Welcome to Michael Hill, country and First Nations people throughout Australia, New Zealand, and community. I pay my respects to them and their cultures, and to elders past, present, and future. I'm Rob Fyfe, chair of the board of directors, and it is my pleasure to chair today's meeting. Our company secretary has confirmed that a quorum is present, so I formally declare the meeting properly constituted and open for business. Before I get into the housekeeping matters, I'd like to welcome my fellow board members who are here virtually at this meeting. Firstly, the company's founder, Sir Michael Hill; Gary Smith, chair of our Audit and Risk Management Committee; Emma Hill, chair of our People Development and Remuneration Committee; Jackie Naylor, Daniel Bracken, our Managing Director and CEO, and our newest addition to the board, Dave Whittle.
In August this year, the board appointed Dave as a non-executive director. Dave's experience and expertise will bring a fresh perspective with a wealth of knowledge across data, technology, and brand, which will be invaluable to the company. His extensive experience in marketing, omni-channel retail, and digital transformation complements that complements, sorry, the existing board composition. Today, we are also joined by CFO and Company Secretary, Andrew Lowe, and Kelli McKenzie , lead external audit partner from Ernst & Young. Andrew and Kelli are present to address any questions on our financial reports. On to housekeeping and the flow of the meeting. I invite you to take full advantage of the technology that we are using today. The platform allows shareholders and proxies to ask questions and submit votes in real time.
To that end, if you do have any questions or comments on any item of business, in this year, you are able to do so in either of two ways: in writing at any time, or verbally during the dedicated question time following the presentations. To ask a written question, select the Messaging tab at the top of the Lumi platform, type your question in the box towards the top of the page, and press the arrow symbol to send. A copy of your submitted questions, along with any written responses from our meeting team, can be viewed by selecting My Messages. To ask your question verbally, click on the Request to Speak button at the bottom of the broadcast window. The audio questions interface will now display. You will be prompted to confirm your name and enter the topic of your question.
Submit your request and follow the instructions to allow access to your microphone and connect to the queue. We will address your questions and comments after Daniel and I have presented. If we do not get to your question for whatever reason during the meeting, we will follow up directly with you following the meeting. Voting today will be conducted by way of a poll on all items of business. Instructions on how to vote are on the screen. In order to provide you with enough time to vote, I now declare voting open on all items of business. If you are eligible to vote at this meeting, the Voting icon will soon appear. Selecting this tab will bring up a list of resolutions and pre- and present you with voting options. To cast your vote, simply select one of the options. Your vote is automatically recorded.
There is no need to press the Submit or Enter button. You do, however, have the ability to change your vote up until the time I declare voting closed. I will give you a warning before I move to close the voting. If we experience technical issues that result in a number of shareholders being unable to reasonably participate, I will adjourn the meeting, and it will be reconvened at a later time. If this occurs, we will lodge an ASX and NZX release after the adjournment that sets out the details and next steps. Today, I'd like to give you an overview of how we view the year that's closed. Following that, Daniel will give more detail on our 2023 results, our strategic focus, and the current trading update. Our financial year, ending July 2nd, 2023, was certainly a more challenging year at Michael Hill.
During both FY 2022 and the first half of FY 2023, we continued to benefit from COVID economic stimulus, reduced operating costs, and travel restrictions in all our markets, which boosted domestic retail spend. In the second half of FY 2023, we saw inflation in wages, gold, diamonds, and other input costs, along with rising interest rates eating into disposable consumer spending, and an increased portion of that remaining spend being redirected to domestic and international leisure travel. We have also experienced a particularly challenging security environment in New Zealand, with record levels of retail crime necessitating a significant increase in security countermeasures, increased stock losses and an incremental AUD 5 million spent to protect our customers and team members.
Despite these challenges, we have maintained an unwavering commitment to our strategy with an increased investment in elevating the Michael Hill brand and our product offering, a strong commitment to executing on the retail fundamentals, strong cost and inventory management, and investment in a series of new brand offerings to expand our addressable market. Against this backdrop, the business delivered a solid performance for FY2023, with record revenue, elevated margins and strong earnings. I'm both proud and grateful for the agility, resilience, perseverance and focus that Daniel and the entire Michael Hill team have displayed in delivering these results. The heritage of our brand and creative inspiration from our founders continues to underpin the foundations of the company.
FY 2023 saw the launch of the Jeweller's brand campaign, which focused on our origins as a fine jeweler, the vision of our founders in showcasing our craftsmanship, creativity, and commitment to quality. I will now share the latest brand campaign.
Hello. At some point, he needs to wake up. He's not going to get anywhere dreaming his entire life away. You're only doing this as a favor for your mother, you know?
Oh, let's go to the blood this night. I'm Michael.
I'm Anne, but my friends call me Christine.
Hello, Michael Hill Jeweller .
This campaign demonstrates that as the Michael Hill brand continues its aspirational brand journey, we will maintain a strong connection to our rich heritage and the vision from our founders. During the year, I've taken great pride in the way in which our leadership team in New Zealand and our group executive team have responded to and supported our New Zealand team members and customers impacted by the retail crime events and ram raids we have experienced in New Zealand, along with a series of extreme weather events. During these times of adversity, our values, we care, we create outstanding experiences, we are professional, and we are inclusive and diverse, get truly tested. I'm proud to be part of a team who have clearly demonstrated and lived the company's values as we have responded to these challenges.
Pleasingly, our employee engagement survey was completed by 84% of our workforce and resulted in an engagement score of 82%, which is 10% higher than the global retail industry average. Our consistently high engagement score demonstrates how hard we continue to work to ensure that Michael Hill remains an employer of choice and is a great place to work. In August 2022, we released our 2030 Sustainability Manifesto, centered around three key pillars of people, product, and planet. During the year, we have made great progress toward our goals: reduced our Scope 1 emissions by 39%, reduced our head office waste by 65%, and made significant donations towards empowering women with Dress for Success and Auckland Women's Refuge . In addition, an integral part of the strategy was to the launch of a circular jewelry ecosystem that we call Renew.
During the year, the first phase was launched, Recycle, which is a digitally enabled gold recycling program that encourages customers to give new life to their old loves by recycling gold jewelry pieces in exchange for a Michael Hill e-gift card. The opportunity is in the coming year to extend this offering to New Zealand and Canada, and we're very excited to do this. The second phase, Reimagine, is a diamond upgrade program, and the third phase, Restore, will focus on jewelry repairs, both of which are to be launched this financial year. Last year, the company articulated the capital management framework for the business, which included pursuing acquisition opportunities in the fine jewelry sector. Pleasingly, the business successfully acquired an earnings accretive, scalable, and complementary Australian value-led jewelry brand, Bevilles.
With the Bevilles team having successfully transitioned, the key focus is now on expanding the store network nationally. During the year, the company commenced its on-market share buyback, with 8.63 million shares brought back, representing 2.2% of issued capital, for a total cash cost of AUD 10.2 million. The share buyback was concluded in August 2023. Furthermore, we were pleased to declare a final dividend of AUD 0.035 per share, bringing our total dividend for the year to AUD 0.075 per share, representing approximately 70% of adjusted annual net profit after tax, and at the higher end of the company's dividend distribution policy target range of 50%-75%. I'm immensely proud of Daniel, our highly capable executives working alongside him, and the broader Michael Hill team.
Even though the second half of FY20 23 was particularly challenging, the team remained focused, executed on our strategy, delivered a plethora of initiatives, and successfully acquired a new brand, Bevilles, which represents a fabulous opportunity to expand our addressable market and support our growth ambitions. I'd now like to close my address by acknowledging and thanking all our shareholders for their ongoing support. I now invite Managing Director and CEO, Daniel Bracken, to address the meeting and discuss the 2023 operational performance, provide an update on the company's strategy, and also a current trading update. Daniel?
Thank you, Rob. Good morning, and thank you for joining us today. I will now take you through a review of the 2023 financial results and operational achievements. We'll also provide you with some insights into key strategic initiatives for the year ahead, and an update on our current trading performance. Let me start by saying, it has been a very busy year at Michael Hill. While we finished FY 2023 with comparable EBIT slightly below the prior year, due to a more challenging second half, we still delivered the second highest profit in the company's history. These results were underpinned by our clearly articulated strategic initiatives, driven by the ability to elevate average transaction value, supported by Michael Hill's aspirational brand journey, leveraging our loyalty program, which now has over 2 million members, the evolution of our product.
During the year, we introduced some fantastic new ranges, and most importantly, a relentless focus on retail fundamentals, driving continued improvement in productivity across all markets. In August 2022, the company executed a seamless relocation of its global headquarters to new purpose-built premises, housing the global support functions with a reimagined artisanal jewelry workshop, and state-of-the-art Australasian distribution center. Our new office provides a contemporary, dynamic, and productive environment, strategically aligned to Michael Hill's aspirational brand journey. In June 2023, the company completed the Bevilles acquisition, successfully transitioning all team members, stores, and inventory to the group. As the Michael Hill brand elevates, the Bevilles business gives us the opportunity to capture market share at the value end of the fine jewelry category. Currently, a 26-store business, primed for a significant real estate expansion strategy.
We also continue to focus on digital, to modernize customer experience, and to reach new markets. The creation of a dual language Canadian website allows us to attract a new French-speaking customer base in Quebec and across Canada. We also extended our marketplace offerings by partnering with Zalora in Singapore and Malaysia. And most importantly, the Michael Hill business is built on the foundations of a great culture and a fantastic team, as evidenced by our most recent engagement survey, with our global engagement score above 80%. I'd like to both acknowledge and thank the team for their unwavering focus and energy throughout the year.
The group has reported record operating revenues of AUD 630 million for 2023 financial year, a 53-week retail financial year ending 2nd July 2023, which includes 4 weeks of Bevilles trade in the group and Australian segment results. Comparable earnings before interest and tax for the group was AUD 58.9 million for the year, a decline of 6% year-on-year, due to higher cost of goods pressure, wage inflation in all three markets, and elevated New Zealand security costs. While the company delivered record revenue for the year, this was driven by a particularly strong first half performance, followed by a more challenging second half, as macroeconomic conditions deteriorated and consumer confidence declined. Notwithstanding the impact of sustained elevated raw material input costs seen with diamonds and gold, and while slightly down on prior year, the company still delivered strong growth margins.
This performance was underpinned by the aspirational brand strategy and the ability to leverage average transaction value even in a challenging retail environment. Inventory year-end holdings were AUD 203 million, with Michael Hill on target and broadly in line with the prior year. The lift in stock holdings was largely driven by the inventory acquired in the Bevilles transaction. During the year, the company benefited from strong operating cash flows, successfully acquired Bevilles, returned capitals of shareholders through a buyback in dividends, and continued investment in both the core business and growth initiatives, which resulted in a year-end net cash position of AUD 8.4 million. Furthermore, the company refinanced with a new three-year, AUD 90 million bank facility on favorable terms, which will support future strategic growth, growth initiatives.
Michael Hill opened 3 new stores and closed 5 underperforming stores across the network during the year, and with the inclusion of 26 acquired Bevilles stores, the store network totals 304 across all markets at the end of the year. In terms of key performance insight, it is noted that both revenue and gross margin have lifted significantly on pre-pandemic levels. Even though comparable EBIT was down on the record FY 2022, earnings were also still well above pre-pandemic levels. As shown in the bottom of the slide, pleasingly, the strong lift in revenue has been underpinned by increased store productivity. This is borne out by the lift in both average revenue per store and average gross profit per store. Before moving on to our current trading update, I'd like to share our year-in-review film.
Now moving on to our current trading update. There is no doubt that retail conditions have continued to be very challenging in all markets as the group cycles record H1 sales in the prior year. For the first 19 weeks of FY 2024, group sales, including Bevilles, are up 2% on prior year and up 26% on FY 2022. For the core Michael Hill brand, sales have continued the recent trend and are down on the record start to FY 2023. However, are up 13% on FY 2022 and up 15% on pre-pandemic trade in FY2019. Group gross margins have continued to be under pressure, with sustained elevated diamond and gold pricing and dampened consumer confidence due to economic challenges, leading to greater promotional activity across all retail categories and markets.
We have seen transactional sales data from multiple external sources that demonstrates that both Michael Hill and Bevilles continue to take market share in a challenging retail environment. As we enter the all-important Christmas period, the start to November trade is encouraging. However, we are only two weeks into the Christmas trading period. Our new Christmas campaign launched at the start of the month and is already gaining strong traction with both customers and stores. Earlier in the year, the company undertook a comprehensive product range review, enabling the largest ever injection of newness in readiness for the key Christmas trading period. With over 2.1 million members, the Brilliance by Michael Hill loyalty program will be a key differentiator and enabler for customer engagement and sales-driving events.
Along with 2 significant store refurbishments, 4 new Bevilles stores will open for Christmas trade, bringing the brand's store count to 30. Much of Michael Hill's strong performance over recent years can be attributed to the strategic transformation and elevation of the brand, along with an overarching emphasis on growth. The strategic framework underpins the future growth of the business, is customer-led, and continually evolving. The strategy to elevate and modernize the Michael Hill brand underpins the overarching vision for the business. Highly engaging and emotive marketing campaigns, focusing on key life moments with an emphasis on product, quality, and craft, are leading the transition away from price and promotion towards emotional, long-term customer relationships. The success of this strategy is best evidenced by the continued expansion of average transaction value, up 27% over the last 4 years.
Product evolution is at the center of a customer-led retail strategy and is critical to achieving sales growth and supporting elevated margin. The laboratory-grown diamond category continues to expand, with higher sales growth and margins helping to offset high input costs for both mined, mined diamonds and gold. During the year, the business invested in new talent and capability across product buying, sourcing, and procurement, as well as technology investments in merchandise planning. A great example of a brand-led campaign is our recently launched Christmas campaign, which we will play for you now.
There is a house built out of stone. Wooden floors, walls, and window sills. Tables and chairs worn by all of the dust. This is the place where I feel at home. I built a home for you and me, and it, it is a piece of me for you. Now it's time to leave our haunted old house. Out in the garden where we planted the seeds, there is a tree that was always me.
Just, wipe the tears from my eyes at that wonderful piece of content. Moving on to loyalty. The Brilliance by Michael Hill loyalty program underpins customer engagement and has now grown to over 2 million members. The program provides the business with essential data to drive more frequent and more profitable customers. Brilliance members are more valuable across average transaction value by 70%, gross profit by 250 basis points, and members transact more frequently. Pleasingly, more than 80% of our sales are now made by members of the Brilliance loyalty program. Bricks-and-mortar retail is at the core of the Michael Hill business, driving more than 90% of company sales. The retail fundamental strategy has delivered a 21% uplift in store productivity over the last 4 years.
During FY20 23, the business invested in refreshing a significant portion of our store network as we elevate the in-store experience to align with the brand strategy. The retail team continues to focus on productivity as a key performance metric for stores, in conjunction with a deliberate emphasis on lifting average transaction value. As the Michael Hill brand continues its aspirational brand journey to a more premium position, the acquisition of Bevilles in June provides a vehicle to take market share at the value end of the fine jewelry category. Additionally, in October, the business launched its new bespoke brand, TenSevenSeven, focused on servicing the high end of the market with its unique, personalized diamond ring proposition. With these additional brands, the Michael Hill Group now services all significant customer segments of the fine jewelry category and delivers multiple new growth pipelines.
The Bevilles brand will deliver both sales and profit growth through a significant real estate expansion strategy, coupled with digital growth and an optimized business model. For FY 2024, 4 sites have been secured for pre-Christmas opening and a further tranche identified for the second half. Leveraging group capabilities and partnerships, Bevilles will benefit from optimization of both supply chain and vendor relationships, delivering margin and cost benefits to the business. With system integration planned for the second half of FY 2024, this will drive further opportunities in both productivity and efficiencies by leveraging a common technology platform. TenSevenSeven is a new startup brand designed to deliver a completely unique and elevated proposition, capturing an entirely new high-end customer.
TenSevenSeven is brought to life through an immersive digital experience, where customers are invited to select from tens of thousands of unique diamonds, paired with the ring design of their choice and ultimate handcrafting in our artisanal Australian workshop. The digital platform allows the brand to showcase a curated diamond library in a capital-light business model, as the diamonds are owned by our trusted diamond vendors. In due course, this digital offering will be supported by the gradual rollout of a limited number of showrooms in key capital cities. And to give you a sense of this incredible new brand.
Call out, smile, and wait to catch a fire. I know you think that you can feel again. It's all outside, the way it used to hide. It flows away before we're gone. But you make me stronger, and I can breathe again. You let me fall into summer. And you keep me stronger, and I can feel again. We're slowly making back to where we started.
I hope you are now all as excited as I am about our new TenSevenSeven brand. I will now hand back to the chair to conduct the formal business of the meeting.
Thanks, Daniel. Before we move on to the formal business of the meeting, we will now take questions or comments. If you do have any questions of the board or our external auditors, or wish to make any comments on any item of business, please either submit them in writing or use the audio function now, if you haven't already done so. Our moderator for the question- and- answer session is Emily. Emily, have any written questions or comments been received, or are there any shareholders waiting to speak via the online platform?
Thank you, Chair. We have received a number of written questions via the online platform. The first question is from shareholder Eric Kenny, who asks, "Why did the share price go from $1.20 to $0.80? A $1.20 to $0.80 ?
Thanks for the question, Mr. Kenny. I'm happy to pick that up. We have seen a general softening in retail stocks across the market here in Australia and, in fact, globally. And without doubt, as referenced in the comments by both Daniel and I, we are seeing some pressure on disposable consumer spending as higher interest rates eat into the share of wallet. We also referenced we're seeing some shift in spend away from retail and into travel. In fact, when you look at the retail spend data across the market, outside of hospitality and grocery, all sectors have been trending down, and I think that's been reflected in our share price.
Notwithstanding that, based on the data we're seeing, we believe we're certainly taking market share in terms of our relative performance to the overall jewelry sector. Thank you.
Chair, we have another question from shareholder Eric Kenny, who asks, "What efforts with regards to innovation is the company seeking to engage members of the public in the design of jewelry?" So, "What efforts with regards to innovation is the company seeking to engage members of the public in the design of jewelry?
Thanks, Emily. I think I'll pass to, to Daniel to respond to that question.
Good morning, Mr. Kenny. Thank you for that question. We have our own internal product design and merchandise team that build our product ranges. We've recently, as I said in my presentation, invested in new capability to beef up the capability in that team. As we elevate our brand, it's increasingly more important that the products that we bring to market aligns with the aspirational brand positioning that we're aiming to achieve, and that there's uniqueness in our products. So everything in our ranges now in a Michael Hill store is uniquely designed by Michael Hill for Michael Hill, not just bought off the line like many other jewelers do. And of course, as part of that design and development process, we're constantly monitoring consumer trends.
Our designer actually is U.S.-based, because that's where innovation really begins in the world of jewelry. We leverage our supply network to understand future trends and capabilities and new innovation and technology behind jewelry manufacturing. This is a key area of focus. So while we don't engage directly with consumers to ask for design input, we're very cognizant of consumer trends, and listening to feedback from our customers is part of our operating rhythm at Michael Hill. Thank you.
Back to you, Emily.
Chair, we have three questions from Su Yee Chong. His first question is: The Bevilles acquisition seems dilutive to capital efficiency, as it has a return on capital employed of only about 12%, based on the AUD 45 million price tag, compared to more than 20% for the existing Michael Hill business. In itself, Bevilles is also a lower margin and lower return business than Michael Hill. This means that the marginal capital deployed has a significantly lower rate of return. Can you please help us understand how the acquisition will enhance shareholder value?
Yes, thank you. I'm more than happy to share the board's perspective on this acquisition. So firstly, just to clarify, the margins in the Bevilles business are very similar to the Michael Hill business, so we don't see any significant variation there. The opportunity that Bevilles presents to us is to expand our addressable market. We have a very well-established position with the Michael Hill brand in New Zealand, Australia, and Canada. As we look to grow the Bevilles position in the market and increase the number of stores, we will achieve operating leverage across the cost base of Michael Hill.
There are also a number of synergies that we'll be able to gain as we grow, and there will also be an opportunity for us to optimize our store positions across the two brands. So we are very confident as a board and executive team that this will certainly be accretive and value added to the business. We don't anticipate that it will be inefficient in terms of the capital deployed. Thank you.
Chair, the second question from Su Yee Chong is, a s many businesses are reeling from higher costs of doing business in the face of sluggish sales, how flexible and reflexive is Michael Hill's operating cost structure to changing market conditions, such as a recessionary one? Comparisons with the cost structures in previous economic cycles would be useful. A follow-up question is whether there are cost optimization measures on the cards?
I will pass this question to Daniel, and just to reassure shareholders, we spend a significant amount of time talking about the costs of doing business. And certainly, Daniel and the team have, in my view, been well ahead of the curve in anticipating some of the challenges we're now seeing in the market and ensuring we are operating as efficiently as possible. But I'll pass to Daniel to talk more specifically about some of those initiatives.
I think it's fair to say, Rob, or Mr. Chong, that you know, retail does have just generally, retail does bear the burden of some heavy fixed costs. Certainly, occupancy costs aren't flexible. Minimum store labor, and minimum store labor in a fine jewelry business is higher than in a fashion retail business. You know, is again a big fixed cost in our business. But one of our strategic pillars is a cost-conscious culture. It's something that our CFO and myself have created as part of our culture of our business, and it's a constant focus.
Whether that's the cost of moving product around the country, the cost of fit outs in our stores, the cost of you know credit offerings in our store networks, these are all areas that go and attribute to the ATV of the business, and they're areas that are constantly under review. We certainly understand the market that we're operating in right now, and the biggest cost bucket in the business is store labor, and there is some level of flexibility, and we really push hard into that flexibility as and when the conditions require it. But at the same time, it's important that we staff our top stores, particularly at this time of year, with the right levels of staff to maximize the sales opportunity.
So we have introduced a technology platform that drives dynamic rostering now in our business, where we can measure foot traffic, transaction volumes, and predict requirements to support the customers in our business and how we roster our staff, looking to drive the most optimum cost management program in our business. So it is a constant focus, and there should be no doubt from our shareholders that it's a very, very high priority for the whole of our executive team.
Thanks, and back to you, Emily.
Thank you, Chair. A third question from Su Yee Chong, h ow much in total has the company spent so far on beefing up the security measures against ram raids in New Zealand? What is the ongoing operating cost of these security measures, and are the measures really effective?
Thanks again. I think I'll pass that question to Daniel.
Look, I think Rob, in his opening commentary, said that in FY 2023, we invested about AUD 5 million in protecting both our customers and our team. The majority of that investment was in CapEx, bringing new security capabilities into our stores to as a deterrent to the criminals. We have seen increasing success of those investments, and we certainly don't anticipate a future where we have to make the levels of investments in security costs as we invest more in capital to deter crime. But we have been running through a particularly challenging period for this, and we will continue to prioritize protecting our customers and teams, but we do see that there is eventually a light at the end of the tunnel.
Thanks, Daniel, and back to you, Emily.
Thanks, Chair. We have a question from Alan Best, the New Zealand Shareholders Association proxy holder, who asks: What was the background thinking in TenSevenSeven
I'll pass that. Again, I think Daniel can shed some more light on this strategy, which we think is very much fits into our our brand architecture as a core element of that brand architecture. But, Daniel, do you want to.
Well, I'm sort of, Rob, reading between a little bit of the lines of the question, so I'm not totally clear on it. But, you know, TenSevenSeven, if the question's about the naming convention, it very much links back to the core heritage of our brand. And, it was in October 1977 that Michael and Christine made the decision to launch the Michael Hill brand. So it's very much steeped in the heritage of our brand as a naming convention. If the question is around, "I've looked at the website, and it doesn't feel like fine jewelry," I'm surprised, because we think we've brought to market the best digital ring builder, which is the terminology used in the industry. Best digital ring builder available anywhere in the world.
This has been a huge growth area in the U.S., with the likes of Blue Nile, Brilliant Earth and James Allen delivering $500 million-$700 million businesses, each of those brands. This is a clear opportunity for us, as the number one jewelry brand in New Zealand and the number one jewelry brand in Australia, to bring this capability of a personalized, bespoke jewelry manufacturing opportunity, design opportunity, to the market in an incredible digital execution. So, we are actually really proud of the execution of this product, and the digital experience.
Thanks, Daniel. Back to you, Emily.
Thank you, Chair. A further question from Su Yee Chong, who asks, f the average share buyback price of NZD 1.33 represented good value, the current depressed share price of below NZD 0.90 must surely be even better value now and arguably an invaluable opportunity to add shareholder value. Why has the company stopped its share buyback program? Thank you, Chair.
Thank you. I'm happy to respond to that question. I certainly agree that I think the share price is very good buying at these levels. What I would say is, you know, we commenced that buyback in advance of the acquisition of Bevilles, which was obviously a significant deployment of our cash reserves. And we also commenced that buyback in what were quite different market conditions to what we're now experiencing. As I referred to in my address, and Daniel also in his, we look back to the first half of FY20 23, when that share buyback was underway. We were effectively experiencing record performance for the business and record growth.
There are clearly some headwinds on the horizon, and economists, there's some quite diverse views of what the next 12 months will look like. And both as a board and management, we believe it's incredibly important we go into this period with as strong a balance sheet as possible. And we think it's now- now is the time to be preserving our cash holdings and strengthening our balance sheet, rather than looking to return any cash back to shareholders, either directly or via a share buyback. Hence the decision we made to discontinue the buyback at this time.
Thank you.
Emily, are there any further written questions?
Thank you, Chair. I confirm that there are no further written questions received, and there are no shareholders waiting in the audio queue.
Okay. Thank you. We'll now then move on to the formal items of business of the meeting, as set out in the Notice of Meeting . The Notice of Meeting included the explanatory notes that were sent to all shareholders. I propose that the Notice of Meeting be taken as read. You will find a copy of the notice online on the Investor Centre website. Voting on all resolutions will remain open until all items of business have been put to the meeting. The first item of business is to consider the 2023 audited financial statements, directors' report, and auditors' report. These reports are contained in the company's 2023 annual report, which has been released and distributed to shareholders prior to this meeting. You can also find a copy of the annual report online on the Investor Centre website.
There is no resolution on this item. I now confirm the 2023 audited financial statements, directors' report, and auditors' report are now received. We will now move to the next item of business. It is a non-binding resolution to adopt the 2023 remuneration report. Please note that the vote on this resolution is advisory only. Voting exclusions apply to this resolution, as set out in the Notice of Meeting . Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board endorsed director, Robert Fyfe. I'm retiring from the board in accordance with the ASX Listing Rules and the company's constitution, and being eligible, offer myself for re-election as a director of the company.
My experience and details are set out in the explanatory notes, which accompany the Notice of Meeting . Each of the directors, with myself abstaining, recommends that shareholders vote in favor of my re-election. Direct and proxy votes received in respect to this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board endorsed director, Jacqueline Naylor. Jackie is retiring from the board in accordance with the ASX listing rule and the company's constitution, and being eligible, offers herself for re-election as a director of the company. Jackie's experience and details are set out in the explanatory notes, which accompany the Notice of Meeting . Each of the directors, with Jackie abstaining, recommends that shareholders vote in favor of Jackie's re-election.
Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution. The next item of business is the re-election of board-endorsed Director, Dave Whittle. Dave's been appointed to the board since the last AGM. In accordance with the ASX Listing Rules and the company's constitution, and being eligible, Dave retires and offers himself for re-election as a director of the company. Dave's experience and details are set out in the explanatory notes which accompany the Notice of Meeting . Each of the directors, with Dave abstaining, recommends that shareholders vote in favor of Dave's re-election. Director and proxy votes received in respect of the resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution.
We will now move to the proposed approval of the company's Equity Incentive Plan , as defined in the explanatory notes accompanying the Notice of Meeting , and the issue of securities under the incentive plan as an exception to ASX Listing Rule 7.1. The company has established a new incentive plan to address significant changes to the Corporations Act regarding employee share schemes. A summary of the terms of the incentive plan and the other required information is set out in the explanatory notes, which accompany the Notice of Meeting . If approval is obtained, it will be effective for a period of three years from the date of the resolution passed. Each of the directors, with Daniel Bracken abstaining, recommends that shareholders vote in favor of approving the company's incentive plan, as defined in the explanatory notes accompanying the Notice of Meeting .
The issue of securities under the incentive plan, as an exception to ASX Listing Rule 7.1. Director and proxy votes received are as detailed on the slide. Open proxies appointing the chair shall be voted for the resolution. We'll now move on to the proposed approval of an increase of the non-executive director remuneration pool. For the purposes of ASX Listing Rule 10.17 and Rule 39.5 of the company's constitution, the maximum aggregate annual directors' fees that may be paid by the company to the non-executive directors be increased from AUD 840,000 per annum to AUD 1.2 million per annum.
The board is seeking shareholder approval to increase the fee pool for the following reasons: To enable the company to maintain remuneration arrangements that are market competitive, so it can attract and retain high caliber individuals as non-executive directors. To ensure the fee pool can accommodate payment of fees to any additional non-executive, executive directors appointed to the board, including the recent appointment of Mr. Dave Whittle, if and when required. To provide for non-executive director fees to grow in the future to reflect market trends. I draw to your attention that the current director fee pool of AUD 840,000 was approved in 2016 by the company's sole shareholder at the time, and has not been increased in the seven years since. The fees payable to non-executive directors are reviewed annually by the People Development and Remuneration Committee.
A review of Michael Hill's market cap peer group was last conducted in 2022, which demonstrated that Michael Hill International director fees were in line with market. The peer group consisted of a sample size of 14 companies in the consumer discretionary , distribution, and retail industry group listed on the ASX. The benchmarking review was conducted in respect of the FY 2021 fees for non-executive directors, board chair, Audit and Risk Management Committee chair, and Remuneration Committee chair. The approach was endorsed by the board.
In determining the appropriate amount to put to shareholders for the fee pool, the People Development and Remuneration Committee modeled scenarios for director fees payable from FY 2023 through to FY 2029, consistent with our current approach, and factoring in the additional director following Dave Whittle's appointment, and the possibility of the appointment of a further additional non-executive director to allow the flexibility for the board to evolve to meet the company's needs. The board considers that the assumptions of the modeling are appropriate to ensure the fee pool is sufficient to allow for directors' fees for the next 5-6 years, to avoid having to revert to shareholders for further approvals.
In accordance with the non-executive director remuneration fee policy, non-executive director fees are indexed annually by the lesser of the Consumer Price Index and the Wage Price Index , and every three years are subject to a market peer review. The full details of the proposed approval are set out in the explanatory notes, which accompany the Notice of Meeting . Voting exclusions apply to this resolution, as set out in the Notice of Meeting. As the non-executive directors have an interest in the outcome of Resolution Six, the board does not believe it's appropriate to make a recommendation to shareholders as to how to vote in relation to this resolution. Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution.
We will now move on to the proposed grant of share rights to our Managing Director and CEO, Daniel Bracken, under the company's Equity Incentive Plan . Full details of the proposed grant of share rights under the company's Equity Incentive Plan are set out in the explanatory notes, which accompany the Notice of Meeting . The purpose of this resolution is to seek your approval for Daniel to acquire share rights under Michael Hill's Equity Incentive Plan for FY 2023, and which form part of his total remuneration package. Voting exclusions apply to this resolution, as set out in the Notice of Meeting. The board, other than Mr. Daniel Bracken, recommends that shareholders vote for Resolution Seven. Direct and proxy votes received in respect of this resolution are shown on the presentation slide on your screen. Open proxies appointing the chair shall be voted for the resolution.
I'd like to remind shareholders who have not yet cast their votes on this, and all other resolutions, to do so now. Voting will close in approximately 30 seconds. Voting has now closed. Now that the formal items of business have been addressed, I'd like to thank you on behalf of the board and management for attending Michael Hill's 2023 Annual General Meeting, and look forward to your continued support in the coming year. The results of the meeting will be announced on the ASX and NZX later today, and will be displayed on the Investor Centre website. I now declare the 2023 AGM closed. Thank you and may-