Ladies and gentlemen, the Myer Annual General Meeting is about to commence. My name is Timothy Clark. I'm the Executive General Manager of Property Store Development and Services for Myer. From a housekeeping perspective, I'm here to inform you should any emergency arise that requires evacuation, the venue staff will be on hand to direct us. Please follow their instruction using the nearest emergency exits. There are three emergency exits located at the back of the auditorium, and one to my left and also one to my right. Please also note that photography, audio, or video recording is not permitted during the meeting. The Myer Chairman, JoAnne Stephenson, will now commence the meeting. JoAnne.
Thanks, Tim, and good afternoon, ladies and gentlemen. As Tim said, I'm JoAnne Stephenson, and it's my pleasure to welcome you to the 2022 annual general meeting of Myer Holdings Limited as your chairman. As we gather for this hybrid meeting today, which is also being audio webcast, let us take a moment to recognize the various traditional owners of the lands on which we do our business today. From my location, I'd like to acknowledge the custodians of the land where we meet here today, which is the Gadigal of the Eora Nation, and I pay my respects to their elders, past, present and emerging, and acknowledge their connection to country. It's really great to hold this meeting today face-to-face after the last couple of years of virtual meetings during COVID.
As always, we plan to make this meeting as interactive as possible with the opportunity for shareholders to ask questions in person, online, and over the phone, and to vote either in person or online. We look forward to taking any questions that you may have later in the meeting as we progress through the resolutions. Joining me today on the stage are my fellow non-executive directors, Managing Director John King, our Chief Financial Officer Nigel Chadwick, and our Company Secretary Paul Morris. I'd also like to acknowledge and extend a warm welcome to Terry McCartney, who has been nominated for election to the board today, and he's with us. Finally, I'd also like to welcome the Myer executive team who are present today in the front line. You saw Tim a little earlier.
Alison Milner, who's also down the front here from our auditors, PricewaterhouseCoopers, and Rory Moriarty from our solicitors, Clayton Utz. Finally, Dan Reid is representing our share registry Link Market Services today. With a quorum present, I now formally declare the meeting open. The notice of meeting has been distributed to shareholders and a copy is posted on the investor section of our website. I'll take that notice of meeting as read. The items of business to be covered at today's meeting are set out in that notice of meeting. After we introduce and speak to each agenda item, we'll take shareholder questions on that item. For those with us today, we have endeavored to answer them in our remarks or in the presentation, but there are a couple that we'll take as questions during that question session.
To the agenda today, I'll speak briefly on the significant progress we've made against the Customer First Plan, and then John will provide a more detailed update on our results, the delivery of the Customer First Plan, as well as providing an update on our preparations for peak trade. Following this, we'll then move to the formal items of business, as well as hear from the directors and nominees who are seeking re-election and election today. Voting on each of these items of business today will be by way of a poll. For those in attendance in person, voting on each resolution will be conducted via the voting card that you would have received when you registered on your arrival today. For those attending online, voting will take place via the online meeting platform, and you will already be aware of that.
I'll explain the Q&A and voting procedures in a little bit more detail later when we get to the formal items of business. Let me now declare the poll open. This means that you can vote on any of the items of business at any time from now until the poll is closed. Please join the directors and the executive team for refreshments back up in the foyer where you came in. Let me make some opening comments and address our performance in the financial year 2022. For the third consecutive year, 2022 presented us with COVID-affected trading conditions. Pleasingly, despite the disruptions through store closures, labor shortages, and supply chain impacts, Myer has produced a strong full-year result.
Importantly, as the second half conditions showed improvements, we delivered sales growth in both stores and online and the best second half net profit after tax before implementation costs since the second half of 2013. For the full year, the business showed strong improvement in sales, underlying profitability, cash generation, and other key measures, demonstrating the momentum being delivered under the Customer First Plan. This momentum and confidence in our performance has allowed the board to recommence dividend payments with a total dividend relating to the 2022 year of AUD 0.04 per share, or a yield of 6.3% on the closing price immediately before the release of our 2022 results or higher obviously if the average share price over the year were to be considered.
We're into four years of delivery of the Customer First Plan and our FY 22 results and current trading demonstrate the continuing momentum of the Customer First Plan. Under John's leadership, this plan has been executed with discipline, addressing legacy issues with a sharp focus on store space optimization and improvement, and upgrading in-store technology. The team is equally focused on future-facing initiatives, including improvement of our online capability, the strengthening of the loyalty program, and introduction of the national distribution center, about which we're pretty excited. The relentless execution by the team has seen Myer improve service levels, better focus the range, and enhance and scale our online business. The leading Myer One loyalty program. Underpinned by our leading loyalty program, Myer One, which continues to deliver greater value to more of our customers, providing a unique and competitive advantage which we will continue to leverage.
The work undertaken in these areas over the last four years has resulted in improved customer service satisfaction scores, a leading net promoter. We've actively been reducing and optimizing our stores' footprint with 119,000 sq ft of 2018. Many refurbishments and space optimization activities have been completed across the network. We're also in the midst of a transformation of store technology with a new point-of-sale system and Zebra mobile devices to allow us to serve customers more quickly and more effectively. Actually, the board with John and some executives saw that in use in our Sydney store this morning. The introduction of the national distribution center will ensure that we're stocking our stores in the most efficient way, increase the speed of fulfillment of online orders, and deliver further customer and shareholder value.
This will be a state-of-the-art facility and is expected to be fully operational in the fourth quarter of the 2023 financial year. Can I now briefly touch on Myer's role in the community? Myer has a long-standing history of supporting local communities and is proud to partner with more than 60 charities across Australia annually. The Myer Community Fund was proud to raise over AUD 1.3 million over the year, and that will go towards supporting children and families in Australia, including those experiencing family violence. Myer continues to progress and improve its sustainability program, with the company making a public commitment to work towards paying a living wage. Now to board matters very briefly. Today, Jacquie Naylor and I are standing for re-election as independent non-executive directors of the company.
Jacquie brings to the role a wealth of experience and knowledge of both women's and men's apparel, homewares, and outdoor brands. She has had extensive experience in strategic planning, logistics, marketing, together with corporate restructuring and global business expertise. The Myer board's unwavering focus is on representing and serving the interests of all shareholders by overseeing the company's strategies, policies, and performance, and continuing to work in a constructive and cohesive way with the executive management team to execute that Customer First Plan and deliver value to all shareholders. With your support, both Jacquie and I, and the rest of the board, will continue this focus on the business and all shareholders. In addition to that, as I said earlier, Terry McCartney, who's with us today, is standing for election as the nominee of our largest shareholder. Each is...
Each of the directors standing for election, Myer today is a better, stronger, and more agile business, well-equipped to meet the demands of our evolving consumer. This is going to be important as we navigate the challenges developing in the external environment. Both internationally and domestically, governments and communities are grappling with rising inflation and interest rates, and labor shortages and supply chain issues are persisting. Your board and leadership team are positioning the business well to deal with those conditions, and we believe that we are well-placed to capitalize on the opportunities that exist with the right value-based proposition, of affordable and aspirational brands across our business, and a performing store and online offer underpinned by the leading loyalty program, providing greater value and choice for our customers.
Through the Customer First Plan, we have achieved a great deal, but we know there is more to be done, and we look forward to continuing to deliver results and a successful upcoming peak trade period. I'll now hand to John, who'll give us a presentation on progress today.
Thank you, Jo. I agree with what you said earlier. It's great to be back here face-to-face again and also acknowledge those online and joining by phone today as well. To the agenda for today. I'll begin with an overview of the FY 2022 results and then speak further on our emerge from the impact of the pandemic with a better, stronger, and more agile business that is well-equipped to meet the demands of today's consumer. While the last few years have been disruptive to our people and our business, it has created an opportunity for Myer to adapt and grow in this new environment. Impact result of AUD 60 million for the full year, 100% increase.
Over 100% increase from the last year when adjusted for JobKeeper payments. Now this included a strong second half NPAT figure, the best since FY 2013, demonstrating the bottom line output of the progress we've made in the business operations. The Customer First Plan has yielded significant improvements to all aspects of Myer, and the output of that progress is tangible improvement in some of the key metrics shown here on this slide. Our balance sheet continues to strengthen with a net cash position of AUD 186 million, which support has provided the confidence and momentum to make a healthy return to shareholders via a fully franked dividend. As we move on to the next slide, we see sales are continuing the momentum since lockdowns ended with our best sales start on record for the first 13 weeks of FY 2023.
Momentum has continued from our post-lockdown affected first half with our second half total sales from Myer Holdings tracking. Plus, we are pleased with the momentum and the underlying performance of the business. Importantly, we are not just getting growth, we are gaining significant market share, up 110 basis points in FY 2022. As I mentioned, our current trading has continued on this trajectory. For Q1, we've delivered a pleasing 52.8% uplift in sales on last year and growth again on pre-COVID levels. Not only is this great growth, but as I mentioned, this now represents our best start to a financial year for over 20 years. Excuse me. I'd now like to touch on our multi-channel offer, which is going from strength to strength and really is a competitive advantage for us.
For FY 2022, comp sales were up 15%, demonstrating strong growth across both our store network and online business. Despite the disruption throughout the year with Omicron, our store network has continued to contribute strong growth with comparable sales up 8.9%, driven largely by regional stores outside of CBD locations with growth over 10%. Our CBD locations have also returned to growth, albeit much more slowly as travel and workers start to return, and this provides us with an opportunity for future growth. Our group sales result for the second half of 2022 represents strong growth from the prior year and was the first half that didn't have impact from mandated lockdowns. When combined with our surging online business on the right of this slide, you will see the value in a strong multi-channel offer.
For example, customers who shop both online and in store deliver additional 1.5 times spend than just a pure in-store customer. This is largely driven by the significant increase in frequency they engage with us to shop, 2.8 times more per annum than a single store channel customer, providing us with greater opportunities to cross-shop and deliver value for our customers. Moving on to page nine, I'll touch on online sales growth and about how it. We do tend to have the size and growth of our online business underplayed. However, if you look at growth, we are outpacing our peers and competitors, meaning we are now one of the largest and over AUD 700 million in revenue last year. To demonstrate this, the chart on the left outlines our growth against the ABS Non-Food Retail Trade Index back to pre-pandemic levels.
Our growth has outperformed the market by nearly 28% since 2018. When we again look at our Mastercard commission data comparing online sales only, our market share in FY 2022 rose by a staggering 191 basis points, meaning we have now had considerable growth in market share for both in-store and online channels. To the right of the page, when talking about how we're outperforming the market, our total growth of 38% has outpaced brands like David Jones and online-only marketplaces, Kogan.com and Catch. An interesting aspect when you look at a category level when compared to specialist retailers. For example, if you take our home category, which has grown at 53% in FY 2022, this has well surpassed the growth of pure plays like Temple & Webster at 31% and Adairs at 4%.
When you look at our beauty category, our 17% increase continues to outpace pure plays like Adore Beauty, who grew at 11%. Moving on to page 10, I'd like to touch on our NDC, which has been a long time in the making. The introduction of this facility will significantly change the future profitability of this business. Our national distribution center is expected to be fully operational in Q4 FY 2023 and will fundamentally fulfill orders. The NDC will be central in delivering future capacity and efficiency as the business gets closer to its aspiration of a target of AUD 1 billion of annual online sales.
The NDC will be a state-of-the-art complex featuring significant innovation with more than 200 autonomous mobile robots, or AMRs, to ensure faster order processing and delivery timeframes, and will be the largest implementation to date of the Geek+ RS8 shuttle system. Please feel free to pick Tony Carr, our supply chain director's, brains on that. This is a great example of how Myer is modernizing for future growth. Moving on to page 11, Jo touched on our loyalty program. All of our growth has been underpinned by our Myer One and also our approach to partnerships. The role of our loyalty and partnerships is incredibly important in today's marketplace, and we have reaped the benefit from our Myer One program, which is continuing to accelerate. In fact, in the last financial year, we had over one...
We had over 71% of all purchases in our stores and online using a Myer One card. Our highest on record since 2009. The program now stands over 6.6 million digitally contactable members, meaning it has significant scale but also is highly contactable. Importantly, one of the key areas when we assess the power of our loyalty program is not by the top-line number, but the number of customers who are engaged with you at any one time. That is why our 3.7 million unique active customers in those that have spent the last 12 months is what makes this with over 55% of all new sign-ups in the 18 to 34 age group.
Equally, we continue to expand and utilize unique partnerships like our Pay with Points program with CBA and Velocity, which enables significant partnership revenue and customer growth opportunities. Pay with Points is an interesting way to tap into future growth and customer value at a time when economic headwinds are building against the consumer. The loyalty program is a compelling and unique foundation for our business, and one that will continue to underpin growth for our business as we leverage better insights to inform business decisions, deliver great insight and support for our partners, and provide a strong and actionable database to commercialize further. Importantly, maintain a deep connection with our most loyal customers. Moving on to slide 12. I just want to touch on Myer being a destination for growing brands. Over the past four years, our merchandise offer has been changing.
We now have a well-balanced offer with significant sized businesses across womenswear, menswear, home, and beauty in particular. This is compelling as it not only demonstrates the size and scale we have when compared to specialty players, but also demonstrates the resilience we have by having a more balanced offer, allowing us to move quickly and capture changes in customer trends and emerging markets, while also be less susceptible where areas face headwinds. I believe our merchandise offer is the strongest it has been for a long time, with a clear focus on inventory management, meaning our customers are shopping more newness than ever before. In the last season alone, we introduced over 30 new brands across home, fashion, intimates, and beauty. However, the strength or one of our key strengths has been our focus on making the big brands even bigger.
This has been done with our renewed focus on working with brands in a partnership collaborative approach to achieve long-term strategic commercial success, and that is seeing more and more brands choose Myer. An example in womenswear, where we launched intimate apparel label Simone Pérèle from Paris into selected Myer stores around Australia and online from February this year. We also announced the return of Bendon Lingerie, who came back to Myer with their stable of brands, including Pleasure State, me. by Bendon, and heritage brand Fayreform. These strategic additions will cement us as one of the leading intimates businesses in the country. We also recently added new brands exclusively, like American Eagle and Aerie, and also Thrills, with many more to come which will reflect our changing customer base.
In beauty, our designer brands, including Chanel, Dior, Tom Ford, have been star performers for us. Recently, we've launched Gucci Beauty and Hermès Beauty, which are proving incredibly popular with our customers. The Myer Perth Beauty Hall has been refurbished with new counter designs, showcasing our range in the very best way. Myer Melbourne opened global firsts for Estée Lauder, MAC, Bobbi Brown, and Hermès, with future exciting new counters planned to open later this year and even this week. With our healthy inventory position and new brands, we are ensuring newness for our customers and delivering on our aim of making the big brands bigger and ensuring that more and more brands are choosing to come to Myer. Moving on to slide 13. We believe our strong liquidity position supports execution of our Customer First Plan and the return to dividend payments.
Our relentless focus on profitable sales over the last 4 years has seen significant momentum across the bottom line, particularly when you have less impacts from mandated lockdowns. Our second half not only delivered strong sales growth in both store and online channels, it translates to one of our strongest results in almost 10 years. Importantly, we remain cash positive for the vast majority of FY 2022. Also, our ABL, which we announced in November 2021, has provided an appropriate structure for peak funding requirements during the first half, but are now much lower than historical levels. Our current expectation is that we will go through this year's peak financing requirement in November in a net cash position, so not requiring to borrow anything. Clearly, we have significant headroom and liquidity within our existing facility, which has over three years to run.
I think it's reasonable to say our balance sheet is rock solid and has been all year long, and this underpins both a gradual increase in reinvestment in the business and a healthy return to fully franked dividend payments. Now to sum up, moving on to the progress of the Customer First Plan, which has us well placed to drive future value creation for all shareholders. It has provided a strong foundation for the business, delivering on a number of issues. Outstanding online growth. We are well on our way to AUD 1 billion in annual revenue. An acceleration of our fulfillment and supply chain capability with our NDC opening in second half 2023.
Improved experiences in store with new customer events supported by strategic store improvements, refurbishments, and relayering across the network. We're continuing to curate and improve our store experience with major refurbishments completed at Toowoomba and Albury and a relayering of Chadstone, Fountain Gate, Carindale, and Adelaide City, with further optimization plans for 17 more stores in this current financial year. Improvement in customer experience in-store and online, customer satisfaction, strategic refurbishments of stores, a right-sized SSO, store support office. Some people call it head office, we call it SSO. Of course, disciplined management of costs and cash, providing our strongest balance sheet in recent times.
Our focus on delivering an optimized store network is well on track with 11.1% space for the future growth of this business and allow us to further unlock greater shareholder value, particularly as we continue to look to scale and deliver a market-leading online business and continue to build our great momentum. However, our focus remains on the all-important Christmas period. We have a healthy inventory position with all Christmas stock in place, with lower levels of aged stock, meaning by launching it through our iconic Melbourne Christmas windows. We have a focused and value-add into and beyond Black Friday period. Our Christmas campaign is fun, engaging, and distinctive, and designed to cut through and resonate with our changing customer profile. We are leveraging our successful Myer One program and unique financial services partnerships to reach new and engaged audiences.
While we believe there is significant uncertainty in the economic outlook, the current performance gives us confidence leading into the all-important Christmas trading period, particularly given the strength of our multi-channel offer. In particular, stores continuing to perform extremely well. We're well-placed to meet market volatility. We are and have been focused on profitable sales growth, a disciplined management of inventory and costs, and a prudent approach to investing in future capability. Concluding on page 16, we will continue to deliver against our Customer First Plan. It was the right plan when we started it four years ago and the right plan going forward, and has underpinned the growth momentum in FY 2022 and the great sales start to FY 2023.
This also gave us, importantly, the ability to reinstate fully franked dividends, which is a direct result of the momentum of this plan and the resilience and strength of this great business. We are focused, well prepared, and have a clear plan to capitalize on the Christmas peak trading period and the year ahead, despite the uncertain economic outlook. We have an experienced executive team who work harmoniously with the board that has, in your interest, developed and delivered a clear plan for profitable growth and, more importantly, creation of shareholder value. Finally, I want to thank all shareholders, both here today and online, our team members, brand partners, and suppliers, but above all, our customers for their ongoing loyalty to this great business. I look forward to chatting further afterwards, and I'll now hand over to JoAnne. Thank you.
Thanks, John. We'll now move to the rest of the formal agenda of today's meeting. The remaining items of business to be covered are now shown on the screen. I now formally propose each of these resolutions, which are specified in the notice of meeting. Bear with me while I go through some of the procedural aspects of voting. Voting on each of these items of business will be by way of poll. Dan Reid of Link Market Services is appointed as the Returning Officer for the purposes of the polls. Item 5, which is the adoption of the remuneration report, is a non-binding resolution. Items 3A, 3B, 4, and 6 are ordinary resolutions which require a simple majority of the votes cast.
As I mentioned earlier, the poll is now open and will remain open until five minutes after the formal end of today's meeting. If you wish to leave the meeting, please do ensure that you vote before doing so. Following the discussion of each agenda item, we'll display on the screen the votes that have been received for and against that item, as well as the number of shareholders that have voted on that resolution. These details have also been lodged with the ASX at the commencement of the meeting today. The voting restrictions for all items are included in the Voting Restriction section of the notice of meeting. When voting on a poll, proxy holders must vote as directed, subject to any applicable voting restrictions.
Any directed proxies that are not voted at the meeting will automatically default to the chairman, and I'm required to vote these proxies as directed. Subject to any applicable vote, voting restrictions, the board recommends that shareholders vote in favor of items of business 3A, 3B, 5, and 6. For item 4, being the election of Mr. McCartney, as set out in the notice of meeting. The board considers this to be a matter to be determined by all shareholders, and the board has therefore not made a recommendation as to whether shareholders vote in favor or against Item 4. Any open proxies that have appointed me as Chairman of the meeting or any of the company's directors, will be voted in favor of 3A, 3B, 5, and 6 and will abstain on Item 4.
Now just some procedural matters relating to your participation in the meeting. Only shareholders, proxy holders or appointed representatives are entitled to speak or vote at this meeting, and only shareholders who are entitled to vote at the meeting may cast a direct vote on a resolution. For those attending the meeting in person, you can cast your vote by filling out the voting card that you will have received when you registered. If you have any questions, please see a Link Market Services team member at the registration desk. For those participating in the meeting on the online platform, you can cast your direct vote using the electronic voting card that you received when you validated your registration. On the Q&A process, for those attending the meeting in person, you would have been given an attendance card when you registered on arrival.
If you've got a yellow card, you're a voting shareholder, proxy holder or corporate representative and have chosen to vote using that paper voting card. You're also entitled to ask questions and speak at the meeting. If you have a blue card, you're a non-voting shareholder. While you're entitled to ask questions and make comments, you're not entitled to vote at the meeting. If you have a red card, you're a visitor and not entitled to speak or vote at the meeting. If anyone with a yellow or blue card wishes to speak, you could make your way to the microphone, so they're in each of the alleys. Identify yourself before asking your question. For those participating via the online platform, you'll be able to submit questions by registering as a shareholder or proxy holder and simply select the Ask a Question tab.
Follow the instructions on the platform. We've also got a facility that's available for shareholders not physically in attendance to ask verbal questions during the meeting. In order to do so, you will have obtained your unique PIN from Link Market Services before the meeting. If you have your PIN, please follow the steps in the virtual meeting online guide to ask a verbal question. I will ask you to please limit your questions to one at a time and also if you could restrict your questions and comments to the resolution in front of the meeting. A reminder also that shareholders can ask questions of our auditors. Today we have Alison Milner from PwC, who's able to respond to questions relevant to the conduct of the audit and the content of the auditor's report.
I would remind you that directors and management are responsible for the preparation and presentation of that report, and the auditor's responsibility is to conduct the audit and to give an independent opinion of the financial report and not individual elements of that financial report. Accordingly, questions on any specific financial matters on the financial statement should be addressed to the directors or to management. With respect to this Q&A process, it is my duty as chairman to allow a responsible opportunity for shareholders as a whole at the meeting to ask questions about or make comments on the items on the agenda, the management of the company, audit matters, the remuneration report and the other items of business today.
We will endeavor to get through as many questions as we can today, but where it is not possible to answer all questions, we'll endeavor to ensure that the most commonly raised questions and other issues are answered. Our Executive General Manager of Property, Timothy Clark, will assist me during this part of the process, and he'll read out the questions that have been submitted online. Thank you for bearing with me while I go through that voting and question process. Now let me introduce the remaining items of business on the meeting agenda. The second item is the financial statements and reports, and that business is to receive and consider those financial statements for the period ended the thirtieth of July, twenty twenty-two, and the reports of the directors and the auditor.
These statements and reports were released by the company on the ASX on the 15th of September and are included in the 2022 annual report, which was released by the company on the 10th of October. We'll now turn to questions on this item, starting with questions that were asked by shareholders prior to the meeting. The first question, and I'll read this one out to you. It says, "Conversion of sales and earnings into net profit is poor. What actions have been initiated to increase the returns to shareholders in terms of dividends and share price gains?" Let me respond to that point. I'd point out that the Customer First Plan has put Myer on an upward trajectory with a clear focus on delivering growth and disciplined cost management.
When not affected by the pandemic, we've shown significantly improved returns, including our most profitable second half since 2013. This has allowed us, as we've talked to earlier, to recommence dividends to all shareholders. It's clear in my view that we've made good progress and we're continuing to build positive momentum. The second question that we received before the meeting was whether Myer could purchase the David Jones business. My answer to that one is a short answer, and that is that it's not on our to-do list. We are focused on continuing execution and delivery of the Customer First Plan. It's gaining momentum, and it's enabled us to return to dividends for all shareholders. Those are the two questions prior to the meeting. Let me now turn to questions from the floor.
Can I ask if there are any questions on this item?
Thank you, Chairman. We've got Geoff Wilson here from Wilson Asset Management. Thank you.
Look, thanks very much and congratulations, Jo and John, to what you've achieved in this last period. You know, to the board and all the management team, you know, just congratulations.
Thank you.
With your franking credit balance, you have the ability to pay out nearly AUD 200 million as a fully franked dividend, and that's equivalent to about AUD 0.243 per Myer share. Anthony Albanese and Jim Chalmers promised all Australians before the recent federal election that they would not change the franking credit regime. Sadly, these promises have already been broken. Unfortunately, the government's recent proposed franking credit legislation will tear apart the franking system, and it appears that Myer, your company, our company, will be a victim. It is the reintroduction of the 2019 retirement tax in a new form, which we're now calling the Retirement Tax 2.0. The only way Myer can pay out those franking credits if the government's two proposed changes are legislated and introduced, is by putting Myer at significant financial risk.
Would you do that? Do you believe that the thousands of Myer shareholders would or should feel betrayed by the Albanese government?
Thanks, Geoff. Thanks for that question. I know this is one that's close to your heart. I've seen the early comments this week on that. I guess my first comment there is that it's not been legislated, you know, as yet. If it is legislated, we would clearly have to consider all of the circumstances at the time in terms of further debt, you know, for this organization. As you and other shareholders know, we would take that very seriously. On the second part of your question, I'll leave the political commentating to others, I think, Geoff. You know, that's a view for individual shareholders in terms of how they feel. I won't make a comment on that second part. Thanks for your question. You focus on that area. Any other questions? There's a gentleman coming down at the back here.
Thank you, Chairman. May I introduce Alan Carter, shareholder. Thank you.
Mr. Carter, welcome.
The current plan is four years. Is that the total length of the plan? When do you envisage to outline the next plan after it has concluded?
Thanks, Mr. Carter. I'll let John comment a little bit further. The Customer First Plan is a strategy that John and the executive team put in as he came into the CEO role. In fact, that is an evolving plan. For example, during COVID, the pandemic, there were elements of that that we really focused on accelerating in terms of the online platform. We see that as an evolving plan, not one that has, you know, bookends to it. John, did you want to-
Yeah. Thanks for your question, Mr. Carter. I'll just add to what Jo said. The flexibility of the plan is that it tackles the six big key areas of the business in those six boxes. What will happen is it'll evolve over time. You know, we'll get to a point where we can't shrink the stores any further or we can't close any more. That kind of space transformation piece in terms of the physical aspect of it will cease. The digital piece is not restricted by anything. There are no walls to what we can do with digital. We believe it should be a billion-plus business down the road, over time. What we will do is we will shift our focus to the areas that we will evolve even faster and more profitably.
The whole aim, I remember many years ago, a group CEO when I was a divisional CEO, said I was uneducated and needed to go to business school because I left school at 18. I went to a business school in France called INSEAD, one of the best. I was dying for this strategy session because I thought, "I'm gonna learn something here. I'm gonna find the Holy Grail." The end of the strategy session was basically two words, profitable growth. That's exactly what we're aiming for with this business. You know, we will constantly keep an eye on cash. As Jo said, during the pandemic, it was all about saving cash and surviving.
We toned down a lot of the work we were doing in stores, didn't spend the money, but we invested it in the online business and we rapidly grew that through COVID. As you see now, it's a AUD 738 million, AUD 28 million business last year. It'll be something north, well north of AUD 800 million next year, getting close to AUD 1 billion. I would say, without sounding trite, it's a journey, not a destination, the Customer First Plan. The whole idea of it is creating profitable growth and best return for shareholders.
Just on that, if it's an evolving plan, what are your intentions as per that evolving plan?
Well, as it evolves, I will age with it.
age with it at Myer or.
Oh yeah, at Myer. Yeah. I have no intentions of going anywhere.
Thank you.
Thank you.
Thanks, Mr. Carter.
Thank you, Chairman. I have Nigel Burgess, Shareholder.
Mr. Burgess.
Hi. Congratulations on the result. I haven't, I used to be a retailer many years ago, and I hadn't expected to see such good result out of you guys. Things aren't even going really well. They're just going sort of well, so congratulations on that.
Thank you.
On the back of that question, I've noticed the same thing that Geoff noticed here, the very large franking credit balance. In that context, really it comes down to your you know, borrowing capacity, what you think your balance sheet can handle. You know, of course, the big question to answer is that the lease liabilities are also always very large for a company like yourself. Can you give us any, you know, I know we've just been through a very difficult period, but you know, at some point, you know, we'll feel more comfortable about the stability of the business. What sort of borrowing capacity, what sort of balance sheet do you think, you know, the company should have long term?
Can we sort of in the context of that, the sort of lease liabilities and where we can perhaps manage the portfolio and get that down?
Thanks for that question. Maybe I'll make a start on it. John can make some further comments. I'm certainly not going to make any future comments about borrowing capacity in relation, you know, to that credit ranking balance. You know, we have just recommenced dividends, and we're really focused on making that a sustainable recommencement of dividends, you know, from our profits each year. The lease liability in the balance sheet really comes back to us, you know, what we've talked about in the Customer First Plan in terms of managing that legacy portfolio of properties.
There's been a huge amount achieved there with, I think 120,000 square meters committed to or out of the portfolio, and we'll continue to focus on that through stores as they come up for renewal, but also through reducing space in stores. John talks about floors, not stores, you know, in terms of that space, and that all has an impact in terms of that lease liability. You know, we have a flexible banking facility now that is really designed for retailers. Nigel would say to you as CFO that it's working very well for us, you know, as a retailer, so with JP Morgan and Gordon Brothers, and that refinancing approach really gives us flexibility in the business.
We're focused to investing in the online, you know, business and doing what we need to do in our really well-performing stores. John, did you wanna add anything?
Yeah. I think, you know, it's a very good question actually.
Mm. Mm.
You know, most companies carry some level of appropriate debt. I think for us, we wanted to get to a strong cash position on our balance sheet to give us the firepower to invest in the business and also to survive COVID. I think we wanna see another year or so of stability, of sort of stable return to dividends, cash generation, you know, growth in online, get through whatever the economy throws at us over the next year or 18 months. I think we'd never rule out, you know, looking at putting some debt on there, which may or may not be linked to your first question in terms of, you know, finding a solution to that. I think they're two separate things.
I think in terms of managing the balance sheet, you know, we've got it to a strong position from 4 years ago, a very weak position. I think we wanna continue to strengthen that balance sheet, you know, invest out of operating cash flow, and continue to develop the key parts of the Customer First Plan as we drive this profitable growth strategy. We'd never rule it out. You know, there may be a strategic acquisition that we might want to do or something like that. I think the two questions are very, very valid, but are very separate. I think the franking credit one is one we'll deal with when whatever changes are made with that.
I think in terms of the balance sheet, it's steady as she goes. Let's get through the next year or 18 months because we're only really 6 months out of the pandemic, and there's now talk of masks in Queensland and COVID wards being reopened in Melbourne hospitals. I mean, I really think we need to just batten the hatches down and just sail through whatever comes at us next.
Thank you.
Another question in the middle here.
Thank you, Chairman. May I introduce David Paterson, shareholder.
Mr. Paterson.
My question is about the closure of Myer in the Knox Shopping Center in Melbourne.
Mm-hmm.
It was a major store. It's been an anchor tenant. It's been there since the complex opened in 1978. It was a big surprise when it closed. It's a thriving area. It's a pretty important shopping center. It goes against you talking about growth. I guess I'm asking why it was closed, and if there was any chance that it could return?
Right. Thank you for that question. I will get John to address that one.
Yeah. Thank you for your question, Mr. Paterson. We actually were in discussions with the center owner, Scentre Group, Westfield, for nearly 4 years on the redevelopment of that center. We had 35 empty units outside of us in the walkway in the runway because businesses were going bust, and the center itself had not been invested in for probably about 30 years. Scentre Group were promising us a plan. We agreed. We would downsize to two floors. We wanted to stay in the Knox Center, but on a much more reduced rent and on two floors. That was a conversation that we had, went on for a best part of 3 years, and in the end, we never got to an answer. The lease was up, and we had no choice but to exit.
What we wanted was a smaller store still in that center. Unfortunately, we had to take the difficult decision of moving on, but we did relocate the majority of our team members from those stores to nearby stores. Unfortunately, that center is gonna be redeveloped into something completely different. I think they were just holding us off until they got the space back.
You're ruling out a return to Knox at some stage or?
If the facility arises, we would certainly consider it if the commercial conditions were right.
Thank you.
Thank you.
Thank you, Mr. Paterson. Another one in the center.
Thank you, Chairman. Introducing Michael Pinn, a shareholder. Thank you.
Mr. Pinn.
Thanks. My question is probably more directed towards John and possibly Dave because of the digital marketing part. It was a testing time in COVID, but a lot of retailers got their head around the fact that landlords need to line up rents with revenue generated, or they wouldn't have a tenant. John, you just touched on one store closure that was forced upon the company after some three years of patience. I hear you talk about the digital marketing side of things and what can be done there and the internet warehousing showroom, so to speak. Most of us are aware that there's a lot of stuff sold on the Internet that's only sold once someone's gone into a physical store, tried it on and found out it fits.
Which I would suggest has been a big advantage for Myer One in promoting things. Although I'd question your numbers on Myer One, because I'm a Myer One account, and I've used it once. My wife uses it a lot, but like, if you're double counting families, I think some of your stats might be a bit skewed. I'd love to see the stat that said those who've used it more than once in the last 12 months. In terms of linking sales to rents, what do you see as an opportunity in that space? Because obviously the Westfield of this world have had a comeuppance during COVID. To some extent, how that partners with the digital marketing side of things, 'cause I have an opinion that digital marketing of all the things that Myer sells only work for the showroom.
Thanks, Mr. Pinn.
Really good question. Several parts to that. I'll start with the digital versus the stores piece. We see both. We need both. No question about that. Now, if I look at who I was working with last from a consulting perspective in the U.S. with the Hudson's Bay Company, they got online up to about 40%-45% in the Saks Fifth Avenue business, and they have subsequently separated that off. Although the two are still intrinsically linked, that was more of a generating cash thing than anything else. If I look at us, I think that we will have a smaller footprint, and that will be floors and stores. So traditionally where we would have had acres of space to beds, and sometimes you go.
I remember when I first got here, and it was the same in other places I've worked. You go to a floor full of beds, and it looks like a World War II field hospital. Just beds, beds. When actually all you need is the top-selling beds, and the rest can be done online. For us, it was about marrying the right space with the digital. The two go hand in hand together. You will see us as we refurbish these stores, and Tim is leading that with Tony, our retail operations head. You know, we're looking at using space smarter. With the NDC coming, we're not gonna need as much space out the back for stock.
Therefore, we can reclaim that space and turn it into selling space, which then means we can operate the store on less floors. Which is drives profit per square meter in terms of the operation of that. That is a strategy that we are absolutely doing. When we renegotiate these deals, we generally tend to get contribution from the landlord for capital expenditure. It's their cash, not ours. Now, obviously, it's gonna come back in the rental somehow, but if it commercially stacks up, that's what we'll do. What we'll also do is some of these deals, department stores generally pay the cheapest rent. You're building a shopping center, north, south, east, west, you want four anchors. You want a David Jones, a Myer, a Coles, and a Target or a Big W, whoever.
Those four are locked in on a cheap, cheaper rent, and then you go after specialty stores. Now with us, what we're doing now is we're agreeing to new rents, lower rents, obviously, on these smaller stores. There might be a turnover top-up for the retailer. We'll say, "You're only getting that rent." They'll come along and want this rent. We'll say, "We'll give you this, but we'll give you a turnover top-up." Across that's what we're doing. In terms of your experience with Myer One and your wife, people using the cards in the family, that's absolutely true. We will be doing a big piece of data cleansing between our Myer One database and our Myer.com database, so we can actually find out who is using it and who.
That will come in our investment in in-store technology and also the digital space, which is in the pipeline over the next two years. We will absolutely get at that. I fundamentally 100% agree with you, and you saw that from the numbers, 2.8 times more valuable to us. We know that, 75% of our in-store purchases start with people looking online. They go online, have a look. When they know they've got it, then they go in and try it on or try the product. If it's a home product, they might not buy it there and then 'cause it's big and bulky. They might look at the product, get the expertise from the sales assistant, and then go home and buy it online, have it delivered to their home. You're absolutely right.
Two go hand in hand, and we see that multi-channel offer as a significant strength for us as we go forward. Look at the results of the pure play onlines. Adore Beauty, Kogan, Catch, they don't make money. All they talk about is top line. You don't get rich, selling 10 AUD 10 notes for AUD 5. I think for us, what we will do is focus on profitable growth and a multi-channel business.
Great. Thanks, John. I don't think we have any other questions in the room, so we'll now turn to other questions that might have been submitted online during the meeting. Tim, do we have any questions coming from online?
We do. Thank you, Chairman. Our first online question is asked by Dennis Stollery, which is, "To the Chair, a question for the CEO. Will Myer be implementing a shareholder discount policy for shareholders purchasing online or in the Myer stores?
I can actually start on that. I think it'll be, you know, the final question. We're aware that there was a shareholder discount policy some time ago. We won't be reintroducing that. We have a very valuable Myer One loyalty program, and we think that brings real value to our customers and our customers who are shareholders. Okay. Tim, any other online questions?
Yes, I have one more online question, and that is from Benjamin Rosenthal. "Does each board member consider Super Weekend promotions fit better into online market segment or foot traffic market walking into Myer stores? If you could please answer by naming one market only?
Okay. I think that question is trying to say does Super Weekend promotion better for the online or in-store market. John, did you wanna make a comment on that?
I can't answer it by one market only.
Mm-hmm.
Because it's both markets benefit from it.
Yeah.
That is a fact. Both markets benefit.
Yeah.
The customer sitting at home who doesn't wanna go out. For the customer that's in store and they're out and about, then they both benefit from it.
Okay, thank you. Tim, tonight if that was the last online question, do we have any telephone questions?
Thank you. We do have a question from John Whittington. Please go ahead, John.
Welcome, John.
Good afternoon, Madam Chair and the directors. My name is John Whittington and I'm a volunteer for the Australian Shareholders' Association. Madam Chair, we would like to thank you and the whole Myer team on such a solid performance during the year. I've got a two-part question. With the solid performance during the year in mind, how has your profitability this year compared with David Jones's and other department stores around the world? My second thing, or second question or second part is, given the recent and highly publicized cyber attacks on other companies, with Myer One, do you have enough horsepower to ensure no cyber risks? Thank you.
Thanks for those two questions, John. I'll take those. In terms of the comparison of profitability, we have done work looking at ourselves against department stores in this domestic market and, in fact, department stores in international markets. The best line that we can compare ourselves is actually the gross margin line. Myer is already comparing very well with that gross margin line, particularly in the domestic market. That goes to the specific question you pointed there to details. Indeed, we're very much in the peer group in the international comparison and obviously with a lot more opportunity there, particularly through the NDC and many other initiatives. The second question that you had has gone out of my mind, I'm afraid.
The cyber attacks.
The cyber attacks. My apologies. Yes. That is as with all listed companies, the examples that we've seen in the market right now of Optus with Medibank and others is absolutely on the board table. We, you know, in looking at those examples and the drivers that we've understood publicly there, we're going back and testing our systems, you know, making sure that we are sure there. We use some of the best outsourced providers in terms of that security perimeter. We also have a different set of information to that information that you've seen, which has become vulnerable in the market. It's very much on the board table and ensuring that we're looking at potential attacks. Thank you. Do we have any other on phone questions?
Thank you. There are no further phone questions.
Thank you. I think we may have another question in the room. Yeah.
Thank you, Chairman. May I introduce Simon Conn, Investors Mutual. Thank you.
Thank you. Welcome, Simon.
Thank you. Thanks, Madam Chairman, and congratulations on, you know, on behalf of all shareholders for the great result last year. It's been a difficult environment.
Thank you.
I'd just like to ask a question in relation to the election of the Premier candidate and just understand what protocols will be in place to ensure that information is not leaked or is provided or given or sought or whatever by other competing organizations. I know Coles doesn't have a director on the Woolworths board and vice versa, and obviously there's overlaps in the categories. Obviously protocols there and also obviously the database, which I think is a significantly undervalued asset in the Myer business.
Mm-hmm.
Can you just talk about how you can create more value and give the market more presence on that and also ensure that, you know, that doesn't ever again leak to other organizations?
Right. Why don't I take that first part of the question, Simon, thank you, on the conflicts, and then John might just talk a little bit more about Myer One and particularly how we can leverage that more. We're already starting to do that. As we set out in the notice of meeting, we believe that the conflict of interest, actual or perceived here, can be managed. We acknowledge and in fact, Terry and Premier have acknowledged that there are issues there that we will sit down and constructively deal with. We have good conflicts of interest policies and sharing of information policies already in place in the organization. There are obviously some categories like denim and sleepwear, where there is you know, something that we will need to sit down and talk about.
We believe, and I'm confident, that constructively that can be managed, Simon. Yep. John's just on the online-
Yeah, the database.
Yeah.
It's twofold really. One is the existing and new customers, and the other one is new partnerships with other third party businesses. Part of that work I outlined a minute ago, last question, is that we will be cleansing the databases, tidying up all of our records between dotcom and Myer One, to really offer a personalized service to the consumer. We're also doing partnerships with some brands where they're paying us for the information from the data, you know, for the customer to actually more specifically tailor who that brand customer is and how they can actually drive more business through them through Myer into those brands. In terms of the partnerships, we've had the CBA partnership for many years. We've just accelerated that.
Virgin's only six weeks old, but we do see huge potential in that in terms of bringing new customers to Myer and to Myer One. At the moment, the way the scheme works, if you're a Velocity holder, you can bring your miles to Myer and spend them on over 200,000 items. A lot of people have miles they can't use, particularly now with the airline prices and the number of miles required to redeem any kind of reasonable flight. You can actually take those unwanted and turn them into currency at Myer effectively through the points program.
Now, if you're a Velocity card holder, but not a Myer One loyalty holder, what we're adding on top is you can come along, bring your Virgin points, but if you sign up for Myer One, we'll give you Myer One points for spending your Velocity points. We know this will bring the customer back. Early days, we're seeing some interesting conversion rates, but we'll talk more about that at the half year results in March. Those are the two main avenues in terms of moving the database forward. Simon?
Thanks, John. We do have one more online question, I think, on this resolution, Tim.
Yes, we do, Chairman. The next question is asked by Hooman Shirinshiri, and the question is: Do you believe that Myer's sales can reach the figures of 2011-2014 again in the next few years?
I'll take that one. Look, we're not going to make a prediction in terms of sales getting back to any levels compared to the past. We're focused on growth. The other point that I would make, and John has made a number of times, is that we are interested in profitable growth, you know, within the business, and that will continue to be our focus. We've seen a return to growth in both store sales and continuing very strong growth in online. John's referred to the start in the first quarter of this year with very significant, up to 52.8% compared to last year. We think there is momentum in the business. All right, so just confirming through all avenues, that's the last. No. One more in the room. Thank you.
Chairman, may I introduce Dustin Gordon, shareholder.
Thank you, Mr. Gordon.
Just one little point, mainly with the in-store experience, but to a certain extent online. There seems to be the concession brand partners doing the heavy lifting in terms of inventory and staffing levels in store. To me, in store at the moment, it's almost like going into Westfield. The concessions are all there with their staff and their stock, and they've got plenty of both. But where you're reliant on what Myer's purchased, you don't seem to have the people to support it, and it seems to be almost a secret. One brand in particular, Raging Bull, it sort of, to me, could have been promoted. You know, it's exclusive to Myer, to my knowledge.
It could have been promoted more heavily, but it's sort of, just sort of hidden away, and it's just reliant on those brands. Same with online. A lot of our customers seem to be seeing things online, but they're actually not available in store. They buy them through Myer, but they actually comes from a third party. It just seems to be moving more to be more reliant that way rather than Myer being the actual retailer.
Thank you for that question. Obviously the business model we have is a combination of our own exclusive brands, concession brands, as you've identified, and national brands. You know, I think in terms of the customer service levels that we're seeing, there is a very considerable uplift in the way that our staff and a combination of our staff and our concessions or brand staff are serving our customers. Maybe John, would you-
Yeah, I think it's a good question, actually. There's three routes to market as JoAnne says. There's concessions where we act as a landlord, as you said, like a Westfield. And then there's the national brands which we purchase, and that will sometimes be a hybrid. It'll be either our staff or it'll be co-funded staff with us and the brand. And then you have our own private label, MEB product, which is, you know, in the high teens. In terms of how we run the payroll, it's based on percentage to sales. If the sales are up, the hours will be up and more people there. If you go into our store on a Monday morning versus a Saturday morning, you'll see it's completely different. It's based on the profile.
Certainly over the years, we've been looking to put more people on the shop floor. I think the customer service measures, the team member satisfaction scores, which are done by third party and done by customers, we've moved from 70-82. Things are improving, but I think they can always improve. That's why I think that's a fair point. We will continue to invest in the technology that we're putting into stores will allow our team members to check you out as in your purchase in a fitting room. You don't have to queue up. We're trying to do away with queues and just make the customer experience more enjoyable and more efficient and easy to, you know, find your product, find the size and check out.
The whole idea is to enable our team members. These are personal devices they carry, and we've only just launched them to allow them to spend more time with the customer, actually helping them with their purchase rather than standing behind a cash register. A very good question, and we're on it. Thank you.
Thank you for that. I understand there are no more questions online or on the phone and no more questions in the room. I will move on from that resolution, but thank you for the feedback and questions from shareholders there. As per the notice of meeting, it's now time to consider items 3A and 3B, the re-election of directors. Resolution 3A is that Jacquie Naylor, who retires in accordance with rule 8.10A of the company's constitution and being eligible, has offered herself for re-election. It is that she be re-elected as a director of the company. The proxy and direct votes received prior to this meeting are now shown on the screen behind me.
In relation to this resolution, I confirm that the board, excluding Jacquie, has unanimously supported her re-election and recommends that shareholders vote in favor of this resolution. I'll now just hand to Jacquie to speak briefly about her credentials and experience.
Thanks, Chairman. Good afternoon, everyone. I'm honored to be here today seeking re-election as a director of this great iconic company. As I mentioned to you, I think the last time I stood for re-election, Myer is actually where I began my career as a member of the cadetship program, and it was that amazing, and I'm saying valuable experience that led me on my journey to retail. As well as having diverse executive retail experience across many well-known brands, I have extensive board-level experience with ASX and private equity-backed retail companies. This includes previously as Group Executive Director of Merchandise and Marketing at the Just Group, Non-Executive Director of the PAS Group, Non-Executive Director at Macpac, and Advisory Board Member of Pattern, a global consumer-facing e-commerce agency specializing in retail.
Within these roles, I have been acutely focused on establishing strong commercial foundations, developing connection of product, brand, and customer, and a rigorous approach to growth and transformation. It is this experience in retail and e-commerce which ensures that I am uniquely well-placed to offer and deliver value in this current and future retail landscape. Currently, in addition to having the honor of being on the Myer board, I am also a Non-Executive Director for Michael Hill, a brand specializing in fine jewelry with 300 stores in countries including Canada, Australia, and New Zealand. That in itself has been a highly successful transformation journey and one that I'm equally proud to have been part of and a demonstration of the relevant experience I can add to Myer.
Over the past three years of my term at Myer, I have overseen the successful implementation of our Customer First Plan, which has been key to the delivery of the outstanding performance of Myer today. This plan maximizes the many facets of retail to better deliver for our customer a more profitable result for the company and increase shareholder value as well as return to dividend. As Chair of Myer Remuneration Committee, we have incentivized executives to deliver on what I like to say, metrics that matter integral to delivering results. This focus has seen the development of an exceptional and unique culture, building a collaborative, enthusiastic team with a can-do attitude and an absolute commitment to deliver the Customer First Plan. Myer is now well-positioned to maximize growth. The strategy is in place. This strategy, Customer First, is the right strategy.
We have the brand right, we have our product mix right, inventory is optimized, and we continue to innovate with collaborations, leveraging supplier partnerships. All maximizing and accelerating profitable brands. Or as John would say, "Make the big bigger." I'm honored to be on this board. It is a collaborative, united, and cohesive board focused on success. We now have the momentum, and we're positioned well for the future. As a member of the board, I'll put myself forward for re-election today and offer my extensive experience in retail and give you my absolute commitment that I will be putting your interests, as well as those of our customers, first and foremost. I look forward to meeting you later today. Thank you.
Thanks, Jacquie. We'll now turn to questions on this item, starting with one question that we received before the meeting, which I will take. The question was: Why is Myer spending money to get Link Market Services to call and encourage shareholders to vote their proxies when there are no special resolutions, and resolutions involve only elections and remuneration? This should be a formality and should not waste company funds. That was a question we received online before the meeting. I'll take that one, and it relates to both of our elections, as it was asked. Myer has a large and diverse shareholder base, and there was a significant issue on this agenda in relation to the independence of the board, the combination of resolutions three A, three B, and four.
We make no apologies for encouraging shareholders to consider the agenda, vote, and participate in this AGM process. We're indeed pleased to see this year that the turnout, pre-meeting voting that we've seen has been really strong. We've been prudent in the way that we have actually approached this and are very well aware of our directors' duties in relation to the spending of money in that way. I will now turn to any other questions that have been. Well, let's go to the floor in terms of questions of Jacquie and her re-election first.
Michael Pinn here, Shareholder. Thank you.
Thank you. Thanks, Mr. Pinn.
Thank you, Jacqui, for your efforts over the last few years. My question is to you, but it's also to all the board in some respect, okay? Don't feel like you're being singled out. I look at the published records for what directors hold personally as shares in Myer, and it undermines my confidence in board members where they don't seem to have the same confidence in the company that I do. I'm looking for some sort of response from you personally, 'cause this, we're talking about you at the moment, but I think it applies to all directors, right?
Mm-hmm.
Why don't you hold more Myer shares? Do you feel some limitations on it? Because I know less than you do, and I hold Myer shares. You know a lot more than I do on where you hope to take the business, and I would think that would be reflected in an increase in shareholding.
Well, I'll answer. I know we probably have some various answers there, Jo, but I'll answer for myself. Over the three years that I have been on the board, I've certainly been acquiring Myer shares, and I will, in fact, continue to do so. I'm very optimistic about our future, and Myer will be considered as a very important part of my personal portfolio. Jo?
Yes. Perhaps, Mr. Pinn, I can add to that sort of for all of the board members. Our base policy is that directors build to a shareholding equivalent to base fees for a director within the first five years of being on the board. As Jacquie has said, all of the directors sitting in front of you today have either bought initially, in Ari's case, when he joined, or have built their portfolio of shares over time and will continue, certainly in my own case, to build that portfolio as well. Thank you.
Thank you.
No other questions in the room. Oh, sorry. Yes, we do have another question in the room.
Thank you. May I introduce Rod Partridge, Shareholder.
Thank you, Mr. Partridge.
Thank you, Ms. Stephenson. It's always a pleasure to speak with you. Ms. Naylor, just looking at your bio, and amongst a cluster of mediocrity up there, to me, you actually stand out as someone who delivers value to the Myer board. You have extensive experience, and that is indeed valuable. Just looking at your current directorships, Cambridge Clothing is noted. There's the Kiwi New Zealand Aotearoa costume jewelry company, Michael Hill and Cambridge Clothing. What does that company do?
Sorry, what does it come in?
What does Cambridge Clothing do?
Oh, sorry, I didn't catch that. Cambridge Clothing is the manufacturer and seller of men's suiting. Has various brands, seven brands all up, three of which are in Myer.
You're a director of a company that is a supplier to Myer?
I was a director of that company before I joined Myer, yes.
You're still a director?
I am still a director.
Okay. Let's go to notes eleven. Excuse me. What has been put in place, appropriate protocols in relation to actual potential conflicts of interest and disclosure and use of confidential information in regards to the conflicts you have with Cambridge Clothing and your role at Myer?
Mr. Partridge, I can actually take that question. Jacqui's interest in terms of Cambridge Clothing has been declared from the date that she joined Myer. It is a very immaterial amount between Cambridge Clothing and Myer. But as with anything, there are protocols that we put around that in line with our conflicts of interest policies that's dealt with and considered if there is anything that's raised in any meeting. It's dealt with, declared within our existing policies.
Ms. Naylor is able to separate her roles at Myer and her roles at Cambridge Clothing. Is that correct?
Correct.
You don't think anyone else with vast experience, particularly in the department store sector, experience as a corporate director, with the protocols and legislation in place, the Corporations Act, Section 180, 181, 182, 183, the standards of the Myer existing board protocols. You don't think anybody else could possibly be a director, but they've got to have special protocols in place, but you're okay?
No, we're not asking for special protocols, Mr. Partridge. It's
Did you read this thing you sent out yourselves and what you've put out through your various surrogates in the media?
We've not been causing the commentary that's been in the media recently. Our notice of meeting, Mr. Partridge, actually says, and I said earlier, that we can deal with any conflicts of interest, actual or perceived, in relation to Mr. McCartney's nomination today.
So-
That's very clearly set out, Mr. Partridge.
You now accept that he can separate role A and role B?
It will be dealt with. I don't know what you mean by separating, but will be dealt with within our conflicts of interest policy. Acknowledged on the table. If there are issues on the table that cause a conflict in any particular situation or there's information which is confidential, that will be dealt with within our processes.
Thank you, Ms. Stephenson.
Pleasure, Mr. Partridge. Thanks for your questions. I don't think there were other questions in the room. Tim, can I check if there are any questions online?
Chairman, there are no online questions relating to this resolution.
Thank you. Any questions on the phone?
Thank you. There are no questions on the phone line.
Thanks, Rachel.
Thank you. Thanks, Chair.
The next item of business is my re-election as a director, and I'll hand over to Ari Mervis, who will chair the meeting in relation to this item. Ari.
Thank you, JoAnne, and very good afternoon to everybody. Resolution 3D is that JoAnne Stephenson, who retires in accordance with Rules 8.1D and 8.1E of the company's constitution and, being eligible, offers herself for re-election, be elected as a director of the company. As you'll see on the board, the proxy and direct votes received prior to the meeting are now being displayed. In relation to this resolution, I can confirm that the board, excluding JoAnne, unanimously supports her re-election and recommends that shareholders vote in favor of this resolution. I'll now hand over to Jo to speak briefly about her credentials and her experience.
Thanks, Ari. As firstly a member and now the chairman of the board, I've been focused on realizing shareholder value, unlocking the inherent value of the business, particularly of online and Myer One, and delivering strong results for shareholders. With your support today, I'm really keen and committed to continuing working with the board and leadership team to drive further improvements in this business. In terms of my qualifications, I'm a chartered accountant with a legal qualification, and I gained experience across a range of industries over a career of more than 25 years at KPMG, working in the latter years as part of the firm's leadership team and finishing up as a senior client partner. My key technical focus areas were risk, audit, and the financial advisory area of the firm through that, through both operational consulting, corporate restructuring areas of the firm, so turnaround.
I've chaired the Audit, Finance and Risk Committee at Myer and am now a member of this committee, as well as the Human Resources and Remuneration Committee. My other listed company director positions are at Challenger Limited, where I now chair the Remuneration Committee, and at Qualitas Limited, where I chair the Audit and Risk Committee. When I spoke to you as shareholders on my last re-election in 2019, I said that cost reduction and productivity improvement were areas of focus for me at Myer. This has been a key plank of the Customer First Plan, and working with John, Nigel, and the team, we've continued to focus on cost management and efficiency with good results. The national distribution center, which we've talked about earlier, is another key step in this process.
I've been privileged to first be a part of, and then to lead a strong, united, and independent board through what have been really challenging times in the Australian economy and the retail sector in particular. I believe we've emerged as a stronger and more agile business, better positioned for the future. I'm committed to working with the board, John, and the leadership team in a constructive way with the absolute aim of delivering value to shareholders. Thank you.
Thanks very much for that, JoAnne. We'll now turn to some questions if there are any on this item and start with any questions from the floor.
Rod Partridge again. Thank you.
Yeah. Mr. Pinn. Yeah.
Mr. Pinn.
As long as the reporters don't write it up as Henry, you'll probably be happy.
Thank you, Mr. Pinn.
I wanna put this the right way. JoAnne, I think you've been here through a period, and the company's done some great things. All right? As I've made it plain privately, I think it's time for you to move on. I voted against this, but I've got questions for you around it which really came home to me this week. I received a text, an email, and a phone call soliciting my vote. Now, you've touched on it earlier in a response, and I have to say, I wouldn't feel as bad as I do now if you had said what you said at the opening of this meeting a week ago and show some sort of impartiality. The communications I've got signed under your name are directing me to vote a certain way, and I find it irreconcilable.
I thank my fellow shareholder for raising the issue because I think Jacquie Naylor's a great addition to the board, enormous retail experience. So would Terry McCartney be. You're acting as Chair, you're the mentor to the board, and yet not seeing through the enormous value that someone with experience like that could bring to the table when you've just told us that you can manage any potential conflicts. I don't understand how you can sit there as the Chair and having signed off on that notice to me as a shareholder, spending company money soliciting a vote for you to be reelected. I just think it's invalidated your position. If that's a range of questions, yes, I suppose it is, and you're entitled to respond to it. I say at the outset, I respect what you've done to get to here today.
I just think it can't go on.
Thanks, Mr. Pinn. I'll answer a couple of parts of that. The first thing I've answered already, the question around, the soliciting, you know, as you put it, of proxies. You know we, in our notice of meeting, recommended as a board the reelection and the adoption of the remuneration report. The communications to shareholders, the email that was signed out from me was really just referring to those board recommendations that were in the notice of meeting. I have received, at least in the, in the proxies and direct votes before this meeting, the strong support of a vast majority of shareholders and of the votes that have been cast before this meeting. I would like to address your, comment in relation to the board position in relation to Mr. McCartney.
I'd just say again that in our notice of meeting, what I said there was that the board actually acknowledged the deep experience and expertise of Mr. McCartney. I had no issue with him joining the board. We also acknowledged that those conflicts of interest could be managed within our existing policies. The two questions that caused us to give a recommendation that said we wouldn't recommend voting for or against were the issues of the independence on an ongoing basis of the board and the no to the standstill position that we put to Premier Investments. We last year set out some very clear principles, you know, in terms of largest shareholders, director nominees coming onto the board.
Those two questions really related to our principal of a change of control and not being able to get a premium in terms of that change of control to shareholders. In our view, we're not questioning the ability of Premier or any other shareholder to make use of the creep provisions that is in the law. There is also nothing which drives an independent board to facilitate or be a part of that strategy. We have always said from last year through that this should be a matter for shareholders at the AGM. That's the position we took in the notice of meeting, and that's what's happening today. You'll see in the results that there is a diversity of view in our shareholder base. That is the position that the board took. I appreciate your position.
I understand, you know, what you're saying to me, but that's a board position that we have developed, and we stand by that decision. Thanks for your feedback and comments, Mr. Pinn.
Thanks, JoAnne. Thanks, Mr. Pinn, for that question. It doesn't appear as if there are any more questions here from the floor. If I can just question whether there are any questions that have been submitted online or before the meeting?
Ari, there are no online questions relating to this resolution.
Thanks, Tim. Perhaps any questions from the phone?
Thank you. There are no questions on the phone line.
Thanks very much. I'll now hand back the chair to Jo for the balance of the meeting. Thanks, Jo.
Thanks, Tori. We'll now move to item four. Item four, resolution four is pursuant to clause 8.1 K4 of the Constitution of Myer Holdings Limited, and for all other purposes. Terrence Luke McCartney be appointed as a director of Myer Holdings Limited with effect from the end of the general meeting of Myer Holdings Limited at which this resolution is passed. Mr. McCartney, a non-executive director of Premier Investments Limited and Just Group Limited, which is a subsidiary of Premier, has been nominated by Middle Grove Pty Limited, a subsidiary of the company's largest shareholder, for election as a director in accordance with 8.1 K4 of the Constitution and Section 249N of the Corporations Act. The proxy and direct votes received prior to the meeting are now shown on the screen.
I'll now invite Terry to come up and make some comments in relation to his credentials and experience.
Thank you. Thank you, Chair. Thank you for the opportunity to address you today and for the opportunity to seek election to the Myer board. As a former CEO and Managing Director of the company, Myer holds a special place for me. I am basically a retailer. I had the good fortune of working for more than 40 years across the full spectrum of retailing, from luxury goods and department stores to mass merchandise and discount department stores. Across all the commercial disciplines and skills that underpin a successful retail operation such as merchandise sourcing, store operations, marketing, omni-channel retailing, supply chain, property inventory management, IT support, and detailed financial analysis.
If elected by shareholders to the Myer board, I will apply this retail experience, which I believe is unique to the Myer board, in order to add value as a director for the benefit of all shareholders. My career began at Boans Department Stores in Perth before I moved to Grace Brothers in Sydney in 1984. Following Myer's acquisition of Grace Brothers, I relocated to the merged department store group in Melbourne in 1989. My executive career culminated in the role as Managing Director of Kmart for Australia and New Zealand and Managing Director of Myer Grace Bros, as it was known then, where for five years I led the Myer Grace Bros team to year-on-year profit growth. I am currently an independent non-executive director of Premier Investments, as well as Premier's wholly owned subsidiary, Just Group Limited.
I also serve as chair of Premier's Remuneration and Nominations Committee. Premier operates a portfolio of well-recognized brands through the Just Group, consisting of Just Jeans, Jay Jays. You'll know a lot of these. Peter Alexander, Smiggle, Jacqui E, Portmans, and Dotti. Just Group trades from over 1,000 stores across multiple countries as well as through wholesale and via, of course, online channels. Since I was appointed to the Premier Investments board in 2016, Premier's market capitalization has increased 57% to approximately AUD 4 billion. Over this period, Premier has distributed over AUD 640 million in fully franked dividends to shareholders. Since 2016, Premier's net profit after tax has increased over 174% to AUD 285 million for the financial year 2022.
I am personally very proud to be part of a team that has continuously delivered those outstanding results. I believe I bring to the board those intimate retailing skills and a proven capacity to work with the board and management to deliver results. I am committed to work in a collaborative and cohesive manner with the Myer board and will take my fiduciary duties very seriously, including managing conflicts of interest, perceived or otherwise. I am cognizant of the challenges, but excited by the potential opportunities ahead for Myer. If elected, I am committed to faithfully discharge my duties to Myer in the interests of all shareholders. Thank you for your attention and hopefully for your support.
Thanks, Terry. Do you want to stay there?
Mm-hmm.
We'll now turn to questions on this item. Do we have any questions from the floor? Mr. Pinn.
Michael Pinn.
Thank you.
Thank you.
Thanks.
Terry, this is directed to you, although it should go through the chair officially. There has been a lot of commentary in the marketplace about premium, control premium for Myer shares. I don't have any interest in selling my shares. I've been forced out of a number of businesses and got to find somewhere else to invest over a period of time, and I'm not very happy about it. I think Myer has the ability to go for another 100 years and celebrate with Disney again in 200 years' time. I'll be dead and gone, but Myer can still enjoy it. I have watched the Myer business, which was Grace Brothers as far as I was concerned, because I'm a Sydney person, grow. I went there as a child. I'm now taking my grandchildren there. It's a place to go to buy stuff. It's almost the first place you go.
John, yes, great job getting it back there because it wasn't there for a while. This premium, control premium, this implicit thought that you being involved might give away a control premium. I'm not really interested in that. I'm not really interested in Myer selling off to somebody else. Are you in this for the long haul, or are you looking for Myer to only have a limited time? Do you see this that Myer should be sold off and taken over? Because I don't.
Be directed at me? As you know, I have also a history with Grace Bros. I remember fondly the time when Grace Bros independently was serving New South Wales. Then the realities of life unfortunately came to fruition, where it made more sense to do it with Myer and Grace Bros together. I must admit, when I joined the combined group, I was seen as a bit of an outlier because I was a Grace Bros, a GB's person. You can imagine how they felt when I became the Managing Director. It's a fact of life. Things have moved on. The competitive nature of retail has changed. You can see some of the big, not only from my experience from the discount operations. They took a chunk of it.
You see the people like the Zara's of the world, and they come in. You get these specialty category people that come in and take a chunk. That does not dismiss the fact that a reshaped department store called Myer doesn't have a place in it. I remember when I was first interviewed about becoming the managing director of Myer, and the journo said, "Well, what do you think of the future of department stores?" I said, "I'm unsure." She looked at me twice like, "Hang on, you have just become the managing director." I said, "Ask me the second question, and what do I think about the brand Myer?" That's very, very different. We lost Grace Bros', but we have Myer as a department store that can be a strength within the Australian retail situation.
I don't see it disappearing. I think what John and the team have done has actually brought it back to life, and we have a chance with maybe some of the experience that I have and with the rest of the board to actually help that. I know that there's been commentary about, well, you haven't done anything with the plan. I've come in because I want to listen to the team so that I understand, add my value, hopefully, to that plan going forward. No, I don't see it as being sold off. I see this as a business that has found its legs again, and hopefully, I can add some value to that.
Thank you, Terry. I don't think there are any other questions in the room. Can I check, Tim, are there any questions online?
There are no online questions relating to this resolution.
Thank you. Can I also check the phone lines?
Thank you. There are no questions on the phone line.
Thank you, Rachel. Thank you, Terry.
Thank you.
Can I just say to shareholders today, we look forward to working with Terry on the board. Terry and I have already met before the AGM today, and we look forward to progressing quickly to have him on the board once the results of today's meeting are published. May I move on to item five, which is the remuneration report. The next item of business is the adoption of the remuneration report for the period ended thirtieth July 2022. The remuneration report is included in Myer's 2020 and 2022 annual report. It sets out Myer's remuneration policy and the arrangements for non-executive directors, the CEO and executive key management personnel. This is a non-binding advisory resolution, but the board will take account of any feedback which it receives from shareholders for future policies.
The changes made to the executive remuneration framework over the past two years, Jacquie referred to earlier, have really supported the company's transformation agenda and reflected our ongoing commitment to creating a really strong link between transforming our business performance and the executive remuneration outcomes. All the other detail in terms of the outcomes for the 2022 year are set out clearly in the remuneration report and will continue as a board to ensure that the views of our shareholders are fully considered in the development and implementation of that framework. The proxy and direct votes received prior to this meeting for resolution 5 are now shown on the screen. Can we turn then to questions on resolution 5? Once again, I'll turn to questions in the room first, if I may. Thank you. Can I go to Tim? Are there any questions online?
There are no online questions.
Thanks, Tim. Rachel, can I check if there are any phone questions?
Thank you. We do have a question from John Whittington. Please go ahead, John.
Thank you.
Madam Chair, it's John Whittington from the Australian Shareholders' Association again. A comment. We will be supporting the remuneration report as we did last year, as we believe it aligns remuneration with performance and shareholder returns. We would also like to add that the ASA does not support use of the remuneration votes for reasons other than remuneration. We believe that the improvements in executive pay, for example, lower rates of base pay and incentives, better alignment to shareholders, and closer alignment with community expectations, have all been as a result of the two-strikes policy. If the two-strike policy were to start being used as a lower threshold for corporate actions, then there is a fair chance that changes would be made to that policy and executive pay would be back to its bad way in no time.
We therefore call another shareholders to vote on this item purely based on their view of the Remuneration Report. Thank you, Madam Chair.
Thank you, John. I don't think there was a question for me in that, so I'll let that go through as a comment from the ASA, but thank you for that. Rachel, just checking, no other questions or comments on the phone line?
Thank you. No other questions on the phone line.
Okay. Thank you very much. We'll move then to item six, which is the grant of performance rights to the Chief Executive Officer and Managing Director. This is an item which is for the approval of the company to grant performance rights to our CEO and Managing Director, John King, as described in detail once again in the notice of meeting. Under the ASX Listing Rules, Myer is required to obtain shareholder approval to grant securities, including performance rights to John under our long-term incentive scheme. We are seeking approval to enable the company to grant those rights to John for his FY 2023 long-term incentive plan entitlement. Each performance right entitles John to acquire one fully paid ordinary share in the company, but only if the applicable performance hurdles are met, subject to any adjustment for capital actions.
The performance rights will be granted in one tranche and will be broadly on the same terms as performance rights granted to other executives participating in the performance rights LTI plan offer for FY23. The key terms of the performance rights are set out in the notice of meeting, and the proxy and direct votes received prior to this meeting for this resolution are now shown on the screen behind me. Once again, could I please turn to questions on this item, firstly in the room once again? No? Thank you. Could I go to any questions then, Tim, that might have come through online on this item?
Chairman, there are no online questions.
Thank you. Rachel on the phone, do we have any phone questions on this item?
Thank you. There are no questions on the phone line.
Thank you. I can see I'm losing our audience here quickly in the room as well. That does conclude our discussion of each of the items of business. As stated earlier, we've endeavored to get through as many questions as we can today, and we thank the shareholders for their questions and comments for us today. We've endeavored to ensure that those commonly raised questions and issues have been answered, and I hope we've achieved that. We will now proceed to voting on all of the resolutions. If you intend to vote and have not yet cast your vote, you should do so now. Voting will close approximately 5 minutes after the end of the meeting. You'll be notified on the online platform exactly how much time you have left to vote.
The counting of votes on a poll can take some time, so rather than wait for the results, I'll now formally close the meeting today, and the results of the vote will be advised by the ASX this afternoon and will be made available on the investor section of our website. There being no further business, I now declare this meeting closed subject to the finalization of the poll. In closing once again, can I thank all shareholders for their attendance at our AGM, whether it's here or in person. Can I now make two invitations. Firstly, as I'm sure many of you know, Myer does Christmas better than anyone else. Many of you have referred to shopping at Myer in the discussion comments today. Can I invite you to come in and see Christmas in the store. It really is very impressive.
Secondly, and more immediate, can I invite you to join us outside? Both the directors and the executive team will be there, and we have some refreshments there. Thank you all very much for your attendance today. We really appreciate it. Thank you.