EBOS Group Limited (EBO) Earnings Call Transcript

Good afternoon, ladies and gentlemen. My name is Liz Coutts, and I'm the Chair of EBOS Group Limited. I'm delighted to welcome you to today's annual meeting in Auckland. Today's meeting is held in person and online via Computershare online meeting platform. This allows shareholders, proxies and guests who could not join us to watch live webcast of the meeting and read the company documents associated with the meeting. Welcome to you all. [Operator Instructions] Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together, and I will address questions at the relevant time of today's meeting. We will also take questions from the floor here in Auckland. As required under the NZX listing rules, voting today will be conducted by way of poll on all items of business. To provide you with enough time to vote, I will shortly open the voting for all resolutions. Those eligible to vote can do so on the voting forms provided. Alternatively, you can cast your vote using the Vote tab on the Computershare online meeting platform. Shareholders viewing online can also vote via the platform. To vote via the platform, simply click on the Vote tab and select your voting direction from the options shown. Your vote has been cast when the tick appears. You can change your vote up until when I announce voting is closed. I am advised that a quorum is present. I, therefore, declare the meeting open and that voting is open on all items of business. As the Notice of Meeting has been circulated to all shareholders, I would take it as read. There are no apologies. Now to the business of the meeting. My first duty today is introduce your directors and executives. Today, we have all directors and our CEO and CFO here in Auckland. Joining me are our fellow directors, Stuart McLauchlan, Tracey Batten, Mark Bloom, Matt Muscio, Coline McConville and Julie Tay. Julie is seeking reelection today, and she will address the meeting later. Also seated on the stage is Chief Executive Officer, Adam Hall; and our Chief Financial Officer, Alistair Gray. Also in attendance today is Mike Hoshek. He -- with our auditors, Deloitte. He's on the front row here; and Roger Wallis, from our legal advisers from Chapman Tripp, is also in the front row. So great to have you join us today. Today's meeting is comprised of 3 parts: firstly, I will provide shareholders with a summary of the highlights from the past year; and then Adam will provide you with further details on the group's financial performance and activity over the last year; and that will be followed by the formal business. We have 2 resolutions for approval this year. Turning now to our highlights for the year. We'll begin with a short video. The video captures the breadth of our operations, the dedication of our people and the key role we play in supporting health care and animal care customers and communities across New Zealand, Australia, Southeast Asia and Hong Kong. [Presentation]

As you have just seen, FY '26 was another year of significant activity and progress across the group. The year was particularly important as we refreshed our strategic direction, sharpened our focus on the higher growth and higher return segments within health care and animal care and further positioning EBOS for long-term sustainable growth. At its core, EBOS is built on a clear and repeatable model grounded in care, productivity and partnership. These principles guide how we operate, how we invest and how we create value. Our care-based portfolio has been curated over many years as defined by our 4 operating segments. Symbion and Healthcare Distribution supplies medicines, consumables, and logistics services to pharmacies, hospitals, government and health care partners across Australia and New Zealand. Retail Pharmacy Brands helps independent pharmacies grow by providing store brands, services, digital tools and retail support across a large network. Medical Technology works in hospitals and alongside surgical teams to support specialist medical technology and biologics solutions across Australia, New Zealand, Southeast Asia and Hong Kong. And Animal Care makes and markets pet food and distributes vet products and animal health brands through retail and wholesale channels. Importantly, each of these businesses holds a leading position in its markets. In most cases, we are #1 or #2. That scale and leadership is a real strength, and it underpins the resilience of the EBOS portfolio. Together, our businesses connect people, pets and communities to care anywhere. FY '26 was a year of solid growth for EBOS, with an 8% increase in statutory EBITDA and a 5% increase in underlying EBITDA. It also marked an important milestone. Over recent years, the Board has backed a significant program of investment to modernize our network and strengthen our portfolio. That facility investment cycle is now complete. As a result, EBOS goes into FY '27 a stronger business. We have modern facilities, a balance sheet with capacity and the flexibility to keep investing in growth. The Board is confident there are further opportunities to build value for shareholders, both through our existing businesses and through disciplined complementary acquisitions. Adam will take you through the results and priorities in more detail shortly. Over the long term, EBOS has delivered an approximately 10% EBITDA compound annual growth rate, supported by a balanced contribution from organic extension and carefully selected acquisitions aligned with our strategy. We have complemented this growth with a strong capital allocation framework, generated attractive returns from bolt-on investments while maintaining stable dividends for shareholders, guided by a long-standing payout ratio target. Our balance sheet remains robust, and our strong operating cash flows continue to provide EBOS with capacity to reinvest in its businesses, pursue growth opportunities with discipline and deliver returns to shareholders. Turning now to sustainability. Where our focus during the year was on practical action and clear reporting. We published our third climate statement in mid-September with a refreshed assessment of our climate-related risks and opportunities and the potential impacts on the group. We continue to invest in renewable energy and energy efficiency, and our grid purchase electricity efficiency improved, largely reflecting the opening of newer, more efficient facilities. Rooftop solar installations increased our renewable energy generation and planning progressed on 2 large-scale ground-mounted solar arrays at our Parkes facility. In New Zealand, we've matched all of our electricity consumption with renewable energy certificates since FY '24. Our contribution to our long-standing partner, Greenfleet, increased again this year, taking our support since 2007 to more than $2.9 million supporting its work in restoring native, biodiverse forests across Australia and New Zealand. In rural Victoria, we've also partnered with Greenfleet on a reforestation project at a former dairy farm. Approximately 98,000 native trees and shrubs were planted with native wildlife already returning to the area. We are equally committed to our inclusive and supportive workplace, where we believe that people do their best work when they feel safe, respected and valued. In FY '26, we refreshed our diversity, equity and inclusion policy to ensure the line with that commitment and with our broader strategy. During FY '26, we continue to identify and strengthen safeguards in our warehouse operations through targeted engineering improvements and investment in critical risk management, which continues into FY '27. We also progressed the rollout of the EBOS Life Savers program, reinforcing a consistent group-wide framework for the management of high-risk activities. Through our safety leadership walks, your Board and the enterprise leadership team engaged directly with employees to understand how risks are managed and identify opportunities to strengthen safety performance. Together, these initiatives reinforce the importance of visible leadership, accountability and open communication, all of which support a strong safety culture. This commitment is reflected in the simple but important Safety Matters mantra: work safe to get home safe. We also introduced a new training, including a Respect at Work module, giving our people practical tools to look after one another and to foster safe, respectable and inclusive workplaces across the group. The success of EBOS is made possible by the contribution of our people and the health, safety and well-being as a fundamental priority for the Board. Retaining and motivating our people also remains a key priority for the Board. In FY '26, we completed a comprehensive review of our executive remuneration framework. The changes which apply from FY '27 strengthen the link between executive reward and EBOS' medium- and long-term performance. They include deferring part of the short-term incentive and equity, adding market-priced options alongside performance rights in the long-term incentive, and introducing a minimum shareholding requirement for executives. The Board also adopted a minimum shareholding policy for nonexecutive directors, and each of us bought shares during FY '26. Together, these steps strengthen the alignment of your Board and executives with you, our shareholders. Our responsibilities extend beyond our commercial operations to the community. As you can see from the slide, EBOS businesses continue to support a range of partnerships and initiatives that improve the health and well-being outcomes in the communities we serve. These contributions include fundraising, strategic partnerships, employee participation and the provision of products and services. They are closely aligned with the purpose of connecting people, pets and communities to care anywhere and reflect the values of our employees, many of whom contribute their own time and energy to supporting local organizations and causes. Turning now to shareholder returns. Your Board declared a final dividend at NZD 0.615 per share, which was paid to shareholders last month. This brings the full year dividend to NZD 1.185 per share, representing a payout ratio of 84.5% of underlying net profit after tax. In determining dividends, the Board carefully balances the importance of providing shareholders with reliable income stream against the need to maintain financial flexibility and invest in attractive growth opportunities. The final dividend reflects a Board's confidence and the resilience of EBOS' earnings, the strength of its cash flow generation and the group's long-term growth outlook. Our approach will continue to be guided by the sustainability of earnings and cash flows, the strength of the balance sheet and the long-term interest of shareholders. So on behalf of the Board, I would like to thank Chief Executive Officer Adam Hall, the enterprise leadership team and all EBOS employees across New Zealand, Australia, Southeast Asia and Hong Kong for their leadership, commitment and contribution throughout the year. Their dedication, expertise and care underpin our success and enable us to continue serving our customers and communities. I also thank our customers, suppliers, pharmacy partners health key professionals and other business partners for the trust they place in EBOS and to you, our shareholders, for your continued support and confidence. We're proud of what we've achieved in FY '26 and look forward to building on that momentum as we deliver on a refreshed strategy and create long-term value for our stakeholders. Together, we will continue to build a stronger, more resilient EBOS, delivering meaningful outcomes for the communities we serve. I will now invite Adam to provide a more detailed review of the group's operational performance and outlook. Thank you.

Thank you, Liz, and good afternoon. Thank you for joining us, whether you are here in the room or online. I'd like to cover 3 things this morning -- this afternoon: first, our FY '26 performance; second, how FY '27 has begun across our 4 divisions; and third, the opportunity to bring those divisions closer together and create further value across the group. Let me start with FY '26. Revenue increased 9.9% to $13.5 billion, while underlying EBITDA, our measure of operating earnings, increased 5% to $614 million. I want to acknowledge the bottom line. Our underlying net profit was $250 million, down 3.1%, and underlying earnings per share declined by 7.3%. This largely reflects the depreciation and interest costs associated with our distribution center investment program that Liz mentioned. Importantly, as of the 30th of June 2026, the major facility investment cycle of recent years is now complete with all 8 facilities operational. Those investments have strengthened the group's capabilities and capacity, and our focus now is firmly on execution, improving productivity, realizing the benefits of that investment and converting our structural advantages into stronger returns and sustainable growth. Following completion of this once-a-generation major facility investment cycle, we have an immediate 1/3 step down in our capital expenditure in FY '27. And that tracks with what we've seen to date this year. Our balance sheet remains in good shape. Leverage was 2.1x, comfortably within our target range of 1.7 to 2.3x, and our return on capital employed was 12.8%. While we made important operational and strategic progress during the year, the Board and the executive team are very aware that EBOS' share price performance has been disappointing for shareholders. We recognize that progress within the business must ultimately translate into sustainable earnings growth and long-term shareholder value. As we demonstrate our daily operational performance and as we post consistent financial results, we believe that shareholders will appreciate the value of our high-quality EBOS portfolio, and that will grow with our aging population and the wealth of new medicines and new medical technologies coming to market. Part of that consistency I mentioned is delivering on our guidance. In FY '26, we achieved our financial guidance metrics: EBITDA, CapEx, depreciation and amortization, net finance costs, and leverage. This was despite elevated fuel and broader energy costs, which led us to update EBITDA guidance soon after the Iran conflict began. The divisions also delivered against the growth priorities we set out at our Investor Day in April. Symbion grew in line with its industry, and Retail Pharmacy Brands delivered high single-digit growth. Medical Technology also delivered high single-digit growth, and Animal Care delivered mid- to high single-digit growth. As noted in the full year result, macro headwinds such as foreign exchange rates and fuel costs directly impacted our earnings. But pleasingly, we're able to mitigate some of the fuel costs across our various businesses. Let me now turn to the first quarter of FY '27. The key message here is that positive growth has continued to build throughout the quarter, and we are reaffirming our existing FY '27 guidance despite the persistent foreign exchange and fuel cost headwinds. As we previously indicated, we expect to continue -- we continue to expect earnings growth to be weighted to the second half of the year. What is pleasing is the growth momentum is broad-based. Kemps Creek is ramping up in our Symbion business, and the Chemist Warehouse New Zealand contract has been extended. Retail Pharmacy Brands is expanding its store network and owned brand sales. In Medical Technology, our supplier partnerships continue to grow, and our recent acquisitions are performing. In Animal Care, Black Hawk and VitaPet sales increased mid- to high single digits, and Kiwi Kitchens has made a promising start in the United States. You'll be able to see some of that product later over in the corner. There is also an important change in our financial position. As I mentioned, our 8 new facilities are now operational at the end of FY '26, and that's thanks to the hard work and commitment of the teams leading these large capital projects. CapEx was approximately $145 million in FY '26, and it remains on track to step down this year to $100 million in FY '27. Now that lower capital intensity supports stronger free cash flow. Within our target leverage range, it also creates approximately $150 million of capacity for disciplined bolt-on acquisitions. At the same time, we are beginning to unlock the benefits of operating more effectively as one group. We expect these initiatives to provide incremental financial benefits from FY '28 as well as organizational opportunities, and I'll discuss this further shortly. I'll now talk to each of our divisions and then outline this group's wide strategy -- excuse me, synergy opportunity and finish with our FY '27 guidance. Let me begin with Symbion and Health Care Distribution. The priority here is clear. It is to put our recently installed capacity to work. We have spent several years renewing this distribution network. And with that program now complete, the focus is on using those assets to lift productivity and support growth without further major investment. Kemps Creek is a great example. Warehouse productivity is already approximately 20% higher than at the former predecessor Greystanes site. And we expect that improvement to reach around 30% by the end of FY '27 as the automation benefits are realized and volumes continue to ramp up. The first quarter run rate is on track. Community pharmacy has also had some supportive structural tailwinds. Although competition to serve community pharmacy remains elevated, the government's Community Service Obligation funding pool increased from the 1st of July with earnings from that tracking in line with our expectations. Demand for GLP-1s and high-value medicines continues to remain strong and consistent with our growth outlook. In Contract Logistics, the team secured 20 new principals in FY '26, and our new Perth facility is now live and serving customers, which enables us to offer full Australia-wide coverage. Here in New Zealand, the CWNZ wholesaling contract has been extended by agreement and will now ramp down progressively through to the end of FY '28. This agreement represents a modest component of group earnings, and the extended time frame gives us the opportunity to adjust the cost base in a disciplined way. Three sites have already been exited, with a fourth transition, the Dunedin site into Christchurch, now announced. Importantly, the remainder of our New Zealand business continues to perform well, and we recently announced -- excuse me, we recently renewed a separate major customer contract as well. Turning to Retail Pharmacy Brands. The priority here is to drive store dollars. Put simply, when our pharmacy partners perform well, we perform well. We have seen a meaningful challenge to customer spend as the cost of living impacts their wallet. As a result, our investment is, therefore, focused on helping stores attract more customers and expand the services they provide and increase sales. We see 5 practical levers to help achieve this. First, network growth. We now support approximately 790 stores with 10 -- around 10 net additions in the quarter. This includes TerryWhite Chemmart, Cincotta and MediAdvice from which -- in which we acquired a majority interest during FY '26. A larger network creates further scale across our brands, buying and services. Second, broadening care. 61% of all Australians live with an ongoing medical condition. And 38% of all Australians live with 2 or more. These figures are expected to increase as the population ages. And against this backdrop, TerryWhite Chemmart's commitment to care continues to resonate with customers. During the FY '26 flu season, our network delivered 24% of all pharmacy flu vaccinations. This is not just a measure of vaccination volumes. It also reflects the expanding scope of practice in community pharmacy and is increasingly important role as a front door to health care, creating more opportunities to support our customers with their health over time. Third, our digital ecosystem. Units through TerryWhite Chemmart's online channels increased by 25%. Customers increasingly expect to engage with us, both in-store and online, and the team is enhancing that capability. Fourth, partnering with consumer brands. Campaigns that were delivered through our in-store screens generated a 35% uplift in unit sales for the promoted products. That creates immediate value for our supply partners and our pharmacy owners while also developing a higher-margin income stream for the group. And fifth, owned brand. Retail sales increased at a low double-digit rate. Owned brands provide customers with good value and support stronger margins for pharmacy owners and the group. Moreover, these levers reinforce each other. More stores create more opportunities for more health services, online engagement and owned brand sales. And of course, greater customer traffic also increases the value of our retail media platform. There is always more to be done, but the division has solid momentum as we move through FY '27. In Medical Technology, our priority is to expand scope and reach. It's worth briefly explaining the business model. We connect the world's leading medical technology manufacturer and -- manufacturers and donor networks with the hospitals, clinics and health care practitioners who use their products. We have more than 400 supply partnerships. We serve more than 4,500 hospitals and clinics, and we engage approximately 2,000 practitioners each year through professional education programs. This is not just a distribution business. This is a trusted partnership. We believe we are the leading independent distributor in Australia and New Zealand and Southeast Asia. We're also the largest biologics provider in Australia. We strengthened that platform in FY '26 through 4 acquisitions, each continuing to build out our scale presence: Precision Surgical, which is a spine and orthopedic distributor on the East Coast of Australia; AlphaXRT, which provides oncology radiation solutions here in New Zealand and in Australia; K-Talyst, which works in aesthetics and reconstruction across Southeast Asia; and finally, by consolidating Origin, a U.S.-based allograft JV in which we have a majority interest. Each of these broadens the range of procedures, customers and clinicians we can support. As with FY '26, there remains continued pressure from ForEx and fuel charges in addition to the customer market dynamics that we must respond to. Overall, Medical Technology provides exposure to attractive long-term growth in specialist health care. It's also a natural destination for our disciplined bolt-on investments that our balance sheet can support. Finally, Animal Care, where the focus is on new products and customer momentum. The branded portfolio is performing well in the current climate of elevated cost of living concerns. Across July and August, Black Hawk and VitaPet delivered mid-high single-digit value growth compared to the prior corresponding period, significantly ahead of the category. While cost inflation and the phasing of marketing investments is expected to subdue first half EBITDA growth, these pricing actions will accelerate the second half performance. At a time when household budgets remain under pressure, this demonstrates the strength of the brands and the trust of pet owners. The second growth engine is international expansion, particularly the export of Kiwi Kitchens to the United States. Sales of our Kiwi Kitchens products continue to accelerate in the U.S., albeit off a very -- excuse me, off a relatively small base right now. The brand is now ranged across California, and we have the ambition of expanding our presence in more regions. The United States is the world's largest pet food market, so even a modest position represents meaningful opportunity over time. Our Branded Animal Care business has 2 distinct sources of growth: strong brands with manufacturing capability and increasing reach internationally. Whilst not mentioned on the slide, our leading vet wholesale business also continues to perform well, supported by structural growth in pet ownership and an aging pet population. As pets live longer, they typically require more frequent, more sophisticated care and that, in turn, supports sustained demand across veterinary medicines, consumables and other clinical products. With our broad range, established network and trusted customer relationships, Vet Wholesale remains well placed to support veterinary practices as that demand continues to grow. We're also seeing more and more opportunities to swap best practices between human and animal health in distribution and warehousing. These practical examples point to a much broader opportunity across the group, bringing together the capability, the expertise and the scale that already exists across EBOS. And this now brings me to an important value frontier for EBOS, the opportunity to continue to work more efficiently across the group. EBOS has 4 strong divisions that have historically operated with a high degree of independence. Over the past year, our leadership team has established a strong shared purpose and common group strategy. That work has identified 3 practical opportunities to collaborate to lower our cost base, each at a different stage of development. First, combined support office costs. This work is well underway across finance and IT with a disciplined focus on centralizing, standardizing and automating activity and partnering where appropriate. These changes have already begun, and we expect modest run rate benefits beginning by the end of FY '27, which will then positively impact FY '28 onwards. Second, scaled negotiation. Group-wide visibility and analysis of our external spend has identified opportunities to use our scale to drive better negotiating leverage. Value creation is expected to kick in as legacy contracts start to renew towards the end of FY '27 and into FY '28. And third, supply chain efficiency. This opportunity is at the scoping stage, but it involves evaluating our network on how to use our facilities to best serve customers across all our divisions, building on the network that we've just renewed. This will be a multiyear program carefully sequenced to protect customer service with an opportunity for proof of concept in FY '27. Together, these initiatives are expected to deliver incremental financial benefits from FY '28 and unlock opportunities in the organization. We'll provide further detail, including the size of the opportunity with our half year results in February. Turning to the outlook. The resilience of the divisional performance we have outlined is particularly important given those significant foreign exchange and fuel headwinds affecting the business. The Australian dollar has continued to appreciate against the New Zealand dollar, up another circa 2% in the period, while the average diesel price has increased by approximately 20%. Together, these movements have created a material headwind to earnings and distribution costs, and we expect both drivers to remain volatile through FY '27. Despite this, I'm pleased to reaffirm our FY '27 guidance. We continue to expect underlying EBITDA of $635 million to $655 million, representing mid-single-digit organic growth; CapEx of around $100 million following the completion of the investment program; depreciation and amortization of $152 million to $162 million; and net finance costs of $138 million to $148 million. As noted, similar to last year, EBITDA and impact growth are expected to be weighted to the second half. And the confidence in our guidance is supported by the group's resilient market positions, disciplined execution and the benefits of the investment program completed in recent years. Let me close by bringing the key themes together. First, approximately 85% of the group's EBITDA is generated by businesses where we are #1 or #2 with market positions. Second, we have redeployed approximately $2 billion of capital over the past 5 years into higher growth areas, including Medical Technology and Animal Care. These higher growth businesses now represent more than 70% of group earnings. Third, the major facility investment cycle is now complete. Each division has a clear growth agenda, and we're beginning to realize the benefits of operating more effectively as one group. We also have the balance sheet capacity to continue investing while maintaining the discipline on returns that shareholders should expect from us. None of this is possible without our people, and I would like to thank our EBOs teams across Australia, New Zealand and Asia for all their hard work, care and commitment that they show every day, and our customers and partners for their continued trust. Thank you also for your continued support. I now hand back to Liz.

Thank you, Adam. We will now proceed with the formal business of the meeting. The first item of business is to consider and receive the annual report. The annual report contains the financial statements, directors' report and the auditor's report for the year ended 30th of June 2026. A formal resolution is not required. We will then move on to the other matters to be put to a vote. We have 2 ordinary resolutions to deal with today. Resolution 1 is a reelection of Julie as a director. Julie is required to retire by rotation, is now required to be put forward for reelection by shareholders at this meeting. Resolution 2 is to authorize the directors to fix the fees and expenses of the auditor. Shareholders will have an opportunity to ask questions on each resolution as each resolution is proposed. [Operator Instructions] Your question will come through immediately, and may I request your patience as questions are sent through. Those attending here at Auckland can either use the app or raise your hand, and a member of our team will hand you a microphone. I remind you that only shareholders and valid proxy holders are permitted to vote or ask questions. Those of you who are shareholders in the room today, we would have been given a sticker on registration. Please show the sticker to our team members prior to asking a question. The directors holding proxies representing 135,733,520 shares in respect of all resolutions, where directors hold an undirected or discretionary proxy, they intend to vote those proxies in favor of the resolutions. The annual report and financial statements were subject to audit by Deloitte, who gave an unqualified audit opinion. The annual report and financial statements were audited and lodged prior to the annual meeting, and there is no formal resolution required to be put to the meeting. I will, however, take questions on the annual report and financial statements and any other aspects of the business you may want to discuss. The auditors, Deloitte, are represented here today. Are there any questions on the annual report? I can't see any questions online coming up yet. No? There appear to be no questions. We will now move to resolution 1 relating to the reelection of Julie Tay, a director. The resolution is, it is resolved that Julie Tay be reelected as a Director of the company. I now invite Julie to make a statement to the meeting. Thanks, Julie.

Thank you, Liz. Well, good afternoon, everyone. Thank you for joining us today, and thank you, Liz and the Board for the opportunity to stand for reelection at this AGM. I'm Julie Tay, Singaporean based in Singapore. Today, I'm seeking your support for my reelection as an independent Non-Executive Director of EBOS. Like many of you, I'm a shareholder of EBOS. And over the past 3 years on the Board, I have valued the opportunity to contribute to the company's progress and would welcome the chance to continue supporting its growth in Australia, New Zealand and throughout the Asia Pacific region. I'm a seasoned executive with more than 30 years of experience across Asia Pacific, leading medical device businesses in both B2B and B2C business models. I began my career in sales management, move into marketing, commercial excellence, new business development, strategic planning and ultimately into full P&L leadership roles. I have held executive positions at Johnson & Johnson, Johnson Diversey, Bayer and most recently served as Senior Vice President at Align Technology and a member of its global executive committee. These experiences have given me deep strategic, operational and commercial expertise with a strong focus on growth. I'm also passionate about building strong organizational cultures and engaged workforces by developing talent. Currently, I serve as an independent non-executive director of Sonova Holding AG, a publicly listed company in Switzerland, where I sit on both the remuneration and nomination committee and the audit committee. Driven by my commitment to developing the next generation of leaders in med tech, I also contribute my time as pro bono mentor with Asia Mentors Circle and act as an executive adviser to Signature Leaders. In terms of qualification, I hold a Bachelor of Arts in Psychology and Political Science, earned an MBA from Curtin University of Technology in Australia. I also hold a certificate in International Director's Program, board and corporate governance, from INSEAD, and I'm a member of YPO, the Young Presidents' Organization and also accredited member of the Singapore Institute of Directors. EBOS is an outstanding company with a strong foundation and significant opportunities ahead. Having served on the Board for the past 3 years, I have seen firsthand the quality of its people and the potential of its businesses across the region. If reelected, I bring my commercial experience, international perspective and my commitment to good corporate governance always with the interest of all shareholders at heart. I will be honored to continue serving as your independent non-executive director, and I respectfully ask for your support for my reelection. Thank you. Over to you, Liz.

Thank you, Julie. Are there any questions from the floor on this resolution? Doesn't appear to be. There is a question online from [ Stephen Mayne ]. It's got, nothing much happens at Kiwi AGMs. Part of the standard audit remuneration resolutions today, we've gathered to vote on a similar resolution, the reelection of Singapore-based director Julie Tay. In 2019, ASX-listed Treasury Wine Estates voluntarily moved to annual elections for directors in line with best practice that occurs in both the U.S. and the U.K. Dual-listed companies like News Corp and Rio Tinto also did this due to the laws in the U.S. and the U.K. And BHP has continued doing it even after its U.K. dual listing ended in 2021. Can the Chair and candidate Julie Tay comment on whether our company should or would follow this TWE and BHP lead and move to annual elections for directors at next year's AGM? At least that would make our thin AGM agendas a bit more interesting. Well, first of all, I always -- not always, but I can have some very interesting AGMs. I'm not so sure about that in New Zealand. So no, first of all, just on seriousness, we note that, look, this is not standard practice in Australia or New Zealand, and we do not have any plans to introduce this for EBOS next year. Julie, do you want to comment on that? No? Okay. So are there any other questions on Julie's resolution? Does not appear to be so. I now move the adoption of resolution 1. The second resolution relates to the auditor's remuneration. Deloitte is the current auditor of the company and is automatically reappointed in accordance with the Company's Act. It is proposed that the directors be authorized to fix the fees and expenses of the auditor. The resolution is it is resolved that the directors of the company be authorized to fix the fees and expenses of Deloitte as auditor of the company. Are there any questions from the floor on this resolution, please? Yes, we have a gentleman in the back row and could -- bring -- so we've just got a microphone for you so that you can be heard both in the room and online. Thank you.

Just to query, how often is the auditor's contract put up for tender?

The auditor's contract was put out for tender 3 years ago. Is that right, Mike? The audit partner stays in the position for 5 years and must rotate by their own rules, but it's generally practice that we would put them up for tender at least within 10 years. But we actually do review it each year to see whether we think that this might be a good time to put it out. And some of that we take into account where there's been a change in management, with just what's actually happening in the business at the time. But anyway it was last done at EBOS 3 years ago. Any other questions at all? No. And there's no questions online. I now move the adoption of resolution 2. Before we move on to the voting, does anyone have any other business? Yes, the gentleman here in the yellow shirt. Can -- sorry?

And a green dot.

And a green dot. Could someone just bring the microphone closer, please. Again, we -- well, we just need to make sure that people both online and in the room can hear your question. Thank you, [ Bronwin ].

[ Colin Uptude ], shareholder. I assume there was going to be general business later, so -- but this is a general business?

This is general business.

Okay. I think the Board and management can be pretty happy that they've organized a fairly well organized company with good assets and good results so far apart from the share price, but I understand that that's not within your wheelhouse. My question is what strategies can we change to win back Chemist Warehouse business in New Zealand and Australia.

I'll give it to Adam. Would you like to answer that?

Thank you very much, [ Colin ]. Can you hear me well through the microphone, [ Colin ]? Okay. [ Colin ], your question was what strategies can we change to improve our results competing against another major competitor in the market in both Australia and New Zealand. In New Zealand, we're present at the pharmacy wholesaling stage and in Australia pharmacy -- excuse me, at the wholesaling stage and retail. So I'll start with New Zealand. In New Zealand, we are pleased to announce today the extension of the Chemist Warehouse New Zealand contract. That allows us to resize our position in the market to suit. As they exit, we will have a changed cost base that will allow us to continue to serve the New Zealand market profitably. In fact, we've just won a different -- or renewed a different major pharmacy wholesale contract, which we're pleased with. We also see in New Zealand continued opportunities well outside pharmacy wholesaling, including contract logistics, which is a wonderful business for us here in New Zealand, and the team here do a terrific job. So I think in New Zealand, the opportunity is scale with the market -- it's a very competitive market in pharmacy wholesale -- and focus on other businesses that are higher margin, including contract logistics. So that's the summary in New Zealand. In Australia, we're present at the wholesaling stage and the retail stage, and the strategy is a little bit different. At the wholesaling stage, that's what's driven the investment that you've seen, increasing the productivity and the automation that we have at our sites, culminating in particular the facility called Kemps Creek, which is just outside of Sydney. We didn't show it today, but online on our website, there is a video of Kemps Creek and how automated it is. And it's that additional productivity and capacity that will allow us to compete going forward at the pharmacy wholesaling stage. I should add, because my colleagues would be furious with me if I didn't mention too that there's 2 other facilities that are similarly automated like Kemps Creek, Keysborough in Melbourne and Acacia Ridge in Brisbane. So that network of 3 sites serves roughly 1 million doses of medicine a day through highly automated facilities. And that is, I think, what our key competitive advantage is there. At the retailing stage, I think what is clear is there's another major player with higher sales per store that's focused very much on the discount segment of the market. In contrast, TerryWhite, MediAdvice, Cincotta are focused on care. We have a higher number of -- have -- actually have a larger network of pharmacists across the country, across those 3 brands. And those pharmacists represent about 12% of Australia's pharmacies but as you saw on the slides, 25% of the pharmacy vaccinations that were delivered. And I think that speaks to the fact that these retail pharmacy brands are seen as the destination for care. And it's not random. Our value proposition being based on care is because Australians and New Zealanders are getting older. They need more care. They need more medicine. They need more support. And so our value proposition through our pharmacy brands speaks loudly to that need. And that's what the shoppers tell us. They like coming into TerryWhite because we give them the care that we need. So to recap, in New Zealand, pharmacy wholesaling will continue to be very competitive, but we have opportunities in other areas, including contract logistics. In Australia, the investment situates us well in terms of efficiency at the pharmacy wholesaling stage. And at the retail stage, we'll continue to focus on that -- those care-oriented customers.

Thank you, Adam. Answer your question? Okay. There's a question online, and it has, please expand on your objectives for Kiwi brands in the U.S. What distribution channels are being used? Adam and I were in Sydney last week meeting with the Animal Care team, and they're pretty excited about this. So -- but I'll -- so over to our CEO, Adam, to respond to that.

Thank you. As an Australian, I didn't realize just how deeply valued New Zealand provenance is to people around the world. If we go to a -- and the question was specifically about the United States. If we go to California and we say, "Oh, we have some fabulous pet food. It was manufactured in Australia," the Californians are complimentary, "That's nice. That's good." But if we tell them that it was made in New Zealand, if it's New Zealand in a bowl, that is a very powerful message for them. They're excited to share that provenance, New Zealand's heritage of purity, of high-quality ingredients with their family member because that's how people see their pets. They're furry family member. And so I believe the question was on the channels. We have partnered with a grocery chain -- excuse me, specialty pet chains in -- notably in California. You can't really take a nationwide perspective in the U.S. You have to do it region by region. But we're partnered with a specialty chain in California. We're looking to add specialty chains down the West Coast in the other regions of the U.S. there. And so far, the reaction has been extremely positive. Shoppers really appreciate, again, this New Zealand provenance. As an Australian, I didn't appreciate it before, but I've learned to appreciate it now. And I think it's something that the Kiwi Kitchens brand will continue to build on. And I think it's a really great opportunity for EBOS and for Animal Care.

Thank you, Adam. Are there any more questions in the room? Yes, in front here. We'll just bring you a microphone, so everyone can...

My question is towards Adam Hall. I believe I've been told that Chemist Warehouse has moved into London. Now if that's the case, they'll be needing more EBOS product, and that's good news.

Could you just -- I caught the first part of the question, that Chemist Warehouse is moving into London. But I'm sorry, I didn't catch the second one.

They're already in London. They moved quite a few months ago into London with the idea of expanding beyond London. But this is the first step. Do you know very much about that?

You were talking about London, United Kingdom?

Yes.

Yes. I have to say, the Board keep me very focused on Australia and New Zealand, so I'm less familiar with how competitors in the U.K. are operating. But I'll take your question.

Well, if that's the case, we'll be needing more EBOS products.

Yes, well said. Okay. So expansion opportunity.

Well, it is.