Good morning, and welcome to the JB Hi-Fi 2026 Annual General Meeting. My name's Stephen Goddard. I'm the Chair of the JB Hi-Fi Group, and I'm your Chair for today's meeting. We have a quorum, and I'm pleased to declare the meeting open. As in recent years, we are holding a hybrid AGM, and I'm delighted to be able to extend a warm welcome to our shareholders, proxies, and guests who are attending either in person or through our online meeting platform. Our meeting is being held on the lands of the Wurundjeri people of the Kulin nation, and I wish to acknowledge them as the traditional custodians. I would also like to pay my respects to their elders, past and present. I would like to introduce my fellow directors, Christy Boyce, Sheila Lines, Mark Powell, Geoff.
Geoff Roberts, Melanie Wilson, Terry Smart, Richard Uechtritz, and our Executive Director, Nick Wells. Our Company Secretary, Doug Smith, is also in attendance, as is Suzana Vlahovic of our auditors, Deloitte Touche Tohmatsu. Obviously, as some attendees are attending online and there is a risk of technical difficulties, if this happens, it will be at my discretion whether we continue the meeting or postpone or adjourn the meeting. The agenda for today's meeting is as follows: procedural issues, summary of items of business and voting opens, Chair's address, Group CEO's address, further information on each item of business, including hearing from the directors standing for election and re-election, and disclosure of proxy votes already received on each item, questions, the voting closes, and the close of meeting. The notice of meeting dated 11 September 2026 has been made available to all shareholders, and I will take it as read.
I'll start by briefly setting out how the meeting will work. All shareholders and proxies attending the meeting, whether in person or online, have the ability to ask questions and submit votes. Noting that questions may be submitted at different times by online participants and participants in person, we will answer questions on all items of business later in the meeting. For those attending the meeting online who wish to submit a written question, you may do so at any time during the meeting via the Q&A icon on your screen. Type your question in the text and then press the send icon. I will then address your question at the relevant time. If you're attending in person or attending online but wish to ask a question verbally, please wait until that time to ask your question.
Voting today will be conducted by way of a poll on all items of business, and Computershare will act as the independent returning officer. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. For those attending the meeting online and who are eligible to vote, when the poll opens, a voting icon will be available on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit submit as the vote is automatically recorded. Please ensure you cast a vote for all resolutions. You will receive a vote confirmation notification on your screen. To change or cancel your vote, click the link "Click here to change your vote" at any time until the poll is closed.
Votes may be changed up until the time that I declare voting is closed. For shareholders, proxies, and corporate representatives attending in person, you vote by either scanning the QR code that you received upon admission and following the instructions, or by completing the yellow voting card that was provided to you upon admission. White cards are for visitors only who cannot vote or ask questions today. Shareholders with a green card are not entitled to vote on the items of business. You can vote at any time after voting opens, and I will warn you before I close voting at the end of the meeting. Results of voting will be released to the ASX after the meeting.
If you have any difficulties voting or submitting questions, please consult the online meeting guide, which can be accessed within the online platform or on the JB Hi-Fi investors website if you're attending online, or raise your hand if you're here in person. The items of business for the meeting are set out in the notice of meeting and are as follows: To receive and consider the financial and other reports for the financial year ending 30 June 2026, to vote on the re-election and election of directors, to adopt the remuneration report, and to approve the allocation of restricted shares to the executive director. I'll provide more detail on each of these items later in the meeting. I now declare voting open on all items of business. The voting tab will soon appear. Please submit your votes at any time.
As I said, I will give you a warning before we close voting. We now move to my chair's address. The financial year ended 30 June 2026 was another successful year for JB Hi-Fi Limited and its subsidiaries, achieving record sales and solid earnings. The group stayed focused on its core proposition of driving great value and delivering consistently high levels of customer service, which continued to resonate with our customers. We are grateful to our over 17,000 team members across Australia and New Zealand, whose support and commitment ensure the ongoing success of the business. As previously announced, Richard Uechtritz will retire from the board today. We would like to recognize and thank Richard for his huge contribution to the group's success over the past 26 years, first during his 10 years as chief executive officer and then as a non-executive director for the last 15 years.
Richard has been a great source of counsel and advice over the years, and we wish him all the best for the future. We are delighted to welcome Terry Smart back to the board following his appointment as a non-executive director from 5 October 2026. Terry has a proven track record as one of Australia's best retailers and has a deep understanding of the group, its businesses, and the markets in which it operates. The board very much looks forward to working with him again. Turning to the group's operating model, the group comprises three iconic retail brands: JB Hi-Fi, with a focus on technology and consumer electronics; The Good Guys, with a focus on home appliance and consumer electronics; and E&S, with a focus on premium home appliances and bathroom products.
The value proposition for each brand centers around ranging the best brands at low prices, supported by exceptional customer service across our store network, our online and over-the-phone channels, and through our commercial business. The multi-branded approach continues to be underpinned by four key competitive advantages, being scale and diversification, a low-cost operating model, multi-channel capability, and people and culture. An integral part of the group's ongoing strategy is to encourage innovation and diversification in our product range, merchandise formats, advertising, supply chain, property locations, and our online offer in a controlled and responsible manner to ensure that we remain current and relevant to our customers. This includes adopting artificial intelligence and other emerging technologies where they can enhance the customer experience, improve productivity, and support future growth.
We have a culture of embracing change, which is seen as a natural part of the business, and this approach provides opportunities to increase revenue, margin, and productivity. The group's FY 2026 Responsible Business Report, which can be found on the group's investor website, outlines our commitment to having a positive impact on our people, our community, and our environment. As set out in the report, we are committed to supporting our people and ensuring a safe, inclusive, and respectful workplace, whilst always looking for ways to provide our team members with flexibility and opportunities to grow and develop; making a positive impact in the communities in which our team members live and work, and working with our supply partners to protect and further human rights; and minimizing the impact that our operations may have on the natural environment, and proactively reducing our waste and emissions.
In closing, the board remains focused on building long-term shareholder value. Since JB Hi-Fi listed in October 2003, the JB Hi-Fi share price annual compound growth is 17.7% to 27 October 2026, compared to 4.4% on the ASX 200 Index over the same period. The earnings per share compound annual growth rate is 17.3%, and the ordinary dividend per share, fully franked, compound annual growth rate is 19.1%. More recently, over the last five years, the JB Hi-Fi share price compound annual growth rate is 9% to 27 October 2026, compared to 3.5% on the ASX 200 Index over the same period. The earnings per share compound annual growth rate is 0.3%. The ordinary dividend per share, fully franked, compound annual growth rate is 3.3%, and the group has returned an additional AUD 196.8 million in special dividends to shareholders.
To deliver positive compound annual growth rate for both earnings and ordinary dividends over the base year, which included elevated earnings during COVID, is a great achievement and a credit to the management team. I would like to take this opportunity to thank my fellow directors, the executive team, and our store warehouse and support teams for their unwavering commitment to the ongoing prosperity of our company and its shareholders. I now invite Nick to address the meeting on the group's operations.
Thank you, Stephen, and good morning, ladies and gentlemen. Firstly, I would also like to acknowledge Richard and the incredible contribution that he has made to the group over 26 years. I am fortunate to have worked closely with him and thank him for his outstanding leadership and support over many years. I would also like to welcome back Terry to the board and look forward to working with him again. Retailing is a dynamic and exciting industry, and JB Hi-Fi, The Good Guys, and E&S are market leaders in their respective sectors. In an uncertain retail environment where customers are seeking value, our brands continued to resonate, and our teams continued to execute to a high standard.
The core of our proposition has always been and will always remain our unwavering focus on our customers, who continue to turn to us for their technology and home appliance needs, and our over 17,000 dedicated and knowledgeable team members across Australia and New Zealand who continue to respond and adapt to meet those needs. As Stephen highlighted, we are committed to having a positive impact on our people, our community, and our environment. In our FY 2026 Responsible Business Report, we outlined the progress made in our key areas of focus, which included 68% of the group's energy now coming from renewable sources and a 58% decrease in the group's Scope 2 market-based emissions from its FY 2020 baseline year, as the group continues to work towards net zero direct Scope 1 and 2 market-based carbon emissions by 2030.
Continued investment in our teams with 617 leaders completing a leadership development course, including 56 managers completing the Women in Leadership training program. Recycling 12,077 tons of e-waste collected through recycling kiosks in JB Hi-Fi Australia and The Good Guys stores, and scrap metal from home appliances collected from customers' homes. Workplace giving donations totaling AUD 4.8 million in FY 2026 and AUD 49 million since inception. Achieving a 7% improvement in waste diverted from landfill, from 60% in FY 2025 to 67% in FY 2026, with the group working towards achieving 80% waste diversion by 2030. We are pleased with the progress we are making on our sustainability plan and commitments, and importantly, we are receiving an overwhelmingly positive response from our team members. Now turning to our FY 2026 results. We reported record sales and solid earnings, with total sales up 4.8% to AUD 11.06 billion.
Earnings before interest and tax was up 5.8% to AUD 734.4 million. Net profit after tax was up 6% to AUD 489.9 million, and earnings per share were up 5.9% to AUD 448.1 cents per share. On an underlying basis, excluding the one-off AUD 13.7 million expense in FY 2025 relating to the resolution of the ACCC proceedings against The Good Guys, EBIT was up 3.8%, NPAT was up 2.9%, and EPS was up 2.9%. The total ordinary dividend for FY 2026 was AUD 337 cents per share, up 22.5% and representing 75% of NPAT. The group's balance sheet continued to be strong, with low financial and operating leverage and closing net cash of AUD 206.5 million at 30 June 2026. Turning to FY 2027, the group will remain focused on the following five key areas. Number one, retail execution. In a competitive retail environment, our strong retail execution remains essential.
We will continue to actively demonstrate and prove value to our customers and utilize our supplier relationships to access stock, create best-in-market promotions, and win at key sales events. In an environment where we've seen significant supplier price rises, we will use the breadth of our range, brands, and price points to give customers choice to trade up or to trade down. We will keep our operating model simple and efficient, focusing on the metrics that matter, driving operational improvements, and reinvesting those efficiencies into customer-facing roles while enhancing customer engagement and evolving our in-store experience. As we've said consistently, our knowledgeable, passionate, and authentic team members are our key competitive advantage, and we'll continue to invest in customer service. Second area of focus is store growth. We will continue to expand our store network with both new stores and expansions across the group.
In JB Hi-Fi Australia, we'll open four new stores, continuing our expansion into regional locations, and relocate one store. In JB Hi-Fi New Zealand, we'll open two new stores and relocate one store. In The Good Guys, we'll open one new store, relocate five stores, and extend two stores to right-size previously undersized stores and grow our available selling space. Number three, multi-channel growth. We will continue to strengthen our multi-channel capability by leveraging our significant online traffic and expanding our Marketplace offer. We will grow our online, phone, and chat sales channels to meet customers' changing shopping needs, evolve our websites with expanded agentic commerce experiences that will include natural language product search and agent-based shopping experiences, and we'll expand our Marketplace offers.
Our membership programs will remain a focus, delivering personalization at scale, and at the same time, we'll ensure consistent customer experiences across all touchpoints and stay connected with customers however their shopping journeys evolve. We will grow our commercial businesses and expand our retail media network, providing more options for our partners to leverage our strong online and in-store traffic to create unique multi-channel advertising experiences. Number four is supply chain. Our investment in building and maintaining a fit-for-purpose supply chain network is ongoing. We will continue to focus on delivering best-in-class delivery options for our customers across all of our channels and leverage our new transport management system to improve the customer experience.
We will expand our big and bulky home delivery centers, starting with Melbourne in February, to extend our range and maximize in-stock positions. We will expand our home delivery center delivery network to open up big and bulky product range and depth to more regional customers. For peak this year, we will expand our centralized online fulfillment and roll out semi-bulky store replenishment for high volume lines for selected JB Hi-Fi Victoria, New South Wales, and WA stores. Finally, number five, E&S expansion. We are investing in E&S for future growth, and we are excited about the opportunity we have to grow E&S. We have made some key management appointments who bring significant industry experience and started building out our commercial team outside of Victoria.
We will migrate our website to Shopify in the second half of FY 2027, which will significantly improve our online customer experience and is the starting point for most customers' interactions with the E&S brand. In addition to the website, we are building our internal systems and tools to support growth. From a store perspective, we have developed a new store layout that reinforces the E&S experience, and we are working on identifying potential new store locations to expand our reach nationally. Now turning to recent trading. The group has today provided a sales update for the period 1 July 2026 to 30 September 2026, or Q1 of FY 2027. Total sales growth for JB Hi-Fi Australia was negative 0.4% with comparable sales growth of negative 1.4%. Total sales growth for JB Hi-Fi New Zealand was 17.3% with comparable sales growth of 10.7%.
Total sales growth for The Good Guys was negative 0.1% with comparable sales growth of negative 0.4%, and total sales growth for E&S was negative 3.7% with comparable sales growth of negative 4.5%. The group continues to see variability in trading and heightened competitive activity, with customers remaining focused on value and increasingly shopping during key promotional events. In October, the group has seen sales slow ahead of the important Black Friday and Christmas trading periods. As always, the group will continue to focus on driving demand and growing market share through creating great value offers for our customers and delivering exceptional customer service. I look forward to another exciting and successful year in FY 2027, and I will now hand back to Stephen.
Thanks, Nick. Turning back to the items of business, item one relates to the receipt and consideration of the financial and other reports for the financial year ended 30 June 2026. The company's annual report, which includes the financial report, sustainability report, directors report, and auditors reports, as well as the company's corporate governance statement, has been made available to shareholders. No formal resolution will be put to the meeting on this item, and I will take the reports as read. Shareholders and proxies may ask questions in relation to the reports later in the meeting. Item two on the agenda relates to the re-election of Christy Boyce and Melanie Wilson as directors and the election of Terry Smart as a director. Item 2A relates to the re-election of Christy Boyce.
Christy joined the board in September 2023 and is a member of the company's Audit and Risk Management Committee. Christy has over 25 years advisory experience in Australia and the U.S., with extensive involvement in retail, including pricing, online strategy, loyalty programs, and sales and marketing. Christy was a director of Port Jackson Partners, and prior to this was a partner at McKinsey & Co, working in the firm's Sydney, New York, and Chicago offices, and was co-leader of the retail consumer goods practice. Christy is currently a non-executive director of ALS Limited, BAI Communications Australia, EMM Consulting, and The Hunger Project Australia. Her previous experience includes acting as a non-executive director of ASX-listed companies CSR Limited, Greencross Limited, Monash IVF Group Limited, Oneview Healthcare PLC, and of the not-for-profit, SCEGGS Darlinghurst Trust. The board considers Christy to be an independent director.
I'll now ask Christy to say a few words.
Thank you, Stephen. It's an honor and privilege to serve on the board of JB Hi-Fi. Thank you very much for this opportunity. I had followed JB Hi-Fi for a long time, actually, before joining the board, as an outstanding retailer. Stephen's covered off most of my CV, so I won't go through all of it again, but as he highlighted, I have had a strong interest in retail throughout my advisory career, focusing on customer value propositions, sales and marketing, customer experience and loyalty, and organizational effectiveness and performance management. I have a Bachelor's of Economics from Sydney University and a Master's of Management from Kellogg at Northwestern in the United States. I have a range of retail experience in my advisory career, including specialty retail, discount department stores and department stores, grocery.
As Stephen mentioned, I've served on a range of ASX boards, serving other people of remuneration committees, audit and risk committees, and sustainability and safety committees of various companies. It's a real privilege to work with JB Hi-Fi. I'm excited to be involved with a company whose aspirations so fit so well in my own professional interests. I feel great alignment with the purpose and values of the company, and it's a joy to work with an outstanding management team that continues to push and challenge themselves. I'm excited to continue to support and challenge the team. I appreciate the trust placed in me and look forward to continuing to work for all our stakeholders, and in particular, for you, our shareholders.
Thanks, Christy. Shareholders and proxies may ask questions in relation to this item later in the meeting and can vote at any time before voting closes. The proxy votes received in advance of the meeting on this resolution are as follows. You can see those on the screen. Item 2B relates to the re-election of Melanie Wilson. Melanie was appointed to the board in June 2020 and is a member of the Audit and Risk Committee and of the Remuneration and Nominations Committee. Melanie gained extensive experience in senior management roles across global retail brands, including Woolworths, head of online BIG W and Manager Strategy Group, Limited Brands, Victoria's Secret and Bath & Body Works in New York, and Diva Lovisa. Her retail experience includes online e-commerce, store operations, merchandise systems, marketing, brand development, and logistics fulfillment.
Mel has also had roles with Bain & Company in Boston and Goldman Sachs in Hong Kong and Sydney, and completed an MBA at Harvard Business School. Melanie is currently a non-executive director of Web Travel Group, Oroton Group, and SkinKandy Limited, and was previously a non-executive director and chair of Baby Bunting Group Limited and a member of its Remuneration and Nominations and Audit and Risk Committees, a non-executive director of Shaver Shop Group Limited, PropertyGuru Group in Singapore, and EML Payments Limited, and a non-executive director and chair of the Audit Risk Committee of iSelect Limited. The board considers Melanie to be an independent director. I will now hand over to Mel to say a few words about herself.
Thank you, Stephen, and good morning to my fellow shareholders. I joined the JB Hi-Fi board in June 2020, and it is a privilege to seek your support for my re-election. As Stephen mentioned, my background is predominantly in retail, with more than 20 years in Australia and the U.S. working on digital transformation and strategy for large, global retailers. Combined with my earlier career in strategy and finance roles at Bain and Goldman Sachs, this has given me hands-on retail, digital, and consumer experience, which I bring to this board. The JB Hi-Fi Group has changed a lot just in the six years that I have been involved.
We have added E&S, we have introduced concepts like Marketplace and loyalty for our customers, we have launched retail media business, and we have continued to grow our market share in what is becoming a highly competitive market, which is transforming rapidly as our consumers change the way that they discover, shop, and interact with our brands. This is where my online multi-channel experience has been most useful, and it is where I continue to contribute. Sustainability is now firmly part of the board's core oversight, and as a member of the Audit and Risk Committee, I have been a part of the overseeing JB Hi-Fi's first mandatory climate disclosures, alongside our progress towards our net zero targets for 2030. As Stephen mentioned, I also sit on our Remunerations and Nominations Committee.
In addition to my retail experience, I have been an ASX-listed company director for more than 10 years, and I have been involved in chairing Remuneration and Audit and Risk committees, as well as overseeing significant M&A transactions. This has enhanced my skills in governance, risk, and capital management. I bring best practice from my extensive board experience to the JB Hi-Fi, and I believe I have the capabilities to continue to fulfill my duties as a non-executive director for JB Hi-Fi. What I believe makes JB Hi-Fi special is the people, and it is what I love about the business. We have more than 17,000 team members who know their products and they love to help our customers. It is our role on the board to help protect that culture as our business keeps evolving. I appreciate your support and I look forward to being reelected. Thank you.
Thanks, Mel. Shareholders and proxies may ask questions in relation to this item later in the meeting and can vote at any time before I declare the voting closed. The proxy votes received in advance of the meeting on this resolution are shown on the screen. Item 2C relates to the election of Terry Smart. Terry was chief executive officer of the JB Hi-Fi group from August 2021 to 3 October 2025, a period which saw significant growth in sales and profit. He was previously CEO of JB Hi-Fi from May 2010 to June 2014, following 10 years as chief operating officer, and he oversaw significant expansion and growth during that period. Terry returned to the JB Hi-Fi group in April 2017 as managing director of The Good Guys and led the repositioning and significant improvement in performance of The Good Guys business.
Prior to his appointment, the company conducted appropriate checks into Terry's background, and those checks revealed no information of concern. In view of his previous executive roles with the group, the board does not consider Terry to be an independent director. I will now hand over to Terry to say a few words.
Thank you, Stephen, and good morning, everybody. Stephen has already outlined my previous roles within the organization. These roles have given me experience in the industry in which we operate, to give me a solid understanding, of course, of the business itself, and really importantly, all the individual brands that we have within the business. All of this will assist me in carrying out the role of a non-exec director for JB Hi-Fi. I am looking forward to being part of the board team and contributing to the continued long-term success of this business. Thank you.
Thanks, Terry Smart. Shareholders and proxies may ask questions in relation to this item later in the meeting and can vote at any time before I declare voting closed. The proxy votes received in advance of the meeting on this resolution are shown on the screen. Item 3 relates to the adoption of the Remuneration Report, which is contained within the company's annual report. Further information, including information regarding voting on this resolution and the two-strikes rule, is set out in the notice of AGM. Please note that a vote on this resolution is advisory only and does not bind the Directors of the company or the company. Again, I will take the report as read. Shareholders and proxies may ask questions in relation to the report later in the meeting and can vote at any time before I declare voting closed.
The proxy votes received in advance of the meeting on this resolution are shown as follows. Item 4 relates to the allocation of restricted shares to the Executive Director, Nick Wells. Further information, including the terms of the allocation and the associated KPIs, is set out in the explanatory notes included in the notice of AGM, and I will take that as read. Shareholders and proxies may ask questions in relation to this item later in the meeting and can vote at any time before I declare voting closed. The proxy votes received in advance of the meeting on item 4 are as follows. We will now take questions from shareholders. Questions submitted online in writing will be read out by our Company Secretary. To ask a question verbally online, please allow the instructions shown below the broadcast window on the online platform.
Our Company Secretary will say your name and then direct you to ask your question. If you have questions from the floor, please raise your hand and wait for the microphone to arrive before stating your name or organization and asking your question. Questions will be answered by the relevant Director or executive or by Suzana Vlahovic from our auditors. While time constraints may prevent us from answering all questions, we will do our best to address all the questions during the meeting. After the questions, I will close voting. So, let's start with questions from the floor. It was a dead heat.
Thank you. A question directed probably to Nick Wells. First of all, JB Hi-Fi, the yellow stores, they are our flagship. Sales seem to have stagnated. I have a couple of questions around the branding and where we are going with JB Hi-Fi. First of all, we seem to have JB Hi-Fi little format stores, bigger format stores, and JB Hi-Fi Home stores. As a consumer, I am getting a bit perplexed as to where I go for what. If I want a robotic vacuum cleaner, I cannot go to my local store at Victoria Gardens. I do not know whether I have to go to The Good Guys. It is a little bit confusing. So question number one. Another question probably for Stephen, sorry. JB Hi-Fi, again, the yellow stores are our major part of the business, the predominant part of the business.
The representation on the board, I would want to see somebody with a couple of piercings and maybe some pink hair to show that we are committed to those people and we understand what we are doing.
Maybe I will answer that first. We were not sure what Terry Smart would look like when he came back. He seems the same. I think your board has a pretty good understanding of our customer base and our people within our stores, and has good experience. I will leave it at that. The first question is an important one. I will hand over to Nick Wells.
Yeah, look, we do have multiple formats, and we deliberately have different formats so that we can operate in different environments. If you think, probably the most extreme example is an airport location, where we are in a less than 100 sq mi of space, and we cater the range for an airport traveler. Shopping center stores, typically a little bit tighter as well. Sometimes, like at Victoria Gardens is a good example. We would love more space in Victoria Gardens, but we just cannot get it in that shopping center, so we have had to tailor a range for what works in that store. Homemaker stores with our full home offer is where we can have our full range. I do not think we are the only retailer who has different products in different stores.
What we try to do online is try to. The vast majority of our customers do start their research online. If you do go online, you will be able to see which store that product is available in before you visit the store, so that is an attempt to try and make it easier for us. We would rather have representation in all those different locations and have a tailored offer to cater for most of the customers, rather than not be there at all.
Geoff Roberts here. I live in regional Victoria, in Wonthaggi. I was very pleased to see a store open down there in November last year. I think it is doing well. I am in there reasonably often. I bought a TV and a phone there in one day, actually. A record. I spend that sort of money about every five years. You would not make a living out of me. I did have an unsuccessful attempt to buy a phone from Kogan, which was a fulfillment issue more than anything else. With reticence, I bought it because it was just so much beyond the price that the store I spoke to in Toowoomba could reach. They said, "No, we do not want that. We do not want to match that price." Fair enough. Good decision, and in the end, it did not work out, so I went back to JB Hi-Fi.
My question is related to the commercial business, and I am not 100% sure where that kind of sits. It is a separate organization or parallel, whatever you want to say. In the commercial business, I think there is an opportunity there for home batteries. I just spent yesterday at the conference and exhibition down at Geoff's Shed, just five minutes walk from here. The 22,000 people there, and most of them are involved with home batteries or obviously larger type batteries as well. I think that is becoming a commercial consumer-grade product, and I see it could readily fit through either direct to consumer or something like an air conditioner, where you buy it through a The Good Guys type store and matched up with a contractor who can put it in for you. I think that is the sort of growth area I would like to see the board consider.
There, that is my two things. I have got another issue I would like to discuss with Nick one on one about some correspondence I had. I will look forward to that. Good luck with the meeting.
Thanks for your feedback on Wonthaggi. We are happy with it, and we think there is opportunity in some areas like that for future stores. Maybe just on product, do you want to make a quick comment?
Yeah, I think your observation's entirely right. We see electrification generally as a really good opportunity for us, and we are doing that work, not just for commercial, to your point. I think there's a good opportunity in commercial for B2B, but also in retail. It is very important in that space, though, to have the right partners for the installation and the delivery of that product, because that is ultimately the last contact with the customer. So that's the work we're doing. We're working on making sure we have the right product, but right partners to do the install and make sure the customer gets a great experience.
Thank you. Other questions?
Yep, yep. Chris Creelman. Could you throw some light on the cost of doing business? The Good Guys and JB, very low cost. But then you've got the cost of doing business for E&S, very high. Can you foresee that coming down to a reasonable level? Gross margins are great, but cost of doing business is high. What are your plans for a reasonable cost of doing business in the future?
Maybe you should just talk a little bit about E&S, because
Yeah
We acquired the business not long ago.
Yeah.
We are putting a lot of investment into the business. We have got good plans for it. We think it has got great prospects. Perhaps an opportunity to cover cost as well as just where we are going with that.
Yeah. It is a very different model than a JB Hi-Fi and a The Good Guys model. It is a very high-service environment, and typically a more premium product, which is what is reflected in the gross margins. If you think it is going to be a higher cost to serve, but a significantly higher gross margin business. Do we think we can see cost benefit over time? Yes. I think two things will play into that. To Stephen's point, we are investing in the business at the moment, so there is a bit of elevated cost from some investment we are making at the moment. Then two, as I highlighted in my presentation, we are going to grow E&S. We will expand interstate, we will grow that top line sales.
As we do grow that top line, we will be able to hold some of the support costs here and sort of fractionalize that cost of doing business. You should see it improve over time, but it will not ever get to anywhere like a JB Hi-Fi Australia number.
Thank you.
Thank you. Chris?
Thank you, Mr. Chairman. Just a couple of formalities if I can get out of the way before I ask my question. Welcome to the board and to shareholders in the room and obviously online. We very much appreciate that opportunity. My name is Chris Lobb. I am a volunteer representing the Australian Shareholders Association. We seek to represent the small shareholders of which, according to your last annual report, you have over 37,000, who hold 1,000 or less shares. I suggest many of those are customers in your stores, so it is a very important element we seek to represent. Obviously, they are delighted with your increasing dividends that you have been able to provide to them. It is an integral part of their financial well-being and so we appreciate and acknowledge that.
Maybe at this point, we should also acknowledge Richard's contribution. It has already been acknowledged already this morning, but I think shareholders generally would appreciate Richard's contribution to that growth. So, thank you, Richard, and best wishes for your future endeavors. We have already mentioned that the online capability, I think, is a very important one when you do have such a diverse number of shareholders. Not everyone can get to the meeting here today, so the ability for them to tune in and ask questions and to vote is a very important element to the governance of the company. So, congratulations on that. Right, to my question. Nick just briefly talked about the supply network, more so, I suggest domestically.
But earlier in the year, there were some comments around supply, the supply and some of the difficulties you were facing in relation to sourcing products and also the increasing cost. I just wondered whether or not he could expand on those comments and just give shareholders a bit of an insight as to what's happening now in that space. Is there ongoing pressures leading into the critical part of the year? How are you sitting? Thank you.
Okay. Thanks, Chris, for your question. Look, I do get the opportunity to meet with Chris and Mike from the ASA prior to the meeting, and appreciate the time and the engagement. It's good for us, so thank you for your time on that. Yes, there's a lot going on in our space, so perhaps Nick.
Yeah, the key challenge, and it has, and it's ongoing, but it is, looks like it's easing, is if you think about the products we sell, the vast majority of them have memory in the products. As AI has been taking off and there's been significant demand for data centers, those data centers have been sort of pulling the supply of memory. So, there's been limited supply of memory, and as supply of memory's dried up, the prices of memory have gone up significantly. So what we've seen across, you know, particularly in a category like computing where memory's an important part of that device, we've seen significant price rises in computing. We've seen it more recently in categories like gaming, so I mean in gaming consoles. You're seeing it now a little bit in mobile phones coming through.
So that price increases have been coming through. They are quite material in some categories. In computers, you know, we've seen circa 50% price rises over the last six months. In gaming, it's kind of more 10%-20%. So it's where the memory is a more important part of the bill of materials of a product, you see a more significant increase. Do we expect it to continue? I'd like to think we're through the vast majority of the price increases. There might be a little bit more to come in memory, in computing. The other challenge we had at the same time was, because supply was constrained, was just availability of stock. So, we'd saw price rises, but just getting enough stock. That had been a challenge over the last six months.
That looks like it is improving now. As we enter into this quarter, there is, there is certain categories that are always going to be, you know, short. You know, when there is a good example is an iPhone Duo, which has just come out, and the demand is through the roof. We do not have enough, okay? But that is just a new product release issue, whereas the broad availability seems to be returning to normal.
Can I just add one more? What about freight costs?
Sorry, just on the mic, Chris.
Sorry
So people online can hear.
The other element of supply, of course, is freight costs, and we're, again, we're hearing reports of, you know, enormous increases in the cost of freight. I assume you're importing the majority of your goods. Would you like to comment on that, please?
Yeah, so our goods are predominantly imported. Suppliers bring those into the country for us, so we buy locally from the local distributors. They are facing those freight increases. To be fair to suppliers, they have been, 'cause we're all very focused on value and trying to make sure we're, you know, we know the consumer is cautious. They're looking for value. Suppliers are trying to absorb those price increases as much as they can today, and they've done that well.
More questions?
Hi, it's Steve Mabb. I'm an ASA member and a TeamInvest member as well. Thank you, Nick, for coming and talking to our TeamInvest members last year. That was very helpful. I've got a question around our audit. So, we've had the same auditor for 24 years.
Deloitte. The Chair of our Audit and Risk Committee was a Managing Partner at Deloitte for 15 years. I am not suggesting there is anything wrong with our accounts, but we also do not have an internal audit function. If there was a problem with our accounts, that is kind of exactly the situation I would like to set up. My question is, why have not we put out a competitive audit tender for quite some time? Are you open to doing that going forward? If not, why not?
Okay, thanks for the question. Just a bit of context. Geoff has been with Deloitte in a previous life for four years out of the past 22 years. He has been with SEEK, he has been with AXA, he has done a whole lot of stuff. When he was at Deloitte, he has had no involvement in our company. I would not draw any line from a connection between our Audit Chair, who replaced Beth Laughton, who had been Audit Chair for some considerable time. Our independence, we think, is quite clear in that respect. Look, it is gaining traction, this question of audit rotation. The rules require us to rotate our partners every five years, and we do that. Suzana has signed the accounts for the third year.
In my experience, when we get a new audit partner, we get a whole fresh set of eyes, we get some fresh team members, and a completely different way of looking at things within the Deloitte umbrella, granted. We feel that does the job in terms of getting an independent view. To be honest, because your comments are a little, maybe I should not take offense at them, but if you look at a business like ours and you match profit and cash over a long period of time, I think you will see that regardless of how we account, it is a pretty stable business. I will just put that to one side. I do understand that the temperature is rising in terms of requiring firms to tender. If we re-tendered and then reappointed Deloitte, I am not sure that would please everyone either.
We are going to take that on board. I do not think now is a great time to be looking to change your auditors, because there has been quite a lot of volatility and things going on in that marketplace. I will take the comments on board. We are, as I say, aware of the fact that things are changing perhaps, and perhaps that will change in terms of regulations and compliance as well. But we do take that on board. As I say, Suzana has been on our audit now for three years, has done a terrific job, and we look forward to continuing to do that in the short term, but acknowledging that matter.
I guess the other challenge with that, of course, is that we're a low-cost operator. That's one of our great strengths. If we haven't tendered the audit for a long time, how do we actually know that we're getting the best price? I'd leave that with you to consider.
Well, maybe if I can just comment briefly.
Sure.
Audit fees are a bit different because they're public, so it's in our annual report. You can look at our audit fee versus what other like companies are paying. I don't want to say they're great value in front of Suzana Vlahovic. We feel, I think, on balance that we end up in a pretty good place. As I say, if you just compare our audit fees with other like companies of our size, I think you'll find we feel we're doing okay.
Very good. Second question, changing gears. One of our other great strengths is our customer service, of course, and that goes to the wonderful brand and reputation that we've built up over the years. Nick Wells, could you just give us a couple of examples maybe of what we've done there in the last year or two of your tenure to strengthen that? Is there anything that we're doing to improve the quality and the talent that we have at a customer service level?
Look, it is very much a continuation of what we have always done. The key is, one, making sure we find the right people when we hire people. We are fortunate with our brand that we have enormous demand for jobs. For example, when we recruit at this time of year, we recruit Christmas casuals. We were this year recruiting, looking for 2,000 roles. Within about a week, we had 50,000 applications. They go through a very strong process of assessment and criteria, so we get good candidates coming in. Then we are very focused on training. That is, I think in the last financial year, we did over 100,000 hours of face-to-face training in JB Hi-Fi Australia alone, in addition to what they do on their PDAs and in other time as well. That continues. We are doubling down on that.
In a tough environment, it would be easy to cut back on that type of investment, but we are not. That is fundamental to who we are and what we do, so we are continuing to invest in customer service.
Great to hear. Thank you.
Thank you. No hands. We take some from the online, Doug, please.
Thanks, Stephen. First question is from Stephen Mayne. When will you run a proper AGM where you follow the agenda, calling for questions on each item one at a time? You do not abandon the agenda in board meetings, so stop doing it at the AGM. The dropdown box on the Computershare system does not even allow shareholders to direct questions to specific resolutions. Dealing with AGM Q&A as one job lot is poor practice which disrespects the AGM process. This approach is not supported by the ASA, and you only do it to keep your AGMs traditionally short. Will you run a conventional AGM next year?
Oh, look, we think it is a much more efficient way of doing it. I am open to feedback, to be honest, from shareholders. But to be able to ask questions at this time on any item, we think is the best way to go. I have been on board for 10 years, and I think we have answered every question a shareholder has had either in person or online, and I imagine we will do that today. So I do not think that holds much water, and this is, we think, an effective way to do it where people can just get in this environment and ask anything about anything, and we are happy to take your questions. Any more, Doug?
Next question is from Stephen Mayne. Why did you not disclose the proxies to the ASX along with the formal addresses as many companies now do? Please summarize the scope and breadth of your pre-AGM governance roadshow. Did any of the proxy advisors recommend a vote against any of today's resolutions? If so, what reasons did they give, and did this translate into any material protest votes? Please do not say they are confidential. It is standard for companies to be across this detail on the voting recommendations and inform shareholders where relevant, and I could show you examples of more than 50 chairs responding positively to this question.
We have felt common practice in the past is to give the proxies out when we get to that point in the agenda. That seems what, in our understanding, most people do. Again, we will take that on board. In terms of the proxies, everyone voted for the REM report. One proxy voted against Nick's shares on the basis, and we have talked about this in previous meetings, that the VRP has some elements that do not tick a certain box, and so they recommended a vote against. You saw Nick's shares at about 85%, I think. So that is a little down.
ASA.
I am sorry?
The ASA recommendation.
Oh, I will get to the ASA in a moment. Sorry, I meant the proxy firms. Ownership Matters, CGI and ISS. But the rest of the votes were around the 97%, 98%, 99% mark. But the ASA, who we met, have voted against the REM report and against Nick's shares on the basis, I should not speak on behalf, but Chris, as I understand it, on the basis that the VRP does not have certain elements that you would expect from a long-term incentive plan. Nick and Chris is nodding, so that is the answer to that question. Any more, Doug?
Yeah, another question from Stephen Mayne. This one is for Richard Uechtritz. Thank you to Richard Uechtritz for his 26 years of excellent and successful service to JB Hi-Fi as CEO and a director. It is always helpful for investors to have access to some exit perspectives from retiring independent directors. In his final contribution as a JB Hi-Fi director, could Richard please comment on what he regards as the best three decisions JB made during his time with the company? If he had his time again, what would he have done differently?
Well, I will let Richard answer that. Over to you.
Thank you, Stephen, and thank you, Stephen. The other Stephen. Maybe the last question first. I do not think you can divide up decisions in a successful company in what are your best decisions. I think, particularly in retail or most businesses, I assume, my obviously experience is in retail, is that it is a whole lot of small decisions that add up to correct decisions, that add up to what the company is. I would struggle and I would do injustice to try and pull out three. It is a bit like. I guess there is one overall, is that if I had any talent, it is the talent to read people and executives. I guess as evidenced by the executives that were with me at the time as CEO, most of them are still there and in a lot senior positions.
They are the ones that over the years, I got out early, so they are the ones that have grown the company from the AUD 3 billion or whatever it was when I was there, to AUD 11 million. They have flourished. They do a fantastic job. I guess if I have any sort of reflection on it is reading people well. From my very first hire, Terry Smart. That says it all to a certain extent. So, it is all about people and creating the guidelines and letting them do their job and flourishing, and they have all flourished. I come to the end of a 15-year non-executive position, and a lot of people do not understand, I think, in boards, in business, as shareholders, that it is all about the management. I have been a very small contributor over the last 15 years.
As in my mind, most board members do a good management team, and the management team is where it all happens. It is the beginning and end of all, and we have a fantastic management team. Just a little anecdote. One of our biggest competitors who I am friendly with, rang me when there was a change of CEO from Terry to Nick and said, "Who is this Nick Wells?" I said, "Do not you worry, he is the best CEO yet." So, I do not think he wanted to hear that. It was obviously somewhat tongue in cheek. If I have any decisions, one that stands out is, I think my best decision, and I would like to think is the legacy that I will leave, is the creation of the Helping Hands project.
The Helping Hands project, for those who don't know, is a contribution out of salaries from the staff and matched by the company. That has grown to this date, to something like AUD 50 million-AUD 60 million that we've given to various NGOs, to various charities over the years. It's been a fantastic success. More importantly, or just as importantly, it's been just a wonderful morale booster of staff, being able to look at it there and say, "We're contributing," and what a wonderful company it is to set up something like that and contribute to the social responsibilities of the company.
I just wish many more CEOs around the country, because the Helping Hands projects similar to that has been adopted by very few companies around the place, and it's just crying out for some. Once you get into a position of being a CEO, you do have an ability to make some changes or put some things in run. There are a lot of CEOs who could say, "This Helping Hands, the workplace giving is one way we can contribute socially." Unfortunately, I think too much the CEOs are too much about, "Oh, I'm now CEO. I've contributed." Instead of saying, "I'm," I don't know, whatever. Instead of sitting back and saying, "How can I contribute not only to the company, but how can I contribute socially?" So that probably I leave here with, that's probably my biggest legacy, and the one I'm most proud of.
It is a lot to be proud of because it's come from a minnow to one of the best retailers in the country. That's again, that's a credit to the continuation of just wonderful management and staff. So, I hope I've answered those questions. Stephen-
Thanks, Richard.
if I've been light on something, let me know.
Thanks, Richard. I think that is an insight as shareholders as to why we will miss Richard so much. He is very humble, and he has done a lot for this business, and we do appreciate it, Richard. We wish you the best. Any questions online, Doug?
Yeah. Another question from Stephen Mayne. This one to Terry. Could Terry Smart please comment on what steps he is taking to ensure he does not overshadow the CEO in board discussions, given his vast experience with the company? It is unusual to have former CEOs sitting on a board. Has Richard given Terry any guidance on how to navigate these issues? During his time away from JB, how did Terry stay across the issues? Did he have regular catch-ups with Nick to assist with the CEO transition? Will these end now that he is just one of several non-executive Directors? Finally, how is Terry enjoying being the opposite side of the table in board meetings, including in various committees?
Well, I might just start with the answer of that. If any Director is out of line, it is my job as Chairman to make sure I give them feedback, and frankly, that does not happen very often on this board. I cannot recall it in recent times, and that would include Terry. It is a very cohesive board. Terry has been around the business for a long time. He has been around boards for a long time, so I do not expect that to be an issue at all. Terry had a break from the company. We really only started talking over the period before he was then reappointed. That was announced in August. Since his appointment in October 5, has been then reacquainted with the financials and the information around the business and attended his first board meeting yesterday.
Terry, all that leaves for you to answer is, did you enjoy yesterday?
Thanks, Stephen. Yes, I did enjoy yesterday. Stephen, I think that last part of the question was just how I am feeling about being on this other side. I have been in this business for 25 odd years, so I have a lot of passion for the business. I am really just enjoying being back. It is one board meeting, but being on the other side and just if I can contribute in some small way to the continued growth and success of the business, then I think I have done my job. So really enjoying it as a start now and looking forward to many more. Thank you.
Thank you. Doug, any other questions online?
No, no more questions.
Any questions to the floor? Chris?
Do you want to come back? Just while we're on the director elections. I must admit, I suppose I didn't realize we're covering the total agenda through the question time, but you've already explained that point. Just to be clear, our association recommended that all directors be reelected, or in the case of Terry, elected. One important element we look to in terms of director elections is their skin in the game, as we refer to it. That is how many shares the individual directors hold in the company, because we think that's a great way to demonstrate alignment. Particularly at a time now where the share price is obviously under a bit of pressure. It's good to know that the directors themselves are sharing some of that pain, and also it's a re-contribution to their fees.
They're all paid well, so we'd like to see that they reinvest at least at a base fee level back into shares into the company. Just noticing because with Terry coming on board now, he has to disclose the number of shares he holds, which is again, very pleasing, and I dare say as a reflection of his very successful executive career. He holds over 115,000 shares. So, he's certainly got skin in the game. But also he declares that he's got what's referred to as restricted shares. We at the association understand that, but I just thought for the purposes of today's meeting, Mr. Chairman, you might like to expand around this issue of restricted shares, any conditions that may apply to them, and how they'll eventually, I assume, will be released from those restrictions. Could you just expand on that whole issue?
Sure. Yeah, happy to, Chris. So our VRP works that there is a target for the year's performance based on EPS growth. If you achieve that target, then you get an amount in cash as an STI component, 25%, and then 25% in shares each year for years one, two, and three. So the restricted shares that Terry would have relate to last year, the year before, and maybe the year after. Although that's the year before, although that's probably granted, Doug. So these shares will vest, and when Terry left the business, he was regarded as a good leaver. He was retiring. He wasn't going to a competitor. So he retains those. But they will vest in due course when they're intended to invest according to that schedule over years two, three, and four.
Just one technicality if I could. I believe they may be already vested, and what has happened is because he is actually entitled to dividends, et cetera, on those restricted shares. Have I got that correct?
The restricted shares do give dividends to the management, not just Terry, but to anyone who participates in that plan.
Yeah.
The intention is that this makes management think like shareholders. If you have got restricted shares in years two, three , and four, which our team has, they think like shareholders, and they are very interested in building the value of that share, along with ensuring they get their performance for the STI component in any particular year. Thanks, Chris. Any other questions? Doug? Nothing from the line. Okay. Thank you, ladies and gentlemen. That concludes the questions. If you had not voted already, please cast your votes now. A reminder that for those attending the meeting online, you can vote by selecting the voting icon. For those attending in person, you can vote by either scanning the QR code that you received upon admission or by completing the yellow voting card that was provided to you upon admission and holding it up for collection.
We will take a few moments now to allow you to finish voting. Please complete your voting now. Please raise your hand if your voting form has not been collected. Remember that for next year. We good? All right. I have got the nod from Computershare. Thank you everyone, voting is now closed. The voting results from the meeting will be released to the ASX later today. On behalf of the board, I would like to thank you for participating in today's AGM. I now declare the meeting closed, and I invite you to join the directors of the company for refreshments in the next room there. Thanks very much, everyone.