Good morning, and welcome to the 2026 Annual General Meeting of Breville Group Limited. My name is Tim Antonie, and I'm the Chair of the company. As it's 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 meet, and to their elders past and present. I also extend that respect to all Aboriginal and Torres Strait Islanders present here today. I would now like to introduce your Board of Directors and other attendees. I'm joined at the table from my right by Rob Perry. Welcome, Rob, to your first meeting. Dean Howell, which we'll talk about later, as Dean's retiring.
Sally Herman, our Managing Director and CEO, Jim Clayton, and on my left, our Deputy Chair and Lead Independent Director, Lawrence Myers, Kate Wright, and our Group CFO, Martin Nicholas. Also present and joining us virtually today are my fellow directors, Tim Baxter, who joins us from the United States, and Tuula Rytilä, who joins us from Portugal. Rob is standing for election today, and Tuula and I for re-election. You'll hear from us each shortly. Also with us today are Sasha Kitto and Lux Wigneswaran, our Joint Company Secretaries. Thank you. And Mark Valerio, our independent external audit partner from PwC. Before we move to the formal part of the meeting, Jim and I would like to take the opportunity to discuss the 2026 financial year and recent performance. We are happy to take any questions on our presentations when we consider the 2026 annual report.
The 2026 financial year was another very successful year for BRG Group, despite a continuing uncertain economic backdrop, particularly in the U.S., our major market. FY 2026 delivered record revenue of AUD 1.8 billion, with global product constant currency revenue growth of 9.7%, and budgeted record EBIT of AUD 207 million. Full-year gross margin was 36%, with second-half gross margin strengthening to 36.8%. U.S. net tariff exposure was actively managed in close collaboration with our value chain partners, and the second half improved margin was a beneficiary of the substantial completion of our manufacturing diversification program. Revenue, gross profit, and EBIT have grown every year since FY 2015, a record that has held through a pandemic, geopolitical conflict, global supply chain disruption, evolving competitive dynamics, and most recently, significant upheaval in U.S. trade policy and global supply chains.
Despite the uncertainty coming into the FY 2026 year, we made the calculated decision to continue to increase our investment in our strategic growth drivers. Spend on product development, marketing, solutions, and technology services represented over 90% of the increase in operating expenses, and outpaced sales growth, rising to 14.4% of revenue. NPAT grew by 1.7% in FY 2026, and total dividends per share grew by 2.7% to AUD 0.38 per share, fully franked, consistent with our targeted payout ratio of approximately 40% of earnings per share. FY 2026 again generated strong underlying cash flows. Together with the IEEPA tariff refunds received close to year-end, the group's net cash position was AUD 104.4 million at 30 June 2026. New product development remained a core driver in FY 2026.
Coffee and cooking both delivered double-digit revenue growth, supported by successful product launches across the portfolio, including the Oracle Dual Boiler, the Eye Q Toaster, the Baratza Encore ESP Pro, and the Lelit Mara X. Food preparation recorded single-digit growth. We have also made further progress on our solutions agenda, including the Beanz platform. Retail partnerships performed strongly in FY 2026, including, for example, the strong performance of our 300 store-in-store installations with Best Buy in the United States, and exclusive range releases in our key specialty partners.
The group's newer geographical markets performed exceptionally, with China, Korea, Mexico, and the Middle East collectively growing revenue by over 70% in FY 2026. Substantial progress was also made on the group's AI transformation, with above 50% of employees now in the top tier for amplification. We see significant potential for AI to further enhance productivity and innovation across the group in FY 2027.
The accelerated manufacturing diversification program of 85% of 120-volt gross profit dollars sourced outside of China was impressively achieved on time while maintaining our high-quality standards, further strengthening the group's resilience and optionality. FY 2026 was our first year of mandatory reporting under the new Australian Sustainability Reporting Standards, and we published our first sustainability report under AASB S2.
This built on continued progress across our sustainability agenda, including the ThermoJet expansion and Sustainable Brown Box projects, as well as ongoing oversight of ethical sourcing and labor standards across our manufacturing partners as our diversification program expanded into new locations. As previously announced, Dean Howell will retire from the board at the conclusion of today's AGM. I would like to thank Dean for his stewardship, technical know-how, and commercial acumen over his term, and wish him well. Well done, Dean. We were pleased to recently welcome Rob Perry to the board.
Rob brings significant experience in global risk management, financial accounting, and governance, as well as extensive retail sector expertise, further strengthening the board's collective capabilities. These changes reflect our commitment to maintaining a board with the right mix of skills, experience, tenure, diversity, and independence to provide effective oversight of the BRG Group as the business and operating environment continues to evolve. I would like to thank all our employees around the world, led by Jim Clayton, for their adaptability and ingenuity throughout the year. Their hard work and resilience despite challenging conditions was central to the group's success in FY 2026 and further strengthens our capabilities for sustainable growth. I'd also like to thank my fellow directors for their counsel and contributions. To our shareholders, consumers, retail partners, suppliers, thank you for your continued support. I'll now hand over to Jim.
Thank you, Tim, and good morning to everyone. Today, I'll walk you through our FY 2026 results, touch on new products, new geographies, the AI transformation program, and then give a brief update on the first half of 27. Given we presented these results back in August, I'll focus on the highlights. FY 2026 was a dynamic year with the backdrop of an evolving U.S. trade policy and our manufacturing diversification program. Against this headwind, revenue grew nominally 6.7%, gross profit 5%, and EBIT 1.2%. Underneath these numbers, we could see the core engine is still firing on plan. Direct markets delivered double-digit growth, new geographies moved from strength to strength, the coffee segment grew double digit, and we saw margin improvement in the second half over the first half.
Looking at revenue growth by geographic theater in constant currency, the global product segment grew 9.7%, with the coffee category delivering double-digit growth. In EMEA and APAC, we experienced some cyclicality in our distributor-led markets, while our direct markets posted double-digit growth. Now to the balance sheet. The relevant call-outs on the balance sheet are twofold. One, in a very dynamic year, the business delivered strong underlying cash flows.
Two, as with prior years, despite the challenging environment of FY 2026, we continued to invest in the growth drivers of the business. We end the year with meaningful flexibility in our balance sheet to continue investing in the business. Now to talk through new product launches and new geographies. In FY 2026, we launched the Mixed Metals range and the Mara X3. We also had the geographic rollout of the Oracle Dual Boiler, the Eye Q Toasters, and the ESP Pro.
Both the Mixed Metals range and the Mara X3 are performing at or above expectations, and I'll have more to say about the Mara X3 when I report in the first half of 2027. We've also launched our digital brand ambassador program across the entire coffee range in 40 countries. In-store, if you tap your phone against the tap and note tag, you'll get a digital experience that explains everything you need to know about the product, as well as how it compares to others in the range.
When you unbox the product at home, again, you tap your phone on the NFC tag, which is either on the machine or a card included in the box, and you have instant access to everything you need during your entire coffee journey, from setting up the machine, to ordering beans, to coffee recipes, to learning how to improve your barista skills, and it's an accelerated pathway to the support in case you need help.
The fact that we were able to do this across all coffee products in 40 countries in 17 languages simultaneously is a testament to the strength and flexibility of our underlying platform, magnified by our AI program. In our new geographies, Mexico, China, South Korea, and the Middle East, they had a breakout year in FY 2026, collectively growing revenue over 70%. Each local team is doing a fantastic job of systematically building channel and brand.
From a forward-looking perspective, it's not just how well they're doing, but how quickly they achieved this milestone. This is a function of the strength of the teams in market, as well as the breadth, depth, and differentiation of our product portfolio and go-to-market offense, a proof point that bodes well for future expansion. Now, a couple of slides on the AI transformation program. I covered this topic in depth at year-end reporting, so I'll focus on the macro storyline. When I read the business press, I see investors struggling to understand what AI is and where it fits. The answer for a growth company is AI is an accelerant of the velocity and quality of execution. In 2018, I presented the BRG's flywheel strategy.
Invest more in NPD, which will accelerate revenue, take that acceleration, invest it in go-to-market, which will pull forward the revenue curve, take that increment, invest in geographic expansion, you expand the TAM, which gives you more revenue, go back, invest in NPD, and go again. It's a reinforcing flywheel loop. But through FY 2015, through 2025, the feedstock of this flywheel was increasing headcount and spending more money. From 2026 forward, we have an additional lever, which is token spend. It's that simple. In order to maximize the velocity of the flywheel, you need to get the optimal allocation across headcount, tokens, and money. Each company that learns how to harness the power of AI will find the mix that is right for them. The second dimension of the investor confusion is, where is the ROI going to come from? The answer is a function of magnitude.
The first step down the AI path is individual amplification. While this is certainly a step in the right direction, the magnitude of improvement is limited to what an individual can accomplish by themselves. But on the business side of the house, everything that matters is a team sport. Without boring you with the details, extending AI to a team or functional level is a very different hat trick. Once teams and corporate processes start moving at higher velocity, you will find another gear. We're on the front edge of this transition, but the early read we are seeing is a step change in the magnitude of benefit. This path results in the complete redesign of the enterprise's core corporate processes. More to come as we get farther down the path.
The relevant metric at this point is that we are progressing up the learning curve and attacking it in anger. As I've said many times, there are two seasons in this business: Black Friday to Christmas and not Black Friday to Christmas. This means the important months are in front of us. The first quarter can't tell you that you've won, but it can tell you that you've lost. The good news is the first quarter of FY 2027 was on plan. This suggests that despite the current global complexities, the premium consumer is still performing and coffee continues to be a growth category. The only item of note is our operations team is busy. The global realities are creating operational complexities, primarily in logistics, which the team is managing. I suspect this will continue until the global logistics reality stabilizes.
In closing, FY 2026 was another proof point that this team can execute on multiple paths at the same time. They delivered double-digit growth across the core growth engines of the company while moving the 120-volt supply chain, executing in an increasingly complex global environment, progressing compelling NPD, and taking a leading position on a relative basis in the AI transformation of the enterprise, all of which sets the table for FY 2027 and beyond. I'd like to acknowledge our manufacturing partners, our retail partners, and the board. In yet another year that required flexibility, creativity, and challenging decisions on an ever-changing fact set, each played their role in helping to navigate the complexity. With that, thank you to everyone for joining us today, and I will now hand back to Tim for the rest of the agenda.
Thank you, Jim. Before proceeding to the formal business of the meeting, I will briefly explain today's meeting procedures. Voting on all resolutions will be conducted by way of a poll. A representative of our share registry BoardRoom will act as returning officer. I now declare the poll open. Shareholders and proxy holders who are eligible to vote have received a yellow voting card. I will invite you to complete your voting card as we consider each resolution. The cards will be collected at the end of the meeting. If you need assistance completing your voting card, please see the BoardRoom staff at the registration desk in the foyer. Shareholders holding a blue card may speak, but are not entitled to vote at this meeting. Guests holding a white card are not entitled to vote or speak at this meeting.
After each item of business has been put to the meeting, I will invite questions on that item. General questions about the company's performance will be taken under the annual report item. If you wish to ask a question, please raise your attendance card, and when you are called upon, state your name and whether you are a shareholder or a proxy holder. In accordance with our AGM procedures, shareholders were invited in the notice of meeting to send any questions they may have prior to the AGM for answering at the AGM. We received one question from a shareholder requesting an explanation for the board's recommendation to vote against resolution four, and I will answer that when dealing with that resolution. Does anyone need more time to register?
Shareholders were sent a copy of the notice of meeting and annual report, or details to access these documents, on 30 September 2026. 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 screen the total number of valid proxies cast for that resolution and the manner in which they have been directed. These figures have been determined as at 10:00 A.M. Australian Eastern Daylight Time on Tuesday, 3 November, being the closing date for the receipt of proxies. I would also like to advise that all eligible undirected proxies given to the Chair will be voted in favor of resolutions two, 3A, 3B, 3C, five, six, and seven, and against resolution four, which is not supported by the board.
The AGM procedures we adopt today are in accordance with the company's constitution and are reviewed on an annual basis by the board, including substantive shareholder proxy and registry feedback to ensure consistency with good market practice. I will now turn to the first item of business, which is to receive and consider the company's annual financial report, Director's report, sustainability report, and independent auditor's reports for the year ended 30 June 2026. No shareholder vote is required on this item. We will now take questions on these reports and earlier presentations from Jim and myself. Our auditor, Mark Valerio from PwC, is available to answer any questions relevant to the audit, including the auditor's report. Are there any questions on this item? Thank you. I will now move to item two, the resolution to adopt the company's remuneration report for the year ended 30 June 2026.
The remuneration report has been made available, provided to shareholders as part of the annual report. The vote on this resolution is advisory only and is not binding on the company. The Board unanimously recommends that shareholders vote in favor of resolution two. Please note that voting exclusions apply as set out in the notice of meeting. Proxies have been lodged in respect of resolution two, 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 2026 be taken. Please fill in your yellow voting card in respect of the adoption of the remuneration report. The next item is item 3A, the resolution for the re-election of myself as a Director.
As this item concerns my own re-election, I will hand the Chair to our Lead Independent Director and Deputy Chair, Lawrence Myers, for the duration of the item.
Thanks, Tim. Tim Antonie is retiring by rotation in accordance with clause 24 of the company's constitution, and being eligible, is seeking re-election.
Just don't get it on there.
Proxies have been lodged in respect of this resolution, as displayed on the screen. The board, excluding Tim, unanimously recommends that shareholders vote in favor of resolution 3A. I now invite Tim to address the room and make some brief comments on his re-election.
Thanks, Lawrence. I feel privileged again to offer myself for re-election as a Non-Executive Director and to continue as the Chair of the company. Breville is truly an Australian success story we should all be proud of. Having started 94 years ago by Bill O'Brien and Harry Norville, Breville is now known globally for its leading innovation and quality. Your Board of Directors continues to evolve and has the necessary skills and experience to govern the company and challenge and support our outstanding executive team, led by Jim Clayton, to continue to deliver sustainable growth. Should I be reelected, I look forward to my continuing contribution to Breville's next chapter for the benefit of all shareholders, employees, customers, and other stakeholders.
Thank you, Tim. Are there any questions on this resolution? Right. As there are no further questions, I now direct that the poll for the reelection of Timothy Antonie be taken. Please fill in your yellow voting card in respect of the reelection of Timothy Antonie. I will now hand back to Tim for the remaining items.
Thanks, Lawrence. I now move to item 3B, the resolution for the reelection of Tuula Rytilä as a Director. Ms. Rytilä is retiring by rotation in accordance with clause 24 of the company's constitution, and being eligible, is seeking reelections. Proxies have been lodged in respect of this resolution, as displayed on the screen. The board, excluding Ms. Rytilä, unanimously recommends that shareholders vote in favor of resolution 3B. I will now invite Tuula to address the room via audio facility from Portugal and make some brief comments on her reelection.
Thank you, Tim, and good morning, fellow shareholders. I'm sorry I can't be there in person in Sydney, but thanks to modern technology, I can join you from Lisbon, Portugal, like Tim said. I feel privileged to offer myself for reelection as a Non-Executive Director of Breville. Having spent most of my 30-year career working for multinational technology companies, I'm excited about the opportunity to continue help Breville's business expansion with a globally oriented, diverse board. It's been great to witness Breville successfully operate as a global company. These last few years, the business environment has been extremely challenging, with constant tariff changes and geopolitical tensions.
Our CEO, Jim Clayton, and his management team have successfully navigated in this environment, strengthening Breville's strategy and execution by expanding into new markets and solutions, and recently, as we heard today as well, driving execution of AI technology much faster and more decisively than most companies. We now have diversified our manufacturing footprint, which reduces our risks. Having worked in multiple hardware and software integration businesses, both at Nokia and Microsoft, I believe I can contribute, I can continue to offer a perspective on the opportunities and challenges in scaling digital platforms, introducing new technologies like AI, driving business model innovation, and building products and solutions that customers love. Having spent years at Microsoft building Windows and Xbox ecosystems and automating their web store operations, I hope that this experience will be of value to Breville team as they further grow the company.
I also believe my more recent board experiences, both with publicly and privately held technology and consumer electronic companies, demonstrate strategic and thought leadership skills that can be of value to Breville, as well as corporate governance experience. Thank you for the consideration of my candidacy for the Breville board. Handing back over to Tim.
Thank you, Tuula. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the reelection of Tuula Rytilä be taken. Please fill in your yellow voting card in respect of the reelection of Tuula Rytilä. I now move to item 3C, the resolution for the election of Rob Perry as a Director. Rob was appointed by the board on 15th September 2026 and is seeking election in accordance with clause 25.3 of the company's constitution. I am very pleased Rob accepted the invitation to join the board as an independent Non-Executive Director. Rob brings immense and relevant skills to the board, and in particular, in global risk management, financial accounting and audit, and also consumer and retail expertise. These skills certainly enhance the board's capability as the BRG Group expands globally in an increasingly complex environment.
Proxies have been lodged in respect of this resolution as displayed on the screen. Very high score there, Rob, 99.8. Well done. Certainly beat me. The Board, excluding Rob, unanimously recommends that shareholders vote in favor of resolution 3C. I will now invite Rob to address the room and make some brief comments on his election.
Thank you, Chair, and good morning, ladies and gentlemen. I am very excited at the opportunity to stand for election as a Non-Executive Director of Breville, or BRG Group. I thought I would just give a quick overview of my career. I spent 36 years in professional services at Ernst & Young, which is now known as EY, and I had a career of two halves, in essence. I was a financial statement auditor, and I became a Partner in the audit practice, signing off on financial statements, and that was primarily in the retail and consumer products sector. So that was the sort of area I focused in on.
The second half of my career, which the Chair alluded to, I moved into the risk and governance practice, so it was risk management, governance, internal audit, internal control, infrastructure, and helping organizations, and particularly global organizations, set up the right infrastructures and governance practices. The clients that I served over the years were the old Coles Myer Group, Country Road. I was external auditor for Country Road Group, external auditor for Just Group, and then Premier Investments, which I finished as the independent auditor in 2019. I also had a secondment to Walmart, and I spent some time in Bentonville, Arkansas. Other key clients, and this was more from a global risk management point of view, I supported BHP with their risks and governance requirements, helped Brambles restructure their global risk and assurance framework, and also helped Transurban. They are just some of the clients I worked on.
I also ran the EY risk practice in Oceania and then Asia Pacific for nine years. I am currently also a Non-Executive Director of Myer. I am excited at the opportunity with Breville. Breville is an iconic brand. It has a rich history and exciting opportunities, both domestically and internationally, particularly. I believe the skills that I have got are highly relevant to the Board, and I look forward to supporting the Board, and I think they are also relevant to areas where shareholders and stakeholders have high expectations around managing risk locally and globally. So I would like to thank you for the opportunity to stand for election today.
Thank you, Rob. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the election of Rob Perry be taken. Please fill in your yellow voting card in respect of the election of Rob Perry. I now move to item four, the resolution for the election of Stephen Mayne as a Director. Mr. Mayne has nominated himself in accordance with clause 22.4 of the company's constitution, and being eligible, is seeking election. Proxies have been lodged in respect of resolution four, as displayed on the screen. We had a question from a shareholder, so I might just answer that now. As detailed in the notice of meeting, the Board considered Stephen's self-nomination and had regard to Stephen's skills and experience, as were provided by Stephen, and gave assessment and compared that against the Board's skills matrix.
And it was determined that Stephen would not add any incremental value, and therefore, believe that the election would not be in the best interest of shareholders. The Board, therefore, unanimously recommends that shareholders vote against resolution four. As Stephen is not in attendance today, are there any questions on this resolution? As there are no questions, I now direct the poll for the election of Stephen Mayne be taken. Please fill in your yellow voting card in respect of the election of Stephen Mayne. Our next item of business is item five, concerning the proposed grant of rights to our Managing Director and CEO, Jim Clayton. In accordance with the ASX Listing Rules, shareholder approval is required before a Director may acquire equity securities under our employee incentive scheme. Approval is sought for two grants to Jim under the Group's equity incentive plan.
First approval is sought for the grant of 75,547 performance rights as Jim's long-term incentive award. These rights are subject to performance conditions measured over a three-year period. Second approval is for the grant of 27,769 deferred share rights as part of Jim's total remuneration for FY 2027. These rights are subject to a service condition. Each right entitles Jim to receive one fully paid ordinary share in the company if the applicable conditions are satisfied. Further details of both grants, including the key terms of the rights, are set out in the notice of meeting. If resolution five is passed, the company intends to grant the rights to Jim as soon as practical after the AGM. The Board, excluding Mr. Clayton, recommends that shareholders vote in favor of resolution five. Please note that voting exclusions apply as set out in the notice of meeting.
Proxies have been lodged in respect of resolution five, 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 yellow voting card in respect of the grant of rights to the Managing Director and CEO. I now move to item six, the resolution to increase the Non-Executive Directors' fee pool. In accordance with the ASX Listing Rules, shareholder approval is sought to increase the annual fee pool from AUD 1.8 million to AUD 2.25 million. The fee pool was last increased in 2021. The proposed increase is intended to provide flexibility to attract and retain suitably qualified Directors, having regard to the company's growth, global operations, and increasing governance responsibilities, and general inflationary pressures.
As the non-executive Directors have an interest in this resolution, the Board has not made a voting recommendation. Please note that voting exclusions apply as set out in the notice of meeting. Proxies have been lodged in respect of resolution six, 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 increase in the non-executive Directors' fee pool be taken. Please fill in your yellow voting card in respect of the increase in the non-executive Directors' fee pool. The final resolution seeks approval in accordance with the ASX Listing Rules for the grant of NED rights under the company's non-executive Director fee sacrifice scheme for the next three years. The scheme allows non-executive Directors to elect to receive a proportion of their fees in the form of rights rather than cash.
These rights are not subject to performance conditions. As the non-executive Directors have an interest in this resolution, the Board has not made a voting recommendation. Please note that voting exclusions apply as set out in the notice of meeting. Proxies have been lodged in respect of resolution seven, as displayed on the screen. You just beat that one, Rob, by 0.05, so you are the winner today. The highest vote. Are there any questions on this resolution? As there are no questions, I now direct that the poll for the grant of the NED rights for the non-executive Directors be taken. Please fill in your yellow voting card in respect of the grant of NED rights to non-executive Directors. That concludes the business of today's AGM. If you have not done so already, please complete your yellow voting card and hand it to the BoardRoom staff members.
Okay, so I've got to do that.
That's not so smart.
Hey, you need a pen? Thank you very much. I now declare the poll closed. The results of the poll will be announced to the ASX and will be published on the company's website once available. I now declare the meeting closed. Thank you for attendance, and I would like to invite everybody to join the Board and management for morning tea. Thank you.