Good morning, everyone. Welcome to the 2026 Annual General Meeting of Temple & Webster Group. My name is Mark Coulter, and I am the Executive Chair of Temple & Webster. It is 11:00 A.M., we have quorum present, and I therefore declare the meeting open. Thank you for attending today. In accordance with our usual practice, cameras and recording devices are not allowed to be used during the meeting. Before we commence the official business of the meeting, I would like to point out the fire exits in the event of emergency evacuation. These are located through the front door when you entered, behind me via the hallway, and to my left and right. Before we begin, Temple & Webster Group and myself would like to acknowledge the traditional owners and custodians of country throughout Australia. We recognize their enduring connection to the lands, the waterways, and the skies.
We acknowledge the Gadigal and Wangal people on whose lands our corporate head office is located, as well as other First Nations countries we operate across. We pay our respects to elders past, present, and to all Aboriginal and Torres Strait Islander peoples. I'd like to start by introducing the members of the board and the company secretary. I am joined in person today by Lead Independent Director Stephen Heath, as well as Directors Conrad Yiu, Belinda Rowe, and Melinda Snowden, and Company Secretary Lisa Jones. Director Michael Malone is interstate today and is joining via the audio webcast. I would also like to welcome the company CEO, Susie Sugden, our CFO, Cameron Barnsley, and Co-founder and Chief Experience Officer, Adam McWhinney, along with other Temple & Webster executives. The company's auditor, EY, is represented by Andrew Moody in person today and Rachel Redmond online.
They will be available to address any questions you may have about the audit of the financial statements later in the meeting. I also welcome representatives from MUFG Corporate Markets, Temple & Webster's share registry provider, who will conduct the final voting poll. The purpose of today's meeting is to deal with the formal business as set out in the notice of annual general meeting. I will deliver the Chair's address, and then our CEO, Susie Sugden, will deliver her address, which provides updates on our strategy as well as a year-to-date trading update. We will then consider the resolutions as set out in the notice of meeting. I will outline voting arrangements ahead of that section. There will be an opportunity of shareholders to ask questions during the formal items of business as they relate to the resolution being considered. Moving to my address.
Firstly, I want to say how excited I am to be in the position of Executive Chair at Temple & Webster, and how thrilled I am that Susie is back as our new CEO. This business has been such a huge part of my life over the last 15 years, and while I'm very proud of what we've been able to achieve to date, I know there is so much more to come. I'm looking forward to continuing to help grow this amazing business in my new role. As reported in August, FY 2026 was a year of record revenue for Temple & Webster. We delivered in a challenging consumer environment. We delivered AUD 665 million in revenue, up 11% on the prior year. We also grew our share of the Australian furniture and homewares market from 2.7% to 2.9%.
That growth came mainly in the first half, with trading conditions weaker in the second half. EBITDA for the year was AUD 21.9 million, up 17%, and a margin of 3.3%. Excluding one-off costs and unrealized FX losses, underlying EBITDA was AUD 25.9 million, and that is up 28%, and the margin improved 53 basis points to 3.9%. This result was in line with our guidance range and reflects the margin initiatives we put in place during the year and the flexibility of our operating model. The business generated AUD 24 million in operating cash flow, ending the year with AUD 123 million in cash. This was after returning AUD 30 million to shareholders through our on-market share buyback. Our capital management priorities haven't changed. We will keep investing in profitable growth in our technology, AI, and innovation capability, assess the right M&A opportunities, and continue to repurchase shares where we see value.
This year, we made a very important change to how the business is led. On the 1st of July , Susie joined as CEO, as I mentioned, and I moved into the role of Executive Chair. For Susie, this is a return to T&W. She was with us from 2016 to 2020 as Chief Commercial Officer and Chief Marketing Officer. Since then, she has been CEO of Love to Dream and a managing director at Genesis Capital. Earlier in her career, she co-founded e-commerce businesses in Southeast Asia. Susie knows this business, this category, and the board is confident she's the right person to lead our next phase of growth. As part of these changes, Stephen Heath moved from Chair to Lead Independent Director. I'd like to thank Stephen for his leadership as Chair over the past 10 years.
His knowledge of the business will remain very valuable to the board in his new role, and personally, you've been a big help to me. Thank you. We took independent advice from a leading corporate governance expert on the new structure. Following that advice, we updated the Board Charter and the Nomination and Remuneration Committee Charter. The changes set out clearly the responsibilities of the Executive Chair, the Lead Independent Director, and the CEO. The lead independent director chairs meetings of the independent directors and acts as the link between them, myself, and Susie. The board has a majority of independent directors, and we believe this structure gives the right balance between executive leadership and independent oversight and is consistent with the ASX Corporate Governance Principles. In closing, FY 2026 showed that Temple & Webster can grow revenue and improve profitability at the same time, even in a tough market.
We have a strong balance sheet, a large customer base, and a clear opportunity in a market worth around AUD 40 billion. On behalf of the board, I'd like to thank Susie and the whole of the Temple & Webster team for their hard work and commitment. Finally, to our shareholders, thank you for your continued support. I'll now hand over to Susie.
Thank you, Mark, and good morning, everybody. This is my first AGM as CEO of Temple & Webster, and it is a privilege to be here. Having returned to the business after departing in 2020, I have been so impressed with the progress made over those years, and also with the significant opportunity that remains ahead of us. Mark has already given us an update on the progress made in FY 2026. I would like to take some time to talk about the future and where we are taking the business. Over the past 15 years, Temple & Webster has grown from a startup to become the online market leader in our category and the number two specialty furniture retailer in the country. As a disruptor and an innovative digital-first business, our goal is to grow market share, deliver strong and sustainable top-line and bottom-line returns, and ultimately, to drive shareholder returns.
In particular, our aim is to return to double-digit growth from FY 2028, with improved unit economics as a result of the work that has been done over the last six months. The drivers of this growth are in place. From a macro perspective, a smaller share of sales in furniture and homeware are bought online in Australia and New Zealand than in comparable international markets and categories. Overseas markets are five to seven years ahead of us. As more of the category moves online, we expect to continue growing our market share and believe that increased AI adoption will accelerate this shift. In addition, today I will take the opportunity to outline new plans across marketing, range, and AI, all of which drive top-line and bottom-line growth of our core business.
We will also continue to diversify our revenue base by growing into adjacent categories and new markets, as we have done successfully over the past few years. We have made the decision to focus our business around the mass to mid-market, and we have been making conscious decisions to reduce our entry-level ranges over time. This shift supports our objective to be the largest retailer in our category in Australia, as the mid-market is the largest customer segment by revenue and profit. We will focus on our core customer proposition of quality, style, and value, and in tandem, take a more disciplined approach to promotions. I will shortly share with you the results of tests that we have run over the past three months, which will give us confidence in this direction and confidence that it will lead to a bigger and more profitable business over time.
The investment thesis in Temple & Webster remains unchanged. We are pursuing a AUD 40 billion total addressable market across furniture, homewares, and home improvement, with our overall share currently below 3%. Not only is the total addressable market large, online penetration in both categories remains low relative to overseas markets and other categories. We continue to see Australia moving to catch up, and Temple & Webster is taking advantage of this long-term structural shift. We believe our business is best placed to win, given that our digital capabilities and our data lake is significant, and we have deep expertise across technology, digital, and AI. Our ability to leverage both drop ship and direct sourcing models provides our customers with the best product range. We have best-in-class bulky logistics and a flexible supply chain that allows us to operate efficiently and ensure a great end-to-end customer experience.
Our asset-light and low fixed cost business model allows us to run a low-cost base, but also to reinvest for growth. The increasing use of AI will be transformative for the retail industry as a whole, and we believe will accelerate the shift to online. As a digitally native online business, this trend will amplify our strengths. We stand to disproportionately benefit from this technology in multiple ways. Firstly, our vast data lake allows us to personalize customer experiences, helping them find what they love and increasing conversion rates and average order values. Secondly, we use AI agents within our supply chain, merchandising, customer care, and tech teams to improve productivity. This widens our cost advantage relative to traditional retail. Thirdly, in marketing.
We are now using our product data and online assets to increase discoverability with LLMs, which over time, will also drive efficiency through competition in digital advertising. Our culture as an innovative disruptor and our unique position as an agile, asset-light business supports these initiatives. We are just seeing the beginning of the impact AI will have in our sector, and the opportunity ahead of Temple & Webster is significant. Over the past four months as CEO, working with the board and the broader executive team, we have challenged our current strategy, thought about what makes Temple & Webster unique, and how we can best position ourselves to become the largest retailer in our category in Australia. At our heart, we remain a customer-centered business.
We want to make our customers' homes beautiful, and we want them to be able to find what they love on Temple & Webster and bring it home with confidence. Confidence in quality, value, and service. This ambition does not require a complete rewrite of our strategy. In fact, what we are executing on is an evolution of our existing priorities, but with a greater emphasis on our position as a tech-driven disruptor and on our customers' changing needs. Over the past three years, we made substantial progress against each of our strategic priorities to become top of mind in the category, to drive a majority of revenue from exclusive products, to grow our capabilities on data, tech, and AI, to lower our fixed costs, and to build scale through adjacencies.
We have updated the market on our progress against these priorities on a regular basis, and our refreshed strategy shows how we are building on the same core strengths of the business. But evolving our approach to reflect the latest technology and the increasingly sophisticated expectations of our customers. Firstly, magnetic brand. We are adjusting our marketing mix with a greater weighting towards mid and top-of-funnel media, creating a trusted and aspirational brand. Secondly, distinctive product. Our ambition is to have Australia's best range, which is famous for quality, style, and value, enabled by AI and automation to ensure that our range remains on-trend, appropriately priced, and that the value is communicated effectively. Thirdly, leading experience. AI gives us the opportunity to transform how customers shop for furniture and homewares, which is a highly emotive and complicated category. Fourthly, operational rigor.
We want to extend our margin advantage as we scale, focusing on ways to use AI and automation across every part of our business to drive down fixed costs as a percentage of revenue. Finally, scale for the future. Our priority is exploring and testing larger international markets in the near term, leveraging AI and technology for low-cost market entry. I will now talk in more detail on what we've been doing across each of these priorities in the last four months, and what actions we are taking going forward. A refreshed brand campaign was launched in Brisbane in July using two years of data which balanced investment across brand and performance marketing, roughly 50/50. This compares to a previous balance of 80% - 90% performance marketing and 10% - 20% brand.
Early results have been positive, with the Brisbane metro area recording an 11% uplift in traffic, 7% uplift in revenue relative to control markets, and a 14% increase in share of branded Google search. Unprompted brand awareness has also increased by 2 percentage points over a two-month period. These results provide encouraging early evidence of the potential benefits of shifting our marketing allocations towards brand, and we expect them to continue to improve as brand campaigns typically take 6 - 12 months to have full impact. As a result, we've made the decision to roll out the campaign in additional markets, including Sydney and Melbourne. Our overall priority is to direct a greater share of our marketing spend to mid and top-of-funnel campaigns over the next three years, and as a result, improve overall efficiency, ROI, and marketing cost as a percentage of revenue.
We can observe this result with many global retail and consumer-facing businesses. We are also progressing our strategy to increase private label and exclusive product penetration and differentiate our range. We completed tests across multiple classes to replace entry-level products with higher quality private label ranges with consistently positive results. A recent program replaced approximately 200 entry-level Manchester SKUs with a higher quality private label range, featuring Australian-sourced fabrics and on-trend designs. The initiative delivered higher average order values, an 8% uplift in revenue, a fivefold increase in private label penetration, and an 11% higher delivered margin. This is just a snapshot of how our focus on higher quality exclusive product drives improved outcomes. Given these encouraging results, we have moved into rollout across the full catalog with an ambition to continue to grow our share of private label and exclusive drop ship product overall.
We are not just improving the quality of our private label range. We will use customer data, and in partnership with our drop ship network, also improve the quality, style, and value of our drop ship ranges. We've recently appointed two new executives who are already within the business to oversee these developments, a Chief Product and Sourcing Officer and a Chief Commercial Officer. We continue to invest in our digital and AI capabilities, which are increasingly focused on personalization across the customer journey. Five AI-led personalization programs have been launched or are in testing across paid media, product pages, checkout, and email. Results to date include tailored shipping pricing at checkout, which have delivered a AUD 1.2 million annualized uplift in delivered margin with no impact on revenue or conversion.
Personalized complementary product recommendations, which increased conversions on displayed items by 56%, and personalized email product recommendations, which increased traffic to our website by 12%. All of these are proprietary technologies built by our in-house data and tech team. Going forward, we see AI personalization as a differentiator for us, and we want to embed it across every customer interaction. We are also focused on improving our discoverability with LLMs as a growing source of customer referrals and driving higher conversion rates and basket sizes from personalized recommendations. AI is also having an impact on our operating costs and margins and is an important driver in our overall ambition to lower our cost of doing business and ensure that we can offer products to customers at the best possible price.
Over the past three years, we have reduced our fixed cost as a percentage of revenue from 12% to 10%, and we will continue to improve. We are now adopting agentic workflows across all departments of our business and also modernizing our core platform using agentic coding. We are focused on the impact of these investments. AI has driven fixed cost improvements and is also helping to drive improvements in delivered margin. For example, we have been able to reduce damage and defective rates in products as a result of AI-based workflows, reducing weeks of works to minutes, and taking action with our suppliers and factories. In combination with strong engagement with our vendors and suppliers, we are seeing a 20% reduction in damaged in-transit and other incidents year-on-year. In addition to saving costs, these changes improve overall customer experience and potential lifetime value.
Finally, our ambition is to explore larger markets and scale the business. New Zealand is our first test of an agentic-led market, where we manage both the technology and the commercial operations with an agentic team supervised by humans. This same approach can be used for larger markets, and we continue to internationalize our range so that it can be sold across multiple different geographies. We will grow revenue and earnings contribution from adjacencies outside our core business in a highly cost-effective manner. Before turning to trading, I would like to touch briefly on capital management. Our capital management priorities remain unchanged, with a focus on maintaining a strong balance sheet that supports us to invest in growth. Beyond maintaining appropriate liquidity buffers, our priority is to invest capital into organic growth and to drive market share gains and to maintain our advantages in relation to AI and technology.
We have also been assessing inorganic growth opportunities and will continue to do so going forward as a potentially effective way to add capabilities, new products, or new markets. Finally, surplus capital will be returned to shareholders, as we have demonstrated through our on-market buyback program. Through this program, we have returned over AUD 70 million to shareholders since 2023. Now to trading. As we said in August, revenue is lower so far this year because we have deliberately reduced promotional depth and raised prices on some ranges. That is why contribution margin is growing while revenue is down. Since our update in August, trading has improved, and the business has continued to step up its profitability in line with our strategy. For the period from 1 July to 19 October, revenue is down 8% versus the prior corresponding period, and contribution margin dollars are up 16%.
For the period between our August trading update and today, this implies run-rate revenue growth of -4%, up from 13% down at our August update. In terms of the shape of FY 2027, from mid-February, we begin to cycle periods with similar promotional depth and intensity as our current mix. At this point, we expect to return to growth with our improved unit economics and our strategy to focus on sustainable top-line and bottom-line growth. We remain on track for FY 2027 EBITDA in the range of AUD 33 million - AUD 40 million, an increase of approximately 50%-80% on FY 2026. Importantly, the growth initiatives that I have discussed today are funded within this range. With improving unit economics and a strong balance sheet, we remain focused on becoming the largest retailer in our category in Australia.
Finally, I'd like to thank the Tempster team for their warm welcome of me and everything they've contributed in FY 2026 and the results so far in FY 2027. Thank you also to Mark and the board for their support, and to our customers, suppliers, partners, and shareholders for their confidence in us as we continue to make the world more beautiful one room at a time.
Thank you, Susie. We now welcome questions or comments from shareholders holding a yellow or blue card in relation to my address and the CEO's address. Before asking your question, please state your name and whether you're a shareholder or proxy, and state the name of the shareholder you represent.
Good morning. David Kingston, K Capital. Look, I think the elephant in the room from a shareholder's point of view is share price. A year ago, you were AUD 25.00. The amazing Gerry Harvey. He is a competitor, but he was quoted as saying the stock was overpriced to buggery, quote. Interesting term, but he was right. He secondly said Temple has a PR machine that is extraordinary. He also went on to say the public has, "been duped into propaganda.
Now, the interesting thing is that your market cap, and congratulations to Susie and the team, you have made a big impact between yesterday and today. Stock is up over AUD 1 today. So in the fours yesterday, it is in the fives this morning. So the market has liked your very extensive presentation, Susie, so well done. You get a tick. But the company is still capitalized at AUD 500 million or AUD 600 million. The EBITDA, you have just forecast AUD 33 million, maybe into the AUD 40 million. Your profit last year was a mere AUD 12 million. Your cash flow last year was AUD 24 million minus AUD 10 million invested plant and equipment, some intangibles. So on a lot of metrics, even at this dramatically lower price, you are still pretty expensive.
I think it is also fair to say that globally, if you look at the SHEIN of the world, they floated, I have not got the recent price, but a couple of years ago, the expectation was AUD 100 billion. They floated at about a quarter of that. So I think the gloss has gone off some of these online retailers. But the bottom line is, look, obviously it is a capable company, good management. Gerry says it is superb marketing. But the implication is it is not backed up by the substance, which you may disagree with. But I think the elephant in the room is, notwithstanding the very severe fall in shareholder value it is still capitalized at a pretty large amount of money relative to your financial metrics.
That is fine, providing you are going to grow. I would just appreciate some amplification from either the Chairman or Susie as to be blunt, is the stock a good buy, even though it has fallen 80% from the peak? Clearly at the peak, it was ridiculously overvalued. I appreciate some response. Thank you.
Thank you for your question. Maybe I will take that, and then Susie, if you want to jump in. Obviously as a management team and Executive Chair, and what Susie has addressed today, what we are focused on is the customer, focused on the results. What the market does with that result is what the market does, and I have been around long enough to know you cannot control the market, and the market is influenced by many, many things. I am not going to comment specifically on share prices and particular valuations. What I can say is, I think the reason why people have liked Temple & Webster stock over the years is because of the long-term opportunity. Gerry is on record for saying no one will buy anything online. He is actually a very good retailer in appliances because appliances is a much further point of the penetration curve than furniture.
Most appliances now today are sold online, especially in markets like the U.S. As Harvey Norman, they sell a lot of appliances online. He does a really good job. He has had to do that because consumers are the ones that want to buy online. It is not about Gerry. It is not about me. It is not about any other retailer. It is about what do consumers want to do. If you look at penetration curves across demographics, people are not going back to stores. They like shopping for some categories as an entertainment, particularly for the social thing. But in the core categories, you see the growth of online retail around the world, and that is happening. It is a disruption which is happening in every category. Furniture is just next. Yes, we have been very much focused on growth.
We have got to AUD 700 million, not because the market has grown that much, but we have taken our 2.9% share off other retailers. That will continue as consumers lead the charge. In terms of share price volatility, it is the worst consumer environment in 50 years. On record, it is the worst consumer environment. You saw other retailers report yesterday, not great results. We are operating in a tough environment. I think this result today, though, of -4% since August trading update, -8% year to date, does mean we are stealing share in this environment. We do not have the data yet, but my best sense is a -4% is actually increasing market share. We are doing it by increasing our profit by 50%-80%. Not only are we increasing market share, we are fundamentally improving our unit economics.
The only thing I will end on is I also heard Gerry say once, they can come back to us when they are making more than AUD 25 million in EBITDA. We are this year. I think let's see who is right over the long term, us or Gerry.
Okay, thank you. Look, I accept most chairmen or Chief Executives always duck the question about share price. I have heard it many times. We do not control the share price. Fair enough. If you could perhaps amplify a few other very critical strategic long-term issues which are highly relevant to this company. In things like travel, bricks and mortars are slowly going to die because you know what the product is when you book an airfare or a hotel. You book it online, not with a travel agent. Furniture is slightly different in that, yes, you have got a lot of sales, but a lot of people like to touch and feel and actually look at it before they buy. It is perhaps not as compelling as some of the online stories, notwithstanding your great success.
If we can also look at, clearly the major retailers are getting more and more stronger and stronger and spending more time on online sales. They are using some of their stores as marketing tools and selling a bigger and bigger proportion online, whether it is Myer or Gerry Harvey or whatever. The other thing that is changing is that with AI, you have got Meta with, I think it is called Muse. These online shopping tools that are going to become prevalent, which will probably hurt the margins of a lot of retailers because AI is going to do the searching for them to compare prices to tell them where to buy. Just be interested if you could please clarify on the medium to longer term trends that I have just touched on. Thank you.
Do you want to?
You go.
Do you have I think there's a microphone there.
I think the point that you finished on is really the one that I would emphasize. To build on the point that Mark was making—
Do you want to?
Sorry. I would sort of agree with the last statement that you made. I do believe that AI is really going to change how things work in this category. Furniture is famously a difficult category to shop. It is highly emotive. This is stuff that you bring into your home and you care about, and it represents you as a person, but it is also something that is low frequency. Most people buy a sofa 1x or 2x in their lifetime. It is hard to understand what they need. I am actually really optimistic about the potential for AI to really transform how customers shop in this category. It can give them information and support to make difficult decisions. And we believe will be a big support for our strategy and us as an online-native business in delivering great growth, both within revenue and profit, but also for our shareholders.
Is there anything you want to add, Mark?
Yeah, I think that is a great answer on the AI. Omni-channel retail is always going to have a role in the sector. Especially for higher price, more premium products, I agree with you. I think people, if you are spending AUD 10,000 on a sofa, you probably want to go and sit on it. That is not our market. We are a mid to mass market retailer. I think actually value is a big part of our proposition. And in my experience, customers will sacrifice touch and feel if it means they save money, and that is a big part of our proposition. The last point I would love to end on is if I had a dollar for every time I heard no one is going to buy furniture online. I have heard that for 15 years, and I think again it is already here. 35% of the U.S. furniture market is sold online.
The debate's gone, I think. It's already here.
Your revenue proves that. It's a strong revenue. I suppose looking at share prices and whether things are good investments, it depends upon having a view on the future.
Great. I think maybe, is there any other questions? Just conscious of time, but thank you so much for that. Does anyone else have any questions? No? Yep. Great. Thank you.
Thank you. [Anindo Siddique]. I'm a shareholder. Mark or the team, could you please give us some color on how you're thinking about the international expansion? I know this is a tough time to already handle, but just some color on how far away you are on that growth phase or any thoughts would be great. Thank you.
I would love to, because I have spent a fair part of my career thinking about how to expand businesses both in Southeast Asia and in a previous role, I took an Australian-based business into an international sort of direct-to-customer business. Something that I am really passionate about and I think that Australian businesses can do really well. The big thing that has changed in the last few years is how cost-effectively we can do that. We talked just briefly about New Zealand being an example of how we are thinking about a low-cost market entry, both from an agentic point of view, but also that New Zealand business got to contribution margin breakeven within nine months. The next step is really where do we want to go next? In my experience, despite it being much easier than it used to be, going international is still work.
Each market is quite a lot of work for different reasons, compliance, market conditions, and competitiveness. My view is if we are going to do that, we should focus on the markets where we have the largest potential additional TAM. That is part of the prioritization process that we are looking at at the moment, and we expect to be able to come back. I think we have shown quite quick progress here, and we would expect to do the same on international.
Any other questions, comments? Sir.
Thanks. It was helpful that you provided an updated EBITDA forecast starting with AUD 33 million, maybe into the AUD 40 million. But could you give some color as to how that translates into free cash flow? Because last year certainly you spent AUD 5.3 million on payments for property, plant, and equipment, another AUD 4.5 million on intangibles. A lot of people look at free cash flow. That is what is funding your buybacks, maybe dividends. How does the EBITDA convert into cash flow?
Maybe I will get Cam to.
Thanks for the question. What I will also point out is for FY 2026, we were free cash flow positive, and we maintain a cash flow positive business model. We have stepped up some investments around our Melbourne warehouse. That particular investment was quite an interesting process to go through. What we realized was by actually taking a lease on a warehouse rather than going through a 3PL, we are able to actually save significant amounts of capital. So it is an economic decision over the longer term rather than thinking about necessarily short term. So it does translate through to positive free cash flow. We will be continuing to invest in technology and AI, as Susie has said, so I have guided to a similar level of intangible capitalizations FY 2026. Certainly, PP&E CapEx will be lower in FY 2027 because we will not be doing that Melbourne warehouse as we did in 2026.
We continue to maintain free cash flow positive business, and we want to continue to do that.
Okay. Thank you.
Great. Thank you. We will just wait for the microphone so we can hear that webcast. [ Any questions?]
Anything regarding on the acquisition or merger or anything that been talking for years now, anything is in your planning stage?
The question around M&A. Definitely, as part of my new role, we are stepped up the focus on looking at potential targets. We are still looking. There is nothing imminent. If there was anything imminent, obviously we would announce it to the market. I think there is, as the retail environment gets harder, actually, opportunities may increase. We have a balance sheet. We will be very careful about using our balance sheet. It has to meet very high strategic hurdles. Really what we have been doing over the last few months is make sure we get the core right, and Susie has been mostly focused on the core, which, as Susie discussed today, is in much better shape.
I think we are very keen on M&A if it meets our strict hurdle. We have been talking about it. We have looked at things, but they have not met our criteria or hurdle. I think you need to take comfort that we're not going to just buy something for the sake of it. If we don't find anything, then we will use our other capital management strategies, like increase the buybacks or other shareholder returns.
Any other questions, comments? Great. Thank you. I'm going to move on to the formal items of business. I'd like to outline the voting arrangements for today. As set out in the notice of meeting, all resolutions will be determined by poll. For those shareholders and proxies here in person who have not already cast a direct vote or proxy before today, you've been given a yellow voting card, which you should complete to vote on each of the resolutions in the notice of meeting. If you've already voted, you will be given a blue non-voting admission card.
Red cards have been assigned to visitors other than shareholders and do not carry rights to speak and ask questions when the business of meeting is being conducted, nor the right to vote. Details of proxy and direct votes for each resolution will be shown on the screens at the conclusion of the discussion. If you have a question, please hold up either your yellow or blue admission card and state your name prior to the question being asked. Please direct any questions you may have to me as the Chair. I will either deal with the question myself or ask someone who's better placed to respond. We will do our best to answer all relevant questions. As Chair of the meeting, it is my intention to cast any undirected proxy votes in favor of all resolutions.
I will declare the proxies held by me at the start of each resolution by showing them on screen. As you will see from the notice of meeting, the Board recommended voting by direct vote for all resolutions. Direct voting enabled shareholders to vote without attending the meeting or appointing a proxy. Voting on all items of business will be conducted by poll. The vote by poll will be conducted by Link, and I now declare the poll open for each of the resolutions in the notice of meeting. Paul Scobie from MUFG will conduct the poll as Returning Officer. Your voting cards will be collected by Paul at the conclusion of the formal business. If you need to leave early, please complete your voting card and present it to a staff member of Link at the doors.
A copy of the notice of meeting and explanatory statement containing the resolutions to be considered today were provided to shareholders last month. I will take the notice of meeting as read. I'll now move to the formal agenda of the meeting. The first item of business is to receive and consider the annual financial report of the company for the financial year ended 30th of June 2026, together with the declaration of the directors, the directors' report, the remuneration report, and the auditors' report. The reports are contained in the annual report, which was released to the ASX on the 29th of September 2026. I will take the reports as read and now formally lay them before the meeting.
Shareholders were invited to submit questions in advance of today's meeting to our auditor on the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by Temple & Webster relating to the preparation of the financial statements, and the independence of the auditor in conducting the audit. Are there any questions for a vote on item one? [Rebecca].
Just a simple question. I am interested that the income tax expense was AUD 7.5 million off a pre-tax profit of AUD 11.8 million. I am sure there is a simple explanation from that, but that is a little bit unusual. Thank you.
There is a simple explanation. It relates to our deferred tax asset on employee share options. That particular asset moves depending on share price movements, and because we had quite a material reduction in the share price, that meant that the DTA has come down and therefore income tax expense was much higher. That 60% odd effective income tax rate is not something to look at on an ongoing basis.
Could you just clarify? Because in a lot of emerging companies, a lot of the remuneration for key people is via options. I note the Chairman has got a substantial number of options, but if that is going to have a significant impact on the P&L, it is something that certainly I will have a look into a bit more closely.
Yeah, I would just take a look at the cash tax expense. If you look at our cash tax expense for FY 2026, it was closer to 30% of PBT.
Okay, thanks.
That is really the main thing.
Any other questions? There is no requirement for a vote on the first item, so I now move to the items of business which require a formal resolution. The first resolution is an advisory non-binding resolution required by the Corporations Act in relation to the adoption of the remuneration report, which forms part of Temple & Webster's annual report released on 29th September 2026. The remuneration report is set out on pages 56 - 73 of the 2026 annual report and provides information concerning executive and director remuneration. The resolution is displayed on the screen. I will now be happy to answer any questions or receive comments you may have on the remuneration report. Noting there are no questions or comments, the details of the direct and proxy votes that have been received are displayed on the screen. The second resolution concerns the re-election of Belinda Rowe.
The resolution being considered is displayed on the screen. Belinda's credentials have been outlined in the explanatory statement attached to the notice of meeting and are outlined in the annual report. Belinda Rowe is currently a non-executive director of the company, Chair of the Nomination and Remuneration Committee, and a member of the Audit and Risk Committee. I would now like to ask Belinda to address the meeting.
Thanks, Mark. I am seeking your support for my re-election to contribute to the company's strategy and growth over the next three to five years. I am excited about the opportunities ahead, which you have heard from Susie today, and the contribution I can make to the company's next phase of growth. I bring more than 30 years of international executive leadership and board experience. My career has focused on building and growing businesses, understanding customers, embracing technology, and delivering strong commercial performance. After being a CEO for advertising and media business in Australia, I spent 10 years in global leadership roles, leading international businesses and partnering with companies across consumer goods, retail, technology, telecommunications, and financial services. Much of this work focused on helping companies grow through a deep understanding of customers, effective marketing, digital transformation, and use of data and technology to create new opportunities.
I also established and led a global content and sports business operating across 32 countries, bringing together technology, data, and digital innovation, including scaling a personalized digital content platform. Today, I serve on boards of Sky New Zealand and ARN Media, bringing experience in strategy, technology transformation, navigating rapidly changing markets. As Chair of Nomination, Remuneration, Culture, I also bring a strong focus on developing leadership capability, supporting management, and building high-performing teams and culture. Looking ahead, there are significant opportunities to build on Temple & Webster's strong market position, attracting more customers, increasing market penetration, and driving effectiveness of marketing investment. Technology, data, and AI, which you have heard from Susie, will play an important improving customer experience, driving conversion and repeat purchasing, and creating operational efficiency.
Drawing on my experience in digital transformation together with the further education I am doing in AI at the University of Sydney, I am committed to staying at the forefront of emerging technologies. I believe this combination of executive leadership, international commercial experience, people leadership, and board governance are particularly relevant to Temple & Webster's next phase of growth. Thank you for your continued support, and I welcome your vote for my re-election.
Thanks, Belinda. Would anyone like to ask a question or express a view on this item?
Thanks, Belinda. We have had the pleasure of meeting at ARN, which has certainly been a challenged company. You have got excellent experience in marketing and various industries, but why does Gerry Harvey say, as I said before, that the PR machine here is extraordinary and that the public has been duped into believing the propaganda? Why is he wrong? Bearing in mind, you are a marketing expert.
Well, I think Mark and Susie explained some of those rationales earlier. As a marketing expert, we are very focused on understanding our customers, how to get more demand in, and how to get more repeat customers. So, that is what we are really focused on, David. Obviously, we have got a great marketing team who are experts in what they are doing. As you have heard, we are shifting some of our expenditure across the funnel to get more demand in and to increase penetration and brand awareness. So, I think over time, we will prove Gerry Harvey wrong.
But you are sustainable?
Sustainably.
Any other questions on this item? Details of the direct and proxy votes that have been received are displayed on the screen. The third resolution concerns the re-election of Melinda Snowden. The resolution being considered is displayed on the screen. Melinda's credentials have been outlined in the explanatory statement attached to the notice of meeting and are outlined in the annual report. Melinda is currently a non-executive director of the company, Chair of the Audit and Risk Committee, and a member of the Nomination and Remuneration Committee. I would now like to ask Melinda to address the meeting.
Morning, everyone, and thanks, Mark. I've been a non-executive director of Temple & Webster since June 2023. I've been a professional company director since 2010, and I have extensive experience in audit and risk committees across a range of industries, including wealth management, property, retail, technology, insurance, from more than a dozen board roles in my career. My background includes 30 years' experience in financial markets, including 16 years in corporate finance and investment banking roles at Grant Samuel, Merrill Lynch, and Goldman Sachs. Early in my career, I was a corporate lawyer at Freehills, now Herbert Smith Freehills. In my role as director at Temple & Webster, I bring to the board my deep understanding of financial markets, financial discipline, and rigor to the Audit Committee and the boardroom that helps ensure that directors and the company are focused on long-term value creation for shareholders.
My other current non-executive directorships include roles with Megaport and WAM Leaders. I hereby offer myself for re-election as a director of Temple & Webster, and I'm happy to take any questions. Thank you.
Would anyone like to ask a question or express a view on this item? Noting there are no questions or comments. Details of the direct and proxy votes that have been received are displayed on the screen. The fourth resolution concerns the renewal of the proportional takeover bid provisions in the company's constitution for a further three years, commencing from the date of this meeting. The resolution being considered is displayed on the screen. Details regarding this resolution have been outlined in the explanatory statement attached to the notice of meeting. Would anyone like to ask a question or express a view on this item? Noting no comments or questions were received. Details of the direct and proxy votes that have been received are displayed on the screen.
Now, as Resolution 5 relates to my long-term variable remuneration, I would like to ask Belinda Rowe, Chair of NomRem, to assume the chair for this item.
Okay. Thank you, Mark. Resolution 5 concerns approval for the purposes of ASX Listing Rule 10.14 and for all other purposes of the grant of performance rights under the company's rights plan to Mark Coulter as part of his remuneration package as Executive Chair. The resolution being considered is displayed on the screens. Details regarding this resolution have been outlined in the explanatory statement attached to the notice of meeting. Would anyone like to ask any questions or express a view about this item? David.
Yep. Obviously, Mark, you've done an excellent job. You've been co-founder, so congratulations on creating a very interesting company. Just wanted to clarify in the context of further performance right grants. You're holding 8.6 million options at the start of the year, 1.2 million are exercised, and 3.8 million are vested. Could someone clarify what's the exercise price of the options?
Are you talking about for the options or?
Yeah. The annual report shows 8.6 million at the start of the year.
Yeah.
And 1.2 million were exercised.
Yeah, we have three tranches there in the notice of meeting.
Well, the first lot of options relates to eight years ago.
Yep.
They have a AUD 0.74 exercise price. They are the ones that are vested and above.
Sure.
The strike price. The 3.6 million ones have three different strike prices, AUD 6, AUD 9, AUD 11 something. All of them are out of money. Essentially, they were there for the last four years. I took a relatively low salary along the way through, no STI cash, and rolled the dice, and I was wrong. All my options are under money. Obviously, I am a big believer in the company, so I believe that they will get back there, and that is why I am here and supporting Susie . That is where I am at.
Look, I think everyone welcomes that. You have obviously done a great job, and are very capable, and a co-founder, so well done. Just if you could clarify in the context of this, you sold 1.6 million shares last year. That is a little bit unusual for a co-founder but—
Well, I am not sure if it is unusual. I think my take on that is this has been 15 years of my life.
Yep.
I'm not sure if you've ever started a business, but you don't earn a lot of money on the way through. You end up selling most of your assets to fund this crazy journey. I think actually I'm a big proponent that founders should be given an opportunity to take some money off the table. I think living in fear is not a great mentality for a founder, a CEO, or exec chair. I think the shareholders who expect founders never to sell anything forget that actually they're waking up in the middle of the night worried about their entire net worth. I think actually taking some money off the table, I've kept most of my shares.
It's allowed me to kind of not live in fear, but still be very committed because most of my wealth, hopefully, is still in Temple & Webster shares. I think it's struck the right balance.
Look, welcome that, and the extra amount is fairly modest relative to your contributions, so I'm sure it'll be approved. Thank you.
Thank you.
He's also reinvesting. Thank you for all your questions. Details of the direct and proxy votes have been received and now displayed on the screen. I will now hand back to Mark.
Thank you, Belinda. I will now ask shareholders, proxy holders, and corporate representatives holding yellow voting cards to complete the card if you have not already done so to finalize your poll votes. Would Paul Scobie of MUFG please come forward to collect the voting cards? Paul's walking around with a ballot box for those who haven't already voted. Paul will forward these cards to the share registry for the completion of the poll. If you need a pen and pencil, let us know. Okay, great. Finally, if you have any questions, please ask one of the representatives from Link if you're worried about this process. I think it's all pretty straightforward. Are there any more voting cards that haven't been collected? Thank you. I now declare the polls on the resolutions closed.
MUFG will now count the votes, and the results will be available on the ASX platform later today. However, as you can see from the direct and proxy votes received, Resolutions 1, 2, 3, and 5 will pass by majority, and the fourth resolution will likely pass by a special majority. Do I have any further questions from the floor? I would like to thank you for attending today, and in addition, I would like to thank our shareholders and customers, our new CEO, the executive leadership team and the staff of Temple & Webster, the company's advisors and auditors, MUFG, my fellow co-founders, Conrad Yiu and Adam McWhinney, and of course, our competitors who keep talking about us, and I'm looking forward to proving them wrong. Everyone, that concludes our business for today. I will now declare the meeting closed. Thank you.