Okay. Good morning, and welcome to the 2023 annual general meeting of Breville Group Limited. My name is Tim Antonie, I'm the chair of the company. As it is now 10:00 A.M. and a quorum is present, I declare the meeting open. I would like to begin by acknowledging and paying respects to the traditional custodians of the land on which we work and to their elders, past and present, and we further extend that respect to all Aboriginal and Torres Strait Islanders present here today. We celebrate the continuing contribution of their food and culture and seek to support it in Australia and the world. I would now like to introduce your board of directors and other attendees. I'm joined at the table from my far right by Peter Cowan.
Morning.
Sally Herman.
Hi.
Dean Howell. Morning. Our Managing Director and CEO, Jim Clayton, and on my left, our Deputy Chair, Lawrence Myers. Morning. Kate Wright, and our Group CFO, Martin Nicholas. Tim Baxter is present but joins us virtually from the United States, and our new director, Tuula Rytilä, is present but also joins us virtually from Finland. So, thanks. It's one A.M. in Finland at the moment, so thank you. Also joining us today are Craig Robinson and Sasha Kitto, our joint company secretaries, and Ace Chandra, our partner from PwC. Today, we have 6 items of formal business: the receipt and consideration of the 2023 annual report, the adoption of the remuneration report, the re-election and election of non-executive directors Dean Howell, Tuula Rytilä, and myself, and the grant of rights to our Managing Director and CEO, Jim Clayton.
Before we turn to the formal business of the meeting, Jim Clayton and I would like to take the opportunity to discuss the 2023 financial year and recent performance. We are happy to take any questions on the presentations when we consider the 2023 annual report. The 2023 financial year was again a record year for BRG, with revenues approaching AUD 1.5 billion and EBIT of AUD 172 million. This was achieved against a challenging and a dynamic trading environment, with a subdued consumer, inflationary headwinds, a strong denominator, and retailer destocking. Over the past five years, revenue has grown at a compound average growth rate of 17.8% per annum.
EBIT has also grown at an impressive compound average growth rate per annum of 14.6%, while increasing our spend in our investment drivers of R&D, marketing, and technology services by 19.5% over the same period. Our global product segment grew by 19.6% per annum across the five years, and our geographical expansion and diversification accelerated, with almost 78% of BRG sales outside APAC in FY 2023, up from 73% five years ago. With more moderate revenue growth in FY 2023, gross margins were managed well, demonstrating the pricing power of our premium products, and expenses were moderated. BRG maintained its investment in R&D, marketing, and technology, ensuring that market-facing activities such as advertising and content creation were kept largely flat year over year. The successful execution of these combined efforts enabled us to deliver 10% EBIT growth.
Net profit after tax increased by 4.2% to AUD 110.2 million. Earnings per share increased by 1.7% to AUD 0.772, and in line with the board's target payout ratio of 40% of EPS, dividends per share also increased by 1.7% to AUD 0.305. BRG is well positioned to the further growth in FY 2024, supported by a number of strategic initiatives, which Jim will discuss in his address today. Our balance sheet remains very strong, with net debt to EBITDA of 0.6 times at 30 June 2023. With the operational impacts of COVID-19 now behind us, we plan to continue to reduce our inventories throughout FY 2024, particularly in the second half, resulting in substantially enhanced cash inflows.
BRG recently has made good progress on its sustainability and diversity goals and has set clear objectives for the coming years. I encourage you to read our annual report for more detail. On behalf of the board, I would like to congratulate our CEO, Jim Clayton, our executives, and our global team for their ability to deliver record results in FY 2023, while continuing to make pivotal strategic decisions and investments to position us for further growth in the coming years. I welcome Tuula to the board and thank my fellow directors for their diligence. I would like to thank our shareholders, customers, retail partners, and suppliers for their continued support. We look forward to sharing the exciting times ahead with you. I will now hand over to Jim.
Thank you, Tim, and good morning to everyone joining the AGM. Today, I'll walk you through our FY 2023 year-end results, give a brief update on the first half of 2024, and finish with some concluding remarks. Given we presented these results back in August, I'll hit the highlights. As with many other verticals, FY 2023 was a challenging period for the small domestic appliance vertical. Despite the headwinds, we delivered 4.2% top-line growth and 10% EBIT growth. While I'd prefer to grow more quickly, FY 2023 did present an opportunity to show how our annual management processes work in a deceleration scenario. Typically, we have the business tilted forward, with revenue growing faster than EBIT, enabling us to further increase our investment in marketing, R&D, and technology services. In FY 2023, however, we were able to show this door swings both ways.
We can also grow EBIT faster than revenue to protect shareholders from the headwinds. Across all the public companies that I track around the world in our vertical and similar verticals, I didn't find another instance where a company successfully executed this inversion. Looking at our segment performance, we saw deceleration in the global segment, delivering 4.1% growth in constant currency, and a shortfall in the distribution segment caused by a bumpy product range transition with Nespresso, as well as the bankruptcy of Bed Bath & Beyond in the second half of FY 2023. The good news is the distribution segment represents a fairly small percent of total at the gross profit line, though we expect it to stabilize in FY 2024. Across the theaters, we were fortunate that both sell-in and sell-out remained positive.
The Americas continued to deliver a solid performance, despite having to absorb the bankruptcy of Bed Bath & Beyond in the second half. EMEA had a pretty turbulent year for sell-in, -22% in the first half and +37% in the second half. Sell-out performance was solid and consistent in both halves, so all the noise was retailer driven. APAC was steady across both halves, with Korea performing well. The EBIT waterfall slide gives a graphical depiction of how we were able to grow EBIT more quickly than revenue. We used our incremental gross profit and a bit of marketing expense to cover the increased cost coming from the annualization of the FY 2022 hires and geographic expansion, while keeping other costs flat. The reduction in marketing expense did not come from customer-facing spend.
Instead, reductions in the go-to-market platform spend came from the core solution platforms transitioning from their build phase to the run phase, which is less expensive. Across the balance sheet, there were two primary changes. First, the increase in receivables. In the second half of last year, retailers in EMEA were not buying. This year, we had a more normal second half. This is showing as an increase over the prior year, but really, it's a more typical end-of-year receivables number. The second is the acquisition of Lelit, playing through the numbers from inventory to goodwill and brands. I've included an updated version of the acceleration scorecard. I'll only comment that while the strategy continues to deliver a nice long-term trajectory, the backdrop hidden within FY 2018 through FY 2023 is pretty remarkable.
Brexit, Trump tariffs, COVID, the Ukraine war, retailer bankruptcies, a volatile and weak Aussie dollar, and central banks around the world trying to force a recession. With this context, the fairly steady, boring progression of the numbers is the true highlight. I'll now give you an update on the first half of 2024. The Breville Plus service is now live in the US. This service helps our customers get great results with our cooking products. Instead of talking about it, I'd like to show you the launch video, which does a great job of explaining the benefits of the service.
Okay, see you then. Should I really be cooking a new recipe for so many people? Open a world of instant mastery with Breville Plus, and discover over 1,000 guided recipes from leading experts, tailored to your Breville oven. Plus, cook guides, which help you turn common fridge ingredients into delicious, quick meals. Plus, live and on-demand classes from talented chefs and cooks- Crispy on the outside, fluffy on the inside. -showing easy ways to air fry, roast, and more. And it's all tested and tuned to your Breville oven. So you get perfect meals, first time, every time. Enjoy the confidence of cooking with Breville Plus.
So in addition to Breville Plus, we've also launched our Specialty Coffee Bundle solution in the first half of 2024 in the US, the UK, and Australia. Through the bundle, we've created a compelling case for our customers to get everything they need for cafe quality at home: a machine, specialty coffee, and training. What's unique about this program is it's designed to be executed through our retail partners. This is not a promotion. Instead, it's an always-on offering for any Breville coffee machine. We're seeing positive initial results, and we'll continue to iterate and improve the program as we engage with our customers. Next slide. Sorry. Now for a quick update on the first half of 2024. Period to date, it is, as we expected, a challenging backdrop.
Our new products are performing well, and we're getting positive consumer and retailer feedback on both Breville Plus and the Specialty Coffee Bundle. Across the theaters, Americas is performing as expected, with a reminder it has a Bed Bath & Beyond overhang in its first-half denominator. APAC is moving from strength to strength in Asia, with a weaker demand pattern in ANZ, and EMEA is posting solid period-over-period results, though it has a weak denominator. Input cost improvements are flowing through, and our inventory flow model is lining up to drive a working capital release in the second half. Overall, we're still between the goalposts, our low-end and high-end case, so we continue to operate within our FY 2024 parameters. In closing, I'd like to thank every employee at BRG for managing through another challenging year, always having a relentless focus on delivering for our customers.
I'd also like to thank the board for their guidance as we navigate the challenges and opportunities. With that, thank you to everyone for joining us today, and I'll now hand back to Tim for the rest of the agenda.
Thank you, Jim. Before proceeding further, I would like to discuss the procedures I will follow today. I propose calling a poll on each resolution be put forth at this meeting. The final results of the poll will be released to the ASX and will be displayed on the company's website as soon as they are available after the close of the meeting. A representative of our share registry, Boardroom, will act as Returning Officer for the purpose of conducting and determining the results of the poll. Shareholders and proxy holders who are eligible to vote at this meeting have received an orange voting card. During the meeting, I'll advise you when it's time to fill in your voting cards. If you need assistance filling in your voting card, please see the Boardroom staff at the registration desk in the foyer.
Boardroom staff will collect voting cards at the end of the meeting. Shareholders who have a blue card are eligible to speak at the meeting, but are ineligible to vote at the meeting. Guests holding a white card are ineligible to vote or speak at the meeting. If you believe that you have not received the correct card, please see a Boardroom staff member in the foyer. After each item of business has been put to the meeting, I will ask for questions. If you would like to address the meeting on the item of business, please raise your attendance card and I will call on you. Please then identify yourself by name and state whether you are a shareholder or a proxy holder. Does anyone need any more time to register?
Shareholders were sent a copy of the notice of meeting and annual report, or details how to access these documents on 4 October 2023. Unless there are any objections, I will take the notice of meeting as read. Shareholders unable to attend the meeting had the option of appointing a proxy. Before a vote is taken on each resolution, I will display on the screen the total number of valid proxies for that resolution and the manner in which they have been directed. These figures have been determined at 10:00 A.M., Australian Eastern Daylight Time, on Monday, 6th November 2023, which was the closing time for receipt of proxies. I would also like to advise the meeting that all eligible undirected proxies given to the Chair will be voted in favor of those resolutions, and this number will also be displayed on the screen.
I now turn to the first item of business, which is to receive and consider the annual report. It's not a requirement that the annual financial report and reports of the directors and the auditor for the year ended 30 June 2023 be formally adopted. However, all shareholders have had the opportunity to receive and consider them. We will now take questions on the annual report and on the earlier presentations from Jim and myself. Our auditors are also available to answer any questions on the conduct of the audit and the content of the auditor's report. Are there any questions on this item? Thank you. I will now move to item two, the resolution for the adoption of the company's remuneration report. The remuneration report has been made available, provided to shareholders together with the annual report.
I would remind shareholders that the vote on this resolution is advisory only and is not binding on the company. Please note that voting exclusions apply to this resolution as set out in the notice of meeting. Proxies have been lodged in respect of the resolution as displayed on the screen. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the adoption of the remuneration report for the year ended 30 June 2023 be taken. Please fill in your orange voting card in respect of the adoption of the remuneration report. As the next resolution relates to my re-election as a director, I'll hand over to Lawrence Myers, the Deputy Chair and Lead Independent Director of Breville, to manage the proceedings for this resolution.
Thank you, Tim. As Tim indicated, next we have item 3A, the resolution for the re-election of Tim Antonie as a director. I will now invite Tim to address the room and make some brief comments on his re-election.
Okay. Thank you, Lawrence. I feel privileged to offer myself again for re-election of this great company. Breville is truly an Australian success story we all should be very proud of. Having started 91 years ago by Bill O'Brien and Harry Norville, Breville is known globally for its leading innovation and quality. Your board of directors has evolved in recent years and has the necessary skills and experience to govern the company and challenge to support our outstanding executive team, led by Jim Clayton, to continue to deliver sustainable growth. Should I be re-elected, I look forward to my continuing contribution to Breville's next chapter for the benefit of our shareholders, employees, customers, and other stakeholders.
Thanks, Tim. The board, excluding Mr. Antonie, unanimously recommends that shareholders vote in resolution in favor of resolution 3A. Proxies have been lodged in respect of this resolution, as displayed on the screen. Are there any questions on this resolution? As there are no further questions, I now direct that the poll for the re-election of Tim Antonie be taken. Please fill in your orange voting card in respect of the re-election of Tim Antonie. Good.
... Okay, I now move to item 3B, the resolution for the re-election of Dean Howell as a director. I will now invite Dean to address the room and make some brief comments on his re-election.
Thanks, Tim. Good morning, ladies and gentlemen. My name's Dean Howell, and I'm very proud to be standing for re-election to the Board of Breville Group Limited. When I joined Breville Board on 31 March 2008, Breville was operating out of a warehouse in Botany. For the 2008 year, our revenue was approximately AUD 425 million, and our profit before tax was AUD 26 million. Compare that to the year just ended. During my tenure as a board member, there have been a number of challenges and many more successes. In 2009, we had the challenge of the global financial crisis, which caused the 2009 profit before tax to decrease by AUD 10 million or approximately 40%.
A year or so later, we had to see off a takeover attempt by what was then one of our major competitors. Let's look at some of the success stories. We recruited our CEO, Jim Clayton, in 2015. Jim inherited some outstanding senior executives but has added many more since and now leads a world-class team. Prior to Jim's appointment, Australia, New Zealand, and North America were operating as silos. Jim transformed our thinking into a global mindset. Our footprint in the U.K. and Europe has expanded dramatically in recent years, and EMEA now comprises approximately 25% of our total revenue, global revenue. In the last few years, we've made a number of strategic and successful acquisitions, namely ChefSteps, Baratza, and Lelit.
We've started the path to diversifying our global supply chain by commencing the manufacture of a small number of SKUs in Mexico. This is a strategically very important initiative. Ladies and gentlemen, I'm very excited about the future of Breville, and I'm looking forward to making whatever contribution I can to our continued success. Thank you.
Thank you.
Thank you.
Okay, the board, excluding Mr. Howell, unanimously recommends that shareholders vote in favor of Resolution 3B. Proxies have been lodged in respect of this resolution as displayed on the screen. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the re-election of Dean Howell be taken. Please fill in your orange voting card in respect of the re-election of Dean Howell. I now move to item 3C, the resolution for the election of Tuula Rytilä as a director. Tuula will address the room via an audio channel and make some brief comments on her election.
Thank you, Tim, and good morning, fellow shareholders. Hopefully, you can hear me well. I'm sorry I can't be there in person, but thanks to this modern technology, I can join you from Helsinki, Finland. I'm very honored to be considered to continue to serve on the board of Breville. I have been a non-executive director of Breville since April this year. Having spent most of my 30-year career working for multinational technology companies, I'm excited about the opportunity to help Breville continue its global expansion with a globally oriented, diverse board. I'm really impressed with the strong growth of the company over the past decade, as well as how Breville is strengthening its strategy by expanding into solutions.
Having worked in multiple hardware and software integration businesses, both at Nokia and Microsoft, I believe I can offer a perspective on the opportunities and challenges in scaling digital platforms, driving new business model innovation, and building products and solutions that customers love. Jim Clayton and his team have executed this growth and expansion strategy exceptionally well. They also have a very clear vision of full solutions, like the smart ovens with Breville Plus, and a real ecosystem play in the coffee business with a great portfolio of products, coupled with the Beanz Marketplace strategy. Having spent years at Microsoft building Windows and Xbox ecosystems, hopefully will be of value to Breville team as they expand further into ecosystem plays.
I also believe my more recent board experiences, both in publicly and privately held technology and consumer companies, demonstrate strategic and thought leadership skills that would be of value to Breville as well. Thank you for the consideration of my candidacy for the Breville board. Over to you, Tim.
Thanks. Thanks, Tuula. And, having Tuula and Jim join the board in the last 18 months has truly transformed the board to be more of an international board, which is fairly fundamental, given 85% of our sales are outside of Australia. The board, excluding Ms. Rytilä , unanimously recommends that shareholders vote in favor of Resolution 3 C. Proxies have been lodged in respect to this resolution as displayed on the screen. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the election of Tuula Rytilä be taken. Please fill in your orange voting card in respect of the election of Tuula Rytilä . Our final item of business is Item 4, the resolution for the grant of rights to our Managing Director and CEO, Jim Clayton. As part of Mr.
Clayton's annual remuneration package, it's proposed that Mr. Clayton be granted a long-term incentive of 108,474 performance rights with a three-year performance period. The number of performance rights that ultimately vest will depend upon the extent to which the performance conditions are satisfied over the performance period. It is also proposed that Mr. Clayton be granted a total of 43,389 deferred share rights as part of the fixed remuneration component of his employment package for the 2028 financial year. The number of deferred share rights that ultimately vest will depend upon Mr. Clayton completing the service period 26 August 2027 to 25 August 2028.
Full details of how the number of rights to be granted was calculated, together with the terms of each grant, are contained in the notice of meeting. If Resolution Four is passed, the company intends to grant the performance rights and deferred share rights to Mr. Clayton as soon as practical after the AGM. The board, excluding Mr. Clayton, recommends that shareholders vote in favor of Resolution Four. Please note that voting exclusions apply to this resolution as set out in the notice of meeting. Proxies have been lodged in respect to this resolution, as displayed on the screen. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the grant of rights to the Managing Director and CEO be taken. Please fill in your orange voting card in respect of the grant of rights to the Managing Director and CEO.
Before I close today's AGM, I ask everyone to complete their orange voting cards and hand them to a board or a staff member who will collect the cards. Record time. Yeah. Gold star. Gotta get up in 30 minutes. Hurry up.
Any more orange cards in the room? Thank you.
I now declare the poll closed. That concludes the formal business of this year's AGM, and I declare the meeting closed. I would now like to invite everyone to share in morning tea with the board and management team. Thank you.