LGBTQ+ inclusion Awards for the fourth consecutive year. We continued our focus on the planet with Scope 1 and 2 emissions now down 31% since 2015. In F '22, on the topic of products, we continue to improve the quality of our data. One of the areas of focus has been plastics. And we can now confirm that we have removed over 10,000 tonnes of virgin plastics from our own branded products through targeted initiatives, more than a 20% reduction relative to our F '18 baseline. We recognize there is much, much more to do, and we remain motivated to be a leader in sustainability, and I encourage you to visit our sustainability team members in the foyer space after the meeting to learn more about our various commitments to a better tomorrow. As we move further into F '22, and for those of you who are not aware, we are now 60 days to Christmas. We expect the operating environment to remain challenging, but we are extremely focused on returning to a consistently good customer and team experience. We are very conscious of the challenges of inflation and cost of living pressures for our customers. We know value remains more important than ever, and we need to make sure all of our customers in Australia and New Zealand get their Woolies worth in the upcoming festive season and in the year ahead. In closing, I would like to take this opportunity to acknowledge Siobhan McKenna and her contribution to the group ahead of a retirement after the -- from the Board after today's meeting. Siobhan joined our Board in 2016, and during this time has been a major contributor to the transformation of Woolworths Group, most recently as Chair of the People Committee. On behalf of the entire Woolies team, we thank you, Siobhan, for your commitment to building a better Woolies, and we wish you all the best as you embark on future endeavors. Finally, I would like to acknowledge Gordon's pivotal time as Woolworths Group's Chair. For the last 7 years, Gordon has been a critical part of the transformation journey of Woolworths Group. Gordon champions purpose or a long-term purpose or noble purpose as he likes to call it for the group. He was a strong supporter of the key investments in our customers and team and our infrastructure, which has driven sustainable value for all of our stakeholders. The shape of our group changed materially during his time at the helm through the exit from Masters and petrol, the successful demerger of Endeavour Group and the recent acquisitions of PFD and Quantium. Even more importantly, during this time, we also materially changed our physical store footprints, with Gordon offering suggestions on every aspect of this footprint, including the color of the in-store tiles. And you were right on most things, but not this, Gordon. He was a huge champion and driver behind us building Australia and New Zealand's largest 1P e-commerce business. And the embarkation on the transformation of our supply chain, the benefits of which will be realized in many years -- for many years to come. While all of this is an impressive legacy, the welfare of our team has always been paramount to Gordon, as has his unwavering commitment to always do the right thing. This was evident in the way we navigated COVID, but also in the way we responded to the painful discovery of team underpayments. On behalf of our ExCo, our team and followed by Board members, I want to thank Gordon for his stewardship, challenge and most importantly, for truly living our global -- our noble purpose of creating better experiences together. You have made Woolworths a better place. Thank you, Gordon. And I'll now pass back over to you.

Well, Brad, that was very unexpected. Thank you for that. We will now turn to the formal items of business for this meeting. The items of business for today's AGM are set out in the Notice of Meeting. As set out in the Notice of Meeting, I intend to vote all open proxies in favor of each resolution. Lucy Chiu from our share registry, Link Market Services, will act as returning officer for the poll. The 5 resolutions to be voted on are all supported by your Board. The first item of business is to receive the financial report and the reports of the Directors of the external auditor for the year ended 26th of June 2022. There is no vote on this item. A copy of these statements and reports was published in the 2022 annual report and sent to those shareholders who requested copies. Shareholders have also had the opportunity to view the statements and reports, including the 2022 sustainability report on the Woolworths Group website. I now invite questions on the financial statements and reports.

Sir, I'd like to introduce Mr. Mitchell.

Thank you.

Welcome, Mr. Mitchell.

Thank you very much. I've been a shareholder since 1993.

You've done well.

And since that time, we see a steady rise in share price and dividends. And I'd like to thank the Board and the management, past, present and emerging, for making my retirement all much more comfortable. I certainly had my Woolies first. I'd also like to acknowledge the present custodians of our land, and the nation of hard-working enterprising men and women, past, present and emerging, who through their enterprise entrepreneurship have made Australia 1 of the best countries in the world in which to live. And to a serious matter, my query is in relation to balance sheet figures. I noticed that inventories, which I take to be all the stocks on the shelves, the tomatoes, the tins of soup, et cetera, et cetera, is roughly about $3,600 million. But I also noticed that our trade payables are $5,200 million according to the notes. If trade payables according to the notes are $5,200 million, which means really that what we owe on our goods far exceeds the value of those goods. And it gives me the impression that possibly the stock on the shelves hasn't been paid for. And also, I think it's really cunning that our suppliers are providing us with the working capital for our trading. Perhaps the Chief Financial Officer, Steve Harrison, might be able to put me on the right track in that regard.

Well, thank you, first of all, for your very kind comments about Woolworths as a shareholder. I can endorse those comments because I'm a significant shareholder as well. And I'm very confident that in your continued retirement that the Woolworths shares will do the world of good. So thank you for that. In terms of our working capital, I think you'll appreciate that all retailers have negative working capital, where we obviously pay our suppliers in 30 days or whatever, and we get an immediate payment for the goods that we sell. So we're in a fortunate position that we have negative working capital. On the issue of inventory, I'd also like to make the observation that because of the supply chain issues that we have, we've actually had to increase the amount of inventory so that we don't run out of stock at the store level. So you're quite right, that has seen an increase in our inventory levels, which has also had a knock-on effect in other areas. But all in all, Steve, did you want to add anything to the commentary? Turn the microphone on.

Hello, can you hear me. No, Gordon. I think you've covered most of it. My only comment would be to just highlight how seriously we take our commitments to paying our suppliers on time. And under the payment times reporting scheme, we're 1 of the top listed companies in Australia in terms of our on-time payment to suppliers.

Yes. We also have an obligation to pay the smaller ones, a legal obligation to pay the smaller ones. So -- but thank you for your comments. Next question from Microphone 1 again.

Chair, I'd like to introduce Paul Donahue from the Australian Shareholders' Association.

Welcome, Paul.

Thank you.

And we had a wonderful meeting with your colleagues in Sydney, and they said lots of nice things about us. So I'm looking forward to that continuing.

Indeed. And can I start by passing on the congratulations on your retirement and the appreciation of all the effort you've put in during the tenure, and the participation in the process of shareholder engagement, much appreciated.

And thank you also to the ASA for your participation in our governance. You do a great job.

So the Shareholders' Association, today, we hold 2.8 million votes from 955 shareholders. The question I have is on cybersecurity. So Brad touched on that in his address. So a bit more detail perhaps. There have been some serious cybersecurity incidents recently with Optus, Telstra, Medicare, which is getting worse and MyDeal, all the subject of data breaches. Last week, the AFR reported that Woolworths knew back in May that some aspects of MyDeal's technology ecosystem required investment. Can you tell us how advanced that program of remediation was at the time of the data breach? And how long will it take until MyDeal systems are secured to the level your IT security teams would recommend?

Yes. Thank you for that question. I might reiterate the points that Brad made earlier and then turn it over to him. Just to give you some context here, we noticed the breach on the 14th of October in the CRM system. 24 hours later, it was shut down. And we notified the impacted customers, of which there were 2.2 million. And as Brad said, we notified all of the relevant authorities. So we, as again, reported in the press, when we were doing our due diligence, we had identified that it was an issue there, and we were working assiduously on it. I can also reiterate, as Brad said, that no passwords, no payment details and no IDs were leaked as a result of that. So our experts in the cyber area are working very closely with the MyDeal team and have been from the get-go to bring it up to the Woolworths standards. Brad, do you want to?

Yes, thanks. Thanks, Gordon. And I think it's a great and very pertinent question for every corporate in Australia. We were weeks away from all the remedial action being done to lift it to the standard we would expect at Woolworths. So it wasn't that it was a poor standard, there were things to be done. But as a major public company, we are going to be targeted and so to lift to that standard. In our learnings, clearly, we would have gone forward, if we have found ourselves in the situation, again, we would make sure that at the point of completion, it was at our standard, not the work was underway to get it to our standard. So it has been a real lesson for us. That said, the team has responded very rapidly on all the things that Gordon has said. And it's also -- we felt we were in a good place in Woolworths in terms of the standard we set, but we are now doubling down on reviewing everything again to really lift our overall standard again. It should be a topic that every one of our shareholders talk. Gordon do you mind if I elaborate?

No, no, please go ahead.

Because it should be one of the key questions elaborated on today? We doubled our spend on cyber between F '18 and F '21. And then we doubled it again between F '21 and F '23. We have over 120 specialists working in cyber in our business today as well as the core IT team. And actually, most of the risks come back to core IT in unauthorized user access or someone finding someone's password and been an unauthorized but authorized user. So we have about 120 people in there today. Our pure spend on cyber in the budget this year is just over $60 million plus well over between $10 million and $20 million of CapEx. So it is a big issue. We all need to take consensus seriously. We're doubling down our efforts, and we've learned a lot through the MyDeal experience, including as I say, this 1 fundamental issue that if you're a public company, in particular, if you, Woolworth's the standards over there, and we should have moved more quickly to have addressed what was well underway.

Thank you very much.

Thanks, Paul. No microphone 2. Anymore from microphone 1? Any more online? Yes.

Chair, this is a question from shareholder, Jonathan Tyler.

Thank you, Luke.

Why does Woolworths not use June 30 as financial year-end. With the 52-week financial year period and a change in year-end date some years like 2019 result in a 53-week financial period, making comparison with the surrounding 52-week financial period very challenging.

Thank you for the question online. Well, we actually adjust for that when we make the comparison. So we try and help out on that basis. I think the answer is to why it doesn't always fall in the 30th of June is that we work a cycle throughout the year in the way that our products are bought and the way we report to the Board and it's normally a 4-week cycle. So it's not going to end on the 30th of June every day. But let me -- we've got our CFO here who might have a better answer to my answer.

No, that's right, Gordon. We operate on a weekly cycle, and we close our period on the last Sunday of June. And so periodically, you end up with a 53rd week. But as you rightly point out, we adjust for that.

Yes. This would be what most retailers, in particular in food do globally, just because of the complexity of actually closing in the middle of a trading week.

Okay. Chair, this question is from shareholder, Josephine Weisman. Why is the 5-year summary omitted from the annual report?

Thank you, Josephine. Well, 2 answers to your question. One is we put a 5-year summary in the rem report. So I'd actually point you to that if you were looking for 5-year summary, and we have to put that 5-year summary in the rem report. But also in addition to that, in order not to cloud up the annual report with more and more information, it's actually on the website. So I would -- I'd strongly suggest that you have a look at the website. And if that doesn't answer your question on the 5-year summary, then by all means come back to us.

Chair, this is a question from a shareholder of Russell Patterson. What regular testing of security of customer data and IT systems are performed? And how often are these tests done?

So we -- so thank you for that question. We exercise ongoing due diligence and we have a proactive program, and we're constantly evolving our processes and controls on the digital environment as the digital environment becomes more and more complex. So I think the short summary answer is we're always on. We have to be internally vigilant 24/7. And we have a robust program around secure development, API security, which seems to be the issue at Optus, and penetration testing and we action high-severity vulnerabilities immediately. In light of the learnings from Optus and MyDeal, we're reviewing all our data sets and retention policies, as Brad said, and this will continue to be our priority as we remain ever vigilant. And the final thing I'd say is we have a -- I mean, other Chairman have said this at their AGM, this is an area that we have to be absolutely vigilant over all the time. And you can't relax. And we've got a first-class team of people. As Brad said, we've made a significant investment in this area. They work with the government on this. So what I want to do is reassure you that we're doing everything that's humanly possible.

Chair, this question is from shareholder, Stuart Breu. What does B2B and B2C mean? Not in the glossary of annual report.

That's a good pickup. B2B means business to business. So in other words, if our PFD business is calling on Guzman y Gomez, which is just along the road, that's B2B. Guzman y Gomez is a fast food business, and PFD is a business. So that's business as business. And then B2C is business to consumer. So if you think about the supermarket environment, we are the business, customers come in.