Woolworths Group Limited (WOW) Earnings Call Transcript

Thank you, team. That was wonderful. Good morning, everyone. I'm Scott Perkins, Chair of Woolworths Group. I welcome you to the 2023 Annual General Meeting of Woolworths Group and look forward to engaging with you during the course of today's AGM. I would like to welcome Aunty Donna Ingram, back to our AGM and thank her for joining us today. Aunty Donna's Family come from the Wiradjuri country with Aunty Donna being a recognized cultural representative for the local Aboriginal community in Sydney. Aunty Donna has worked in Aboriginal affairs, government and community organizations in Sydney for the past 35 years with a focus across -- an impact across Indigenous education, community development and women's leadership. I would now like you all to welcome Aunty Donna. Thank you very much.

Good morning, everyone. It's my great pleasure to be here with permission from my elders to acknowledge Gadigal country and welcome you to Woolworths' AGM 2023. It gives me pride to represent my community in this important cultural protocol. It shows respect for and recognition to the unique position of Aboriginal and Torres Strait Islander people in Australian culture and history. The Gadigal are 1 of 29 clans of the Eora Nation, which is bordered by the Hawkesbury, the Georges, and the Nepean rivers. I am an Aboriginal woman here proudly identifies with the Wiradjuri nation through my family connections from Central West, New South Wales. I was born on Gadigal land, and I've had the privilege to live, work and raise my 4 children on this land for most of my life. My family has grown, and I'm now a proud grandmother to Aaliyah, Elijah, Kelyla, Lakoda, Jake Achey and Baby Cade recently joined the family. My wish for my grandchildren is to grow up happy and healthy in a safe and inclusive society where they believe that their dreams can come true. I acknowledge the Gadigal, the spirits and ancestors who will always remain with the land mother earth, and I thank them for their ongoing custodianship. I'm also very proud to be part of the oldest living culture in the world, the Aboriginal culture of Australia with a unique and distinct heritage, cultures and identities. We have been here for over 65,000 years and our people and our culture will survive into the future. I pay my respects to our elders, both past and present, and we must never forget the sacrifices made by our leaders to create a better future for Aboriginal people. I do this as a reminder and as a tribute to elders and those who have gone before us to fight for land rights, justice and equity for our communities. We will continue to honor their work and fight to be heard. I extend my respects to Aboriginal and Torres Strait Islander people from all clans and nations who are present this morning. I also recognize our non-Aboriginal sisters and brothers from all backgrounds who walk beside us to support our aspirations. On behalf of my community and the Gadigal, I wish you a safe stay on the land and safe travel from the land. I hope you have a productive and successful day to share your successes and challenges over the past year and planned for the year ahead to support Woolworths' purpose of creating better experiences together for a better tomorrow. In closing, we remember that this is, was and always will be Aboriginal land. Thank you, everyone. Have a beautiful day.

Thank you, Aunty Donna. We are very pleased to be meeting here, and thank you for joining us here today. I also acknowledge the traditional owners of the Gadigal Country and pay my respects to elders past, present, and any Aboriginal or Torres Strait Islander people here are online today. Turning to today's AGM. We're pleased to offer Woolworths Group shareholders the option of participating in person in today's AGM and also online. Our Group Company Secretary has informed me that a quorum is present, so I declare our 2023 AGM open. For those attending in person, I would 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 alert alarm is a series of warning beeps. If this alarm sounds, please stand for further instructions from the hotel wardens. If the evacuation alarm sounds, a whooping alarm, all occupants will be directed by the hotel wardens to leave via the nearest emergency exit quickly and calmly, and make their way to the assembly area. This is located at the fountains and front of ANZ on Martin Place. Once there, please remain at this location until hotel staff advice you are safe return to the venue. If you are required to evacuate, please leave your voting handsets and smart card on your chair. I would now like to introduce my colleagues on the stage here today. Starting on my right, our Managing Director and CEO, Brad Banducci; Warwick Bray, Chair of our Audit and Finance Committee; Warrick is standing for election at this meeting, and he will address the meeting later today. Jennifer Carr-Smith, Maxine Brenner, Chair of our People Committee and Holly Kramer, Chair of our Sustainability Committee. Starting on my left is Kate Eastoe, our Company Secretary -- Group Company Secretary; Tracey Fellows, who are standing for election at this meeting and will also address the meeting later today. Kathee Tesija and Philip Chronican, Chair of our Risk Committee. Also in attendance today is Tom Imbesi, the company's lead audit partner from Deloitte and members of the Woolworths Group executive team, including our Chief Financial Officer, Stephen Harrison; and our Chief Legal Officer, Bill Reid. I will now talk through the procedural methods for this meeting. Instructions to help you navigate the online platform are available in the Notice of Meeting and in the online portal guide, both of which are available on our website. The Notice of Meeting sets out the business of the meeting and the explanatory information for each resolution. If you have trouble using the online platform, please call Lumi, their phone number is shown on the screen of your webcast. If we experience a significant technological issue or 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 the details of any adjournment via the ASX and our website. Those of you participating online today will see a split screen with 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. To vote at today's meeting, you need to be registered as a shareholder. 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 the voting options. You can vote for, abstain or against by selecting the option for each resolution once the poll is opened. 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 have multiple holdings, you will need to log in separately with each individual holding to lodge your votes. For those in the room eligible to vote, votes will be submitted using the electronic voting handsets. Those of you entitled to vote should have received a handset, a plastic smart card and instructions on how to submit your vote. If you've not already done so, please insert the smart card into the top of the handset with the bar code 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 Lumi registry assistance will help you. Lumi, we have one shareholder or proxy holder -- we have 2 in the middle here. 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 your handset 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. The green square to move on to the next resolution or the red triangle to return to the full list of resolutions or additional navigational aids. Only shareholders or proxy holders may ask a question or make a comment during today's meeting. I ask that all questions and comments are to be directed to me. To allow us to work through the questions and to give shareholders an opportunity to voice the largest range of questions, I have 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, 1 of those questions will be read and the related questions answered together. Finally, we will conduct the meeting in a responsible manner, and I ask that shareholders are respectful when asking questions as we will be when answering them. There are 2 ways to ask questions by using the microphone in the auditorium or by submitting a written and audio question via the online platform. For those attending in person, please see the attendant at the microphone nearest to 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 will ask that shareholders please ask 1 question at a time, and please limit your questions to 1 question per item of business. If you're asking your question as a representative of an organization or 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 the send icon. To submit an audio question, select the home tab and follow the asking audio questions instructions. 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 for their question to be asked. 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 the questions to the meeting. I will deal with questions in accordance with the item of business 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 speak with 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 registry matter, I've asked the team to inform you that the best way you 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 Woolworths Group website. Now ladies and gentlemen and fellow shareholders after that epic procedural introduction, I have to say, on to my address as Chair of Woolworths Group. Welcome again to the 99th Annual General Meeting of Woolworths Group. Having assumed the role of Chair at the conclusion of the last AGM, it is a special pleasure to address you today to review the past year and update you on the group's performance and prospects. I also look forward to the opportunity to meet many of you and address questions from shareholders during the course of the meeting. Woolworths Group's performance during the 2023 financial year reflects a business that is performing well across many of its key measures. Today, you will hear both from me and our CEO, Brad Banducci, as we share our perspectives on the past year. The group's performance in FY 2023 reflected those improving fundamentals many of which stem from the long-term decisions we've taken during our transformation. The results also reflect the recovery from a very challenging FY '21 and '22 which were materially impacted by the pandemic and related disruptions. However, the most important driver of our performance this year is again the contribution of Woolworths Group's team members. Throughout FY '23, our team have lived our shared purpose of better experiences together for a better tomorrow. They have kept customers and their fellow team members at the center of every day on the job across the group. I would like to thank every team member for their hard work and care demonstrated throughout the year. I would also like to recognize the tragic passing of two team members in two separate workplace incidents in the last 12 months. We are deeply saddened by that loss. And on behalf of the entire Board, we extend our sincere condolences to the families, friends and colleagues of those team members. The safety of all team members is our primary objective and whilst formal investigations into both incidents are ongoing. The business has not hesitated to make any necessary change to our workplaces to protect our team. In our role as the Board, we're also committed to relentless focus on safety and other material risks. Despite a group-wide effort and resulting steady improvement in online safety over many years, these events remind us that we have more work to do. In the context of these tragic circumstances as it related to the safety measure and the short-term incentive, the Board adopted a 2-stage approach. The Board determined that there should be a 10% absolute reduction in the group's short-term incentive for the vast majority of above store salary team members. Mindful that investigations are yet to establish the root causes of each tragic incident, the Board committed to determine a further response informed by the outcomes of those investigations. For the balance of my address today, I will touch on the Board's perspective on the group's performance and underlying health before handing over to Brad to provide more of a detailed summary of our strategic progress as well as an update on the group's trading following yesterday's release of our first quarter results for FY '24. As a Board, we are pleased with the progress Woolworths Group is making. But we take nothing for granted, and every day is a new day in retail. We are acutely aware of the choices customers have and the need for us to relentlessly improve to win and retain their trust. FY '23 marked the return of a more stable operating environment for all businesses following the material disruption of COVID and the associated impacts of the last 3 years. This operating environment, a phaseout of material COVID-related costs and ongoing investment in recent years led to the group EBIT growth before significant items of 15.8%. However, if we were to exclude the material impact of COVID costs in FY '22, EBIT growth for the group into FY '23 was 3.4%. Reflecting the solid result, the Board declared a fully franked final dividend of $0.58 per share, which was up 9.4% on last year. This resulted in total dividends of $1.04 per share, up 13% compared to FY '22, and in line with earnings growth for the year. This reflects both this year's performance and our long-term confidence in the group's prospects. While the overall operating environment for the group improved in FY '23, global and local inflationary impacts created a new challenge as our customers' household budgets became increasingly stretched. Amid this backdrop, we have responded by delivering even greater value across our food and everyday needs businesses. This included weekly specials, low-price programs and food, expanding the loyalty offer and investing in our own brands to provide quality products and more affordable choices. Ensuring that all of our customers can access great value remains a key priority for the year ahead, as well as getting your Woolies Worth!, we increased our focus on investing in the quality, the fresh food and the range that we are famous for. Material investment in the group's digital and e-commerce assets over many years has established a solid foundation that has enabled the group to respond to changing customer preferences. Through our early investment into convenience, we can now offer online shopping options ranging from home delivery within 2 hours to direct to boot and over 700 stores to a milk run delivery, which takes, on average, 33 minutes. We decided to give shareholders more visibility as to the scale and composition of these activities by reporting on our e-commerce profitability separately for the first time in FY '23. The group's multiyear supply chain transformation is a key driver of productivity improvement with the upgraded facilities enabling a wider and fresher range for customers, a material and increasing capacity and improved efficiencies. Major new facilities opened over the last 5 years include: the Melbourne South Regional DC, the Melbourne Fresh DC in Victoria, Adelaide Regional DC expansion in South Australia, Palmerston North DC and Auckland Fresh DC in New Zealand and the Heathwood Chilled and Frozen DC in Queensland. A new fresh DC in Christchurch, New Zealand and Woolworths Group's first automated customer fulfillment center in urban Sydney are on track to open in FY '24. We continued our expansion into complementary adjacencies also during the year. This strategy draws upon what we have learned and established in our food businesses, whether it be our loyalty platform, data and analytics, own brand, store technology and supply chain. While we will remain particularly disciplined in the investment of capital into these areas, pleasingly, the strategy is delivering with an impressive 27% sales growth in PFD, our foodservice business, a 29% sales growth in Cartology, our Retail Media business. The acquisition of an equity stake in Petstock Group announced in December 2022, subject to ACCC approval, will also enable more customers to conveniently shop for more of their everyday needs across our connected group. If you are anything like our household, every shopping mission starts with the needs of your Pet. Overarching all of this, we need to strike the right balance between providing value to our customers, recognizing cost pressures being felt by our suppliers, providing our team with competitive pay and ensuring we are delivering an acceptable return to our shareholders. We believe that operating sustainably, having a positive impact on our communities and maintaining the highest levels of governance benefit all of our stakeholders. We also recognize that it's not the group's place to have a view on every social issue. Rather, we will focus on those which are tied to our purpose, where we can have a meaningful impact and hence, which will be for the long-term benefit of the group. This year also marked the halfway point in the group's 2025 sustainability plan. While we recognize the progress made, we equally recognize that more work needs to be done. The group continues to progress on its pathway to net positive carbon emissions. To support this, we announced a target to reduce our transport emissions by 60% in 2030 compared to 2022 levels as part of the group's transport decarbonization strategy launched this year. We launched our latest reconciliation action plan earlier this year, detailing 97 deliverables to drive meaningful progress towards reconciliation with Indigenous Australia through a focus on employment, health, education and sourcing. We will also contribute the equivalent of an astonishing 34 million meals to our food rescue partners, including OzHarvest, Food Bank and FareShare in Australia and KiwiHarvest and The Salvation Army in New Zealand, which went towards the diversion of approximately 80% of our total food waste from Australian Woolworths Supermarkets in FY '23. These are only 3 focus areas of our many goals. We will continue to progress our sustainability plan in FY '25 to not only have a positive impact but also make our business stronger and more resilient for the future. I would also like to take this moment to acknowledge Brad and the wider group executive team for their dedication and hard work during FY '23. We are indeed fortunate to have a team with the drive, the aspiration and the care that every day is put to work at Woolworths Group. I would also like to acknowledge the dedication of my fellow directors over the past year, and the support they have offered to me and the management team. During the year, we welcomed 2 highly experienced directors, Tracey Fellows and Warwick Bray to the Woolworths Group Board. We're delighted to have Tracey and Warwick's wealth of experience, knowledge and unique perspectives available, which will complement the Board's existing skills. As we move on to our centenary year in 2024, the Board remains focused on supporting our CEO and management team as we execute on our ambitious strategy. While our operating environment remains somewhat uncertain, we are reassured by the clear strategy, by the performance and underlying health of the group and are energized by the opportunities ahead of us. We will be relentless in providing value for our customers and supporting our team across the group. We will continue to realize the benefits of our investments to date, but we'll also continue to invest in a disciplined fashion to strengthen our cornerstone businesses and platforms, grow our adjacencies and evolve the group to meet the changing needs of customers. Woolworths Group is at the heart of nearly every community in Australia and New Zealand. We look to the future with a sense of both responsibility, and optimism guided by the potential of working better together for a better tomorrow. Thank you all. I now invite Brad to address the meeting.

Thank you, Scott, and good morning, everyone. In my address today, I will talk about the group's F '23 performance and our Q1 results for F '24. I will then provide a summary of our key strategic achievements before finishing on the areas of focus for the year ahead. I would also like to address upfront the tragic passing of 2 team members in the last 12 months. This has materially impacted the board of Woolworths team, and our thoughts remain with the family, friends and teammates affected by each tragedy. The first tragedy was a contract cleaner working in our Jesmond supermarket when tragic circumstances led to her passing away while working with the cleaning machine in November of last year. The second was a team member working in our Minchinbury DC, who in late June of this year was fatally injured also whilst engaging with equipment. As Scott stated, the formal investigations into each events to identify the root causes are ongoing. And we are fully cooperating with SafeWork New South Wales to ensure a thorough review is completed with no stone left unturned. We have taken immediate measures in both sites and we're about absolutely committed to ensuring learnings are acknowledged and properly implemented so that every team member returns home safely at the end of every day. Sadly, we have also seen an increased case of aggression towards our team members, particularly in our stores with more than 3,000 acts of violence threats and abuse reported in the last 12 months. This is not acceptable, and we are putting in place additional measures to support our team. In conjunction with investments in areas such as CCTV upgrades, 2-way radio headsets, as well as virtual reality violence and aggression training. We are working closely with the government to advocate for legislative change to further -- to help further protect retail workers. Equally important to us is the mental well-being of our team. To support this, we've partnered with Sonder to provide an [ aid ] to all of our team members that provides unlimited access to help professionals as well as safety, mental health, physical well-being and well-being support -- physical health and well-being support. We also partnered with Good Shepherd to support the financial well-being of our team, which is critically important given the challenging economic circumstances we currently face. I would like to take this opportunity as Scott did to thank all of our hard working team members for their continued commitment to our shared purpose of being better together. Turning to the group's performance. F '23 marked the return of relative stability in our operating environment following the material disruption from COVID in prior years. This increased stability, nonrecurrence of COVID-related costs incurred in the prior year and the realization of benefits from strategic investments led to strong financial outcomes for the group during the year. Customer shopping patterns continue to normalize with customers coming back into stores more often and shopping more on weak nights and weekends. However, the growing demand for convenience continues unabated, evidenced by e-commerce sales returning to strong growth in the second half of F '23 and continuing into Q1 of the current financial year. While overall demand remained resilient through F '23 and in F '24 to date, customers are becoming more careful in their spending, particularly are saver families and young singles and couples. We recognize the impact inflation and cost of living pressure is having on household budgets for both our customers and our team and providing value to all of our customers remains a key priority. Yesterday, we released our sales results for the first quarter of F '24. Group sales increased by 5.3% to $17.2 billion, primarily driven by our Australian Food business. We are also pleased with the continued strength in e-commerce with group e-commerce sales up 16% to $2 billion in Q1. Importantly for customers, we saw a moderation in inflation in our food businesses in Q1. In Australia, the moderation in inflation has been offset by higher item growth, whereas in New Zealand, item growth continues to be more challenged. For New Zealand Food, as we foreshadowed in August, the challenging economic environment and the competitive landscape means that the short-term outlook for the business remains uncertain. While it is still early days, the transformation of the business announced in July is progressing well, with new pricing mechanics launched late in the quarter, showing positive early traction. BIG W sales declined by 5.5% in the prior year with a modest improvement in trend in the latter part of the quarter. While customers continue to be cautious and are trading down within BIG W categories, we're seeing solid growth in summer clothing and in opening price point products that offer real value. The Christmas trading period will be a key to determining the success of the half for BIG W. I'm confident in the strong plans we have for Christmas across the group, and I hope you continue to choose Woolworths Group for all of your needs over the festive season. Turning now to the strategic highlights for the year. We made good progress in our group strategic agenda in F '23 to create value for all of our stakeholders. This can only be achieved if we live our purpose and stay true to our core values. We continued to receive strong external endorsement of our efforts with Woolworths been named the Most Trusted Brand by Roy Morgan and the Most Valuable Brand by Brand Finance in F '23. And indeed, it was my great pleasure last night to attend Roy Morgan again and receive on behalf of our hardworking team. The award is for the Most Trusted Brand again in Australia for F '24, and that's -- thanks to all the amazing work of our team. Customers remain at the center of our strategy, and our customer metrics were broadly stable in F '23 despite a number of external challenges. Pleasingly, stores measure where the customers felt cared for and our group remain the highest customer metrics in every part of the group. Our latest Voice of Team survey has seen team scores improve on previous results, particularly for store teams with an advocacy score of 17 compared to 8 in F '22. This reflects higher scores relating to psychological health, safety and well-being recognition and taking action on team feedback. We've continued to invest in our Australian and New Zealand supermarkets with 22 new stores and 55 renewals completed in the year. Tailoring our stores to the needs of individual communities is also progressing well with our core value and up store segmentation. And at the end of F '23, categories that account for half of Woolworths supermarket sales had undergone range curation. To meet the need -- the demand for convenience, we have continued to expand and evolve our e-commerce offer. We believe that customers will increasingly demand ever greater levels of convenience. And at the end of F '23, over 80% of e-commerce orders were fulfilled within 24 hours of order and 40% were same day. We have also seen increasingly -- increasing focus on delivering better digital customer experiences, average weekly traffic to digital platforms and F '23 increased by 16.3% and weekly average visits to our Woolworths' Everyday Rewards websites and apps reached 17.5 million customers in Q1. Another area of progress in recent years has been the strength of the retail platforms we are building across the group. Our supply chain transformation continues to progress as planned with our fully automated Melbourne South Regional Distribution Center now delivering 2.4 million cartons per week and our new facilities in Moorebank, Sydney progressing to plan. Our retail media business, Cartology, continues to grow strongly with sales growth of 29% in F '23. And VIC, the group's data and analytics platform, has leveraged its impact across the group with over 30 high-impact use cases now turned into platform solutions. In general merchandise, a strong third-party marketplace offering has become a key part of the digital customer experience. To accelerate our capabilities in this area, we completed the acquisition of MyDeal in September 2022 and are well progressed in leveraging these capabilities, in particular with BIG W. In December last year, we announced our proposed investment in Petstock Group. It remains subject to ACCC approval, and we remain committed to working with the founders to complete the proposed acquisition. We progressed a number of key initiatives in the year as we marked the halfway point of our 2025 sustainability plan. In F '23, Woolworths Group was recognized once again for our efforts on inclusion and belonging achieving platinum status from the Australian Workplace Equality Index. As an employer of over 200,000 team members and a company that operates in most communities in Australia or New Zealand, inclusion and belonging are critically important. This includes our commitment to meaningful progress towards reconciliation with Indigenous Australians. We are proud to be one of Australia's largest employees of First Nations people, and we are committed to creating sustainable careers for them within our group. Woolworths Group also has the benefit of establishing and empowering our own Indigenous voice via our First Nations Advisory Board. For the recent referendum, we respected our team members' individual views and our approach as an organization was to educate and show care for all leaders and team. We donated approximately $1.5 million to AICR, Uluru Dialogues and uphold and recognized to specifically support education on this important issue. Our reconciliation journey began long ago and we remain committed to actively contributing through listening and learning and empowering the diverse voices within our group to continue to work better together for a better tomorrow. As part of our progress against our planet sustainability pillar, efforts to reduce our Scope 1 and 2 emissions in F '23 resulted in a 36% reduction from our baseline, and we announced our commitment to a fully electric home delivery fleet by 2030. We also achieved an important milestone with the removable of reusable plastic bags nationwide, which at the end of the phaseout equates to approximately 350 million fewer reusable plastic bags annually, and you need to combine this with a 3.2 million single-use plastic bags that have been taken out of circulation. On the product side, we are proud to retain the title of Healthiest own Brand for the fourth year in a row, and it is great to see our customers continue to embrace our free food for kids with 300 million pieces of food shared in F '23. Finally, we are very disappointed with the suspension of the REDcycle soft plastics recyclable -- recycling program in November of last year after it came to light that the company had been stockpiling due to insufficient processing capacity. Over the last 6 months, Woolworths has been working as part of the Soft Plastics Taskforce to identify potential processing arrangements for the existing stockpiles, and we are carefully working through the necessary steps in order to restart an in-store collection program in a responsible manner. We will continue to invest in areas that align with our purpose and where we believe our scale and reach can have a beneficial impact on communities. Turning to our focus areas for F '24. Looking ahead, I'm energized by the plans we have in place to evolve and grow Woolworths Group for the better. The strong year we had in F '23 would not have been possible without the tremendous efforts of our team. In July 23, we increased the retail wage paid to our store teams in Australia by 5.75% and by 7% for our New Zealand store teams. We're also focused on further enhancing team benefits by our Everyday Rewards plus membership. This in conjunction with our plans to deliver meaningful hours and careers through multiskilling and cross-store working, which was recently rolled out to all team members. In July of this year we announced our plans to strengthen our trans-Tasman connections and accelerate the transformation of our New Zealand business. To date, we have already rebranded 15 source to Woolworths New Zealand from [ Kaitangata ]. And contrary to some press reporting, the rebranding is a small component of the overall NZD 400 million we intend investing in New Zealand over the next 3 years. As part of this investment, we will roll out Everyday Rewards early next year in New Zealand and materially improve our fresh offer through the commissioning of our Christchurch Fresh DC in 2024 to improve our overall customer experience. And finally, investing to make sure our customers get their Woolies Worth remains a key priority, and we will continue to provide a number of ways to help our customers spend less on their shopping. This includes our seasonal prices drop programs with our latest prices drop for spring and next week, prices dropped for Christmas and summer coming out, which was -- we look forward to as well as in conjunction with that, a critically important low price you can rely on program, focused on our own brands and in addition to this, our thousands of weekly specials. We have also continued to invest in our own brands to deliver new and affordable products that provide great choice for our customers with having to compromise on quality. Everyday Rewards members are increasingly looking for more ways to save through member boosts and bank for Christmas. And we have recently launched member pricing to add to the way our members can realize even more value. BIG W has also played a key role in delivering value for our customers with great prices and specials, particularly for key events, such as back-to-school, annual tour sale, Halloween in a few days' time and the festive season ahead. In 2024, we will celebrate our centenary. And as we reflect on our first 100 years, and it's a pleasure to actually welcome Roger Corbett, one of the great CEOs of Woolworths, who was pivotal in that 100 years, and look forward to the next chapter. We are united and galvanized by our shared purpose of being better together. In closing, I want to say thank you to all of our shareholders for supporting Woolworths Group and helping us create better experiences in F '23 for today and for a better tomorrow. And I will now hand back to Scott. Thank you, everyone.

Thank you, Brad. 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, and will be voted on by poll, which is now open. As set out in the Notice of Meeting, I intend to vote all open proxies in favor of each resolution. Our share registry, Link Market Services, will act as returning officer for the poll. All resolutions to be voted on are supported by your Board. Before moving to the resolutions, ahead of today's meeting, we received a number of questions about the referendum and about Woolworths Group support for the Uluru Statement from the Heart. I know Brad has spoken to this in his address. From the outset, I want to express my thanks to all of our team members. In the lead up to the referendum, we asked all of our Australian leaders and team members to listen and learn to inform themselves and to be respectful of others' views on this issue. We have always seen reconciliation as an important element of a wider commitment to being an inclusive organization, consistent with our purpose of creating better experiences together for a better tomorrow. We know our team believes Woolworths Group is a better place when it is a more inclusive place. However, we were very clear with our team that each individual should vote on the referendum as they saw fit. The group has supported the aspirations set out in the Uluru Statement from the Heart since 2019. In 2021, the group established our own Indigenous voice via the First Nations Advisory Board and we now have firsthand experience of the positive impact, First Nation's voices and advice can have on our decision-making. And the lead up to the referendum, the group donated $1.55 million across various groups supporting the proposition for educational purposes, to help people understand the proposition and the referendum process. These donations will be declared to the AEC in due course. The investment was led by management with the consultation and support from the Board. As Australia's largest employer, and as the largest employer of First Nations Peoples, with a unique presence in remote and regional communities, we have the opportunity in the ordinary course of our business to have a positive impact on these communities. We believe it's the right thing to do for our team as well as the Australian communities we serve our business and so you, our shareholders. We embodied these ambitions in our latest reconciliation action plan launched in May this year, a copy of which can be found on our website. Unreservedly, Woolworths Group remains committed to reconciliation, and we'll continue to work in close partnership with First Nations peoples and communities across Australia to do so. The first item of business is to receive the financial report and the reports of the directors and of the external auditor for the year ended 25 June 2023. There is no vote on this item. A copy of these statements and reports was published in the 2023 Annual Report and sent to those shareholders who requested copies. Shareholders have also had the opportunity to view the statements and reports, including the 2023 Sustainability Report on our website. I now invite comments or questions on the financial statements and reports. All questions to the auditor should, in the first instance, be addressed to me as Chair. And if appropriate, I will ask Tom Imbesi to address the meeting, and I may also call upon Brad and Steve Harrison to answer questions of a more detailed nature. I will firstly deal with questions from the floor and then questions submitted online during the meeting. Are there any questions in the room?

Mr. Chair, I would like to introduce Natasha Lee.

And firstly, I'd like to thank the Board on their performance over the year. My question concerns interest on borrowings. I note that the overall level of borrowing short term and noncurrent actually decreased, but there was a significant increase in the interest on borrowings from $77 million to $169 million. Whilst I appreciate interest rates have gone up, they don't seem to have gone up that much. Can you give a more detailed explanation for the increase.

Can I introduce you to Mr. Steve Harrison, our CFO, who's prepped to answer that question.

The increase in interest is a function of 2 things: One, an increase in average borrowing across the year. So while we finished the year with lower borrowings, actually, across the year, we had higher average borrowings. And the second driver is that increase in interest rates. We have a mix of roughly 40% of our interest rates are fixed and 60% are floating. And so with the increase in variable interest rates and floating interest rates, we ended up with a high interest cost through the function of those 2 reasons.

But shouldn't the fixed ones be at a lower rate?

They stayed at the same rate for the period, but it's the variable rates that's driving the interest.

Chair, I'd like to introduce Mr. [ Dudi Jeff ].

I've got 3 questions, but I'll ask my first 2. First question is, I can't see anywhere in the Annual Report about the Voice of Supplier. What happened to that? And second question is, it's a bit alarming what Mr. Banducci has said about the spend about the physical aggression in the client. With regards to that, would investing in discounts help reduce the physical aggression that Woolworths face in high-risk areas?

Okay. Let me -- I'll give you an answer of the question. I'll also pass on to Brad. I'm sure he can provide some more detail. The Voice of Supplier is alive and well. Woolworths, again, has been rated the #1 supplier by our suppliers for, I think, about the third or fourth year running through the Advantage survey. It's something that the Board takes very seriously as another metric about the underlying health and performance of the company. But I don't know, Brad, if you wanted to add any further detail.

I think it's a great question because we're always trying to balance the right thing for the customer, the supplier, the team and our shareholders. Actually, in the year, Scott rightly said, Woolworths supermarkets was the #1 on Advantage survey, and it's actually extended its level of advocacy, which is a remarkable achievement given some of the really challenging conversations we're increasingly needed to have given the cost of living pressures were under. But I call out a dramatic improvement in New Zealand, which actually made a major step up in BIG W as well, which I think is also #1 in the segment as I speak today. So, really nice improvement across the group. A really key issue for us, because we do need to keep an eye on particular small suppliers, and we've got some good feedback from the code arbiter in Australia, Mr. Chris left us on ways in which we can do a better job for the smaller suppliers. In regards to aggression, it just feels like a disilane in society, to be honest. We accept our people are under pressure, but respect is fundamental to the whole way we need to engage. And -- so I think it's unfortunately a bit broader than if we invested more in price, which we are trying to do there, just seems to be some disilane. And it's a very comfortable moment for us as a group at Woolworths because we really are customer-centric. It's our grand obsession to do everything for our customers to ask our customers to treat us with respect to something -- it's taken us a long time to come to the point of same because of the DNA of Woolworths. But unfortunately, with the number of incidents, we feel compelled at this point to say that. And the key issue there is to how we keep the team safe through various measures. And I don't think we can invest enough to keep the team safe. So that's more where the investment is, unfortunately.

And hopefully, you also port -- the referendum did play in some part in helping keeping the team safe as well.

Chair, I would like to introduce [ Michael Stack ], please.

Two related questions. The first one is to the auditors. Has anyone at the audit team work for PwC in the past 10 years because it relates to the probity of the orbit it boarded. And secondly, in the first quarter results of this financial year which were presented, why it was 14 weeks included in the results for a quarter, which is 13 weeks, if I do my sums correctly.

Yes, right. I will ask Mr. Tom Imbesi to comment on the first point. But I would -- what I would say shareholder is the Board is entirely satisfied through external review and our own rigorous review of the performance of the auditor as to the quality of the team. We've been very well served by Deloitte Touche for a period of time. But I will give him the opportunity to respond to your question. And then maybe, Steve, you can just comment on the weeks per quarter, which does vary according to the calendar. Tom?

Thank you for the question. I'm not sure that I can give you a response back to the period of time that you've requested. What I can say is 2 things. One, I'm not aware of anyone on our team that has come from PwC. Equally, I would say to you that whilst PwC have substantial challenges relating to certain parts of their business, I would also state that there are many, many very, very high-quality professionals at PwC. And it's regrettable what they're going through. But equally, I'm not sure that it's appropriate to taint all of the people that may have previously worked or currently work in fact, at PwC with some of the unique challenges or specific challenges that they're going through at the moment.

Well spoken, Tom. Thank you for that. Steve?

Yes. So we run a weekly operating rhythm as a retailer. And so our quarters are a series of weeks and our months are either a 4-week or a 5-week month away our reporting calendars work. And so the first quarter is always 14 weeks. And so we've reported on a comparable basis year-on-year.

Chair, I'd like to introduce Donald Adams.

I'm Donald Adams. I am standing as an individual shareholder today and not in my former capacity as a representative of the Australian Shareholders' Association. Last week, Endeavour announced that even if Bruce Mathieson Jnr has voted off the Endeavour Board, there should be a representative for the BMG Group on the Board. I said nothing about Woolworths. Even though you have a 9.1% shareholding and about $600 million in related party transactions. Why isn't there a Woolworths representative on the Endeavour Board? And will you vote to elect Bruce Mathieson Jnr to the Endeavour Board?

Thank you for your question. Woolworths has never had a director on the Endeavour Board. When we demerged, it was a Woolworths representative. It was one common member for a period of time, our Director Holly Kramer. When we demerged Endeavour, we wanted to give both companies the independent opportunity to go and pursue their own growth strategies and realize their full potential. So we never felt that the shareholding at the time needed to have a formal and long-term link back to Woolworths Group. It was in the nature of a transitional shareholding. And since then, it has been slow down now to a little over 9%. But as you rightly say, still an important investment for the group and one that we obviously take an active interest in. Those trend -- the contractual arrangements we have with Woolworths are also important to the company. They are on arm's length basis. They are also, other than our rewards relationship, we have BWS in the nature of transitional to support as EDG was demerged and as they go on to pursue their independent life.

What about the voting for Bruce Mathieson Jnr at the [ AGM ]?

Yes. We announced yesterday in our Q1 results that we felt the most appropriate exercise of our votes which to support the Board of the company to resolve these matters and accordingly have given our proxy to the Chairman of Endeavour Group to bring about that fact.

Chair, I would like to introduce Jade Marks.

Hello. I'm a shareholder. And I'd just like to talk about the upcoming drought. Have you made any provisions for that? It's just that my parents came from the land and water is so important. Have you made any provisions or anything like that? Because it seems like we're going to go into a long drought again.

Shareholder, that's a brilliantly good question. Yes, we have. We certainly hope that, obviously, the predictions of a very challenging summer and the increased fire risk doesn't present itself, but we do need to be prepared. And so at an operational level, we are building stocks -- say higher levels of stocks in stores that we might think might be exposed to extreme weather events. We've also -- through at one level, our sustainability committee done some long-term thinking on physical asset resilience of our network. And also at a more day-to-day level through the property and Willys 360 teams, ensuring that our stores have got a little bit more operating flexibility to cope with quite unpredictable operating conditions. So your question is absolutely spot on. I think Woolworths, if we look back through floods and fires, Woolworths has done an incredible job at managing to solve seemingly impossible supply chain issues to make sure our stores and remote or vulnerable communities have got adequate amounts of stock to meet customer needs in difficult conditions. So thank you for your question.

If I could add just on our investments. We've tried to expand some of our key DCs because of our exposure. So you'll see a regional distribution center in Western Australia, as we've expanded it just given the challenges of getting product across the Nullarbor and the challenges that moved there, and we've done the same up in Townsville. And then sort of credit secondary staging points as well. We're worried about the drought. And of course, unfortunately, the fires, and we've started to see individual incidences of that already. So we're all nervous about what lies ahead. But hopefully well planned.

Chair, I'd like to introduce Roger Corbett.

For those of you who don't know ladies and gentleman, Roger, and I think probably everybody does, Roger was the former CEO of Woolworths. So it's a pleasure having you at the meeting, Roger.

Thank you, Scott. Congratulations Chairman on your appointment as Chair and your excellent speech today. And to Brad, your period of time as Chief Executive, what an impact you've made on this company and your great belief in being a caring company. I'm sure it's an inspirational to everyone in Australia, including your proud shareholders. Thank you very much. I've made a practice -- studied practice of never critiquing my successes except to say good things that I've just said. There's nothing worse than a Chief Executive that feels he is an ongoing expert. We all have our time and my time has been. And Brad and his team have done, in my view, a superb job in this company. Some -- number of years ago, Mr. Chairman, your Board recommended the divestment of the ALH assets on the basis along with many BWS stores, the new entity endeavored reach would be a much better way to manage these specialist assets. A good lead time has gone by for that to avenge and the shares have dropped 40%. That is by any major, a serious and significant drop. We've heard Bruce Mathieson, the expert in pubs, so the pubs are not being well managed. I think we might assume that he might be Australia's expert in that field. And sir, I have been bold enough and not in the Woolworths context, which I won't do as I said, but in an Endeavour context to say that in my view, the bottle shops or the retail outlets have completely lost their merger. The shares are down 40%. The comp stores, which is one of the most important measurements in retailing is 0 or less and the market share is slipping. So your Board have chosen to support the status quo. I think your shareholders are entitled to know the reason you chose that because the [ status quo ] is so bad. Woolworths has lost circa $200 million on its investment. And I think I might be in copy with a lot of us here that are those Woolworths shareholders and Endeavour shareholders, and we so have lost a lot of money. What are the circumstances? How much worse does it need to get than a 40% reduction in the share price for Woolworths to use its 9% to protect its own investment, but lesser our investment that we have made on your recommendation.

So I think there are some respectful boundaries that I want to observe and -- but give Roger's a very good question, a proper answer. Those respectful boundaries are: This is a Woolworths Annual General Meeting not an Endeavour Group Annual General Meeting. The second boundary is, I absolutely acknowledge as does the Board, we retain a significant investment in Endeavour. It's many hundreds of millions of dollars. And I want to assure you that as a shareholder, we have -- we get a great deal of review. It's a topic of absolute focus for the Board to ensure that we are the best possible custodians of your money in terms of that investment. It does not give us any pleasure at all to see the public matters that have spilled out into the media in respect of Endeavour Group. And our view going forward is that we sincerely hope that the Board of Endeavour Group can resolve these issues and get back to business, creating value for all its shareholders, including us as Woolworths Group. Nonetheless, I don't think it's appropriate for me to dissect the Endeavour Group strategy at this Annual General Meeting. I am prepared as I have been with all members of the Mathieson family to communicate with them. I have met in person with Mr. Wavish and listened to his plans for the company. We have considered this carefully at the Board. Brad and the management team have had multiple opportunities as a large shareholder to communicate with the Endeavour management team. And putting all of that together, we continue to believe that appropriate action was to support the Board, but with a clear message that there is work to do and that we obviously look forward to a return in performance from our investment. So your point is well made. It's absolutely on our agenda. But with respect, I'm not going to enter into the debate around the Endeavour strategy at this Board meeting. Thank you, shareholder.

Chair, I'd like to introduce Daniel Chan.

I have just one single question, Mr. Chairman. Does Woolworths employ foreign students for cash over because a lot of foreign students come over here with great expenses, some of them are financially strapped.

We most certainly do, and I'll pass it over to Brad to give some more detail.

There are caps in the number of our foreign students can work. But we certainly do. We are very focused on actually providing great jobs for youth, whether it's -- as they are slit school or in university, and we think that's one of the key roles we play, that includes foreign students. There are caps on the number of hours that they're allowed to work. So we've got to be very vigilant on those, but they're amongst our hardest working team members. So yes, we certainly do and intend to do that going forward.

Mr. Chair, I would like to introduce shareholder, [ Alan Rickman ].

Look, I hope to keep my question briefer than [indiscernible]. It's to do with the $1.55 million spend on Indigenous education. Could you tell the meeting what proportion of that was spent on disadvantaged on original community, signal mode and regional areas. And what sort of accountability feedback you had from the expenditure on those plans?

Yes. The $1.55 million was split between 3 separate First Nations organizations that we chose to achieve our primary objectives, which were education to actually lift understanding in the broader community to enable people to make a more informed choices. That included Australians for indigenous constitutional reform that got about $1.25 million of the $1.55 million donation. And we left it to them to actually prioritize the expense of those according to the objectives that we set and the conditions we set. We have been in active dialogue and communication with them to ensure that those monies were spent in the way we had intended in the best possible fashion. But ultimately we trusted them to do the right job.

Scott just add, we do have other investments we place into disadvantaged communities, primarily through Australian grocery wholesalers to provide affordable fresh food, and we work very closely with the local retailers in those communities to do that. And then the big investment is education employment and trying to really help provide opportunities for employment. So that's the primary focus outside of that on disadvantaged communities.

Chair, I would like to introduce shareholder [indiscernible].

It's more to comments. And one, I was just going to make a comment about the one, COVID has changed everything I'd normally be trucking around with my [ dozen ] taking a bottle with me and going out. But now we meet out and only about 4 of you so, you're not socializing like you once did, but I get a dozen for Christmas. Then the other thing was, it's just curious, in the presentation, I was interested where the -- it's probably in the report, where the Woolworths was in New Zealand. And I would -- and also Southeast of Melbourne. And if you just put a map up on there and put where a few of them are, it's probably silly, but it's -- it meets -- and where you're expanding a map and it's easier because you're looking at places and you haven't clue where they are.

Shareholder, I would encourage you with your dozen to join -- put with that one of our brilliant new Christmas puddings that are coming out. We tried them all as a Board the other day. They're going to be fantastic. So enjoy. Have a happy Christmas with those, please. And we'll take on board your feedback about the store map.

BWS, I live next to Woolworths, I've moved house. I'm going to get a fridge for the [indiscernible].

Chair, I'd like to introduce Dudi Jeff.

I've got 2 questions. First question is in regards to water management, there's nothing in the annual water management. There's nothing in the annual report that reads water management, even though I feel that's the most important part of ESG. It's just an extension to the lady in the green that asked about our drought situation, just an extension upon that. And also this second question is in regards to Page 19. I do support the referendum and First Nations. Also, is there any way that you support First Nations entrepreneurship as well?

Two very good questions. I'll pass on to Brad. And maybe even Alex Holt, our Chief Sustainability Officer, to add any more details on the waterfront, but it's absolutely front of mind.

I think it's just a great question. We actually are working at a store level and trying to find ways to reduce water usage [indiscernible] out in the last drought. It's hard to believe we are again on 4 years since the terrible bushfires that happened. So we will provide more information on that. And things like [indiscernible] in a whole range of ways we use water. We don't anymore. So I think it's a great question, and we will report going forward, but it's very much on our mind. So thank you on that.

And on First Nations entrepreneurship, we're the largest employer of First Nations people in the country. And the best possible start for entrepreneurship is to get a job and a job it will ease with the training environment, the support, the exposure to everything from day-to-day retailing through all the technology that these days is increasingly defining contemporary retail. That is, I think, a brilliant start to an entrepreneurial career, and we certainly hope that we'll celebrate indigenous entrepreneurship going forward.

Chair, I would like to reintroduce shareholder, Natasha Lee.

I note that the BIG W Group seems to be a bit of a laggard within the company. I understand that some of the challenges are to do with cost of living and pressures, which households are facing. I suppose from my own personal experience, our household hasn't actually shopped at BIG W for a number of years because we've basically boycotted it because what we found is that we could never find or get the things which were in the catalog. I think going back, maybe it was trying to be too many things, too many -- too widened audience like you had like 50, 70 page catalogs and the stores don't necessarily stock all those items. So it's sort of like this enticement or go buy that, but when you get there, you can't find it or it never existed in that store. So I think to -- I'd like to know what sort of measures you're taking to sort of win back that loyalty and take on board the feedback that's maybe a smaller catalog, where you can actually pretty much provide the stock to the stores given that you've got a huge network of stores.

Natasha, it's time you went back to BW and there's a great store up in near town hall above the supermarket, which is very close to you -- you too go and have a look. BIG W is a dramatically different business to what it was even 2 or 3 years ago. So we actually have got a great deal of optimism about the potential for BIG W. Not only as a stand-alone business, yes, admittedly, the general merchandise category is more challenged through online competition. But as part of the Woolworths Group, we're seeing very exciting trends as to the way our connected customers, how Everyday Rewards members are actually trading in the BIG W and getting that refreshed experience. It's a very different store in terms of its customer value proposition. Yes, in recent times it has been at the forefront of some trading down. But if you look over the arc of time, 3-year growth rates, the development of our e-commerce business, changes we've made to format, a lot of fixing the basics that are still in progress, but with we think considerable opportunity and then the marketplace businesses, we're building in and around BIG W, we think it makes for quite an exciting future. So don't give up hope. Go and try us again, and hopefully, we'll win you back.

Yes. I think that sort of reflects what I'm saying is that you discourage customers at one point and sorry, hard to entitle back. But I have seen the Woolworths, the BIG W -- the Woolworths store here. So I might give a try.

Good. Let us know.

Chair, I would like to introduce shareholder, Peter Shilton.

Mr. Chairman as a frequent visit to Woolworths stores, I can't help but notice the large amount of refrigeration, freezers, et cetera, which is in every store and also in the warehouses. Could you tell me or cut the question short, but to say, how much do you pay here in electricity costs? And how much has that increased over the last 2 years?

So it's an excellent question on a number of different dimensions. Woolworths is one of the largest electricity consumers in the country where I think close to 1.5% of total demand. We're a very large energy consumer. As we've detailed in our sustainability report, I think the team has done a tremendous job at getting ahead of the renewable energy megatrend that we're in the living in the middle of and starting the decarbonization journey, which has been to the bit to our benefit in terms of cost. We are on track to 2025 fully renewable energy in our stores. And the good start that we've made, 100% in South Australia, line of sight 100% New South Wales with plans in the rest of the states. I think will stand us in good stead to actually weather the more volatile energy world that we're living in. In terms of refrigeration, you're absolutely right. It's a significant source of emissions for us. And we have, over the last recent years, been implementing transcritical refrigeration solutions as part of broader renewals. It's an expensive solution and we are refining it. But we think it's got great promise to reduce completely the emissions from our refrigeration fleet. So you'll be hearing more about that in the years to come. Thank you for your question.

Chair, I'd like to introduce shareholder, Tony Brain.