Renewal of our store format and investing in technologies that help make shopping in stores easier and more enjoyable for our customers. We have refreshed our Kmart store format across six locations so far, and the customer response has been fantastic, delivering good sales growth and supporting plans for a further rollout across the country. We also want to ensure our stores are a place team members love working in, and so we're investing in new technologies and tools to make our store operations even simpler. Our third priority is low-cost leadership through operational excellence. We are on a mission to make our business as efficient as it possibly can be. Investments in technology, automation, and data are focused on delivering even more efficient operations across every aspect of our business.
We're also modernising our supply chain infrastructure and systems, including our recently announced next-generation omnichannel distribution centre facility in Moorebank, Sydney, which will support both stores and our online customers in New South Wales. Our continued focus on low-cost leadership through operational excellence across all areas of our business will be key to supporting our future growth and enabling even lower prices for our customers. Now, next is a winning online offer. Kmart is already one of Australia's leading online retail websites. We're building on this success by launching a third-party marketplace on kmart.com.au, which will allow us to offer customers access to even more amazing products and brands in one convenient place. We're also focused on growing our business through our online shopping app, improving our digital customer experience, and offering even faster and more reliable delivery services in addition to click and collect.
Continued collaboration with OnePass and Flybuys will support our online aspirations and deliver further value to our most loyal customers. Finally, profitable global growth. This strategy is led by Anko. Anko gives the Kmart Group a powerful competitive advantage. It's our own brand built from the ground up with design, quality, and affordability at its core. Our Anko Global strategy is all about selling our fantastic Anko products in new markets around the world through partnerships with overseas retailers, as well as directly to customers in other markets through Anko-branded physical stores. You can now buy Anko products in markets around the world, from Canada to Europe to the Philippines. By Christmas this year, we'll have five Anko stores open in the Philippines through our joint venture with the Ayala Group. We're also growing through partnerships with respected international retailers like Walmart in Canada and Action in Europe.
In closing, our refresh strategy positions Kmart Group for sustainable growth over the long term. We're strengthening our business by focusing on better products, better stores, and a relentless focus on operational excellence. We are also investing in digital innovation and exploring international expansion for the future. Underpinning our strategy, we remain focused on our purpose, making everyday living brighter for our customers, our team members, and our shareholders. Finally, I'd like to thank our teams across Kmart, Target, and Anko for their ongoing hard work, passion, and commitment. Together, we're building something truly special, a business that delivers real value to families every single day. Thank you very much.
Thanks, Alex. It's always great to hear more about Kmart. Kmart has a great stand outside. If you haven't had your photo taken with Father Christmas yet, please get that done so you can share it with your families and pop in after the meeting and say hi. Next up, we're going to hear from Aaron Hood, the Managing Director of WesCEF. Aaron will speak to the division's growth and future opportunities and the more recent development of the lithium asset. Welcome, Aaron.
Good afternoon, ladies and gentlemen, and welcome to Wesfarmers' Annual General Meeting for 2025. My name is Ruth Callaghan , and I will be the moderator for today's meeting. In relation to some housekeeping matters, in the unlikely event that you have an emergency, you'll be asked to leave the room in an orderly fashion through the exits which are marked around the room.
Convention Centre staff will be available to assist you should you need them. If you have not already done so, may I remind you to please switch off your mobile phones. Now, before our Chairman, Michael Chaney, commences proceedings, I'd like to begin today by welcoming and introducing Dr. Richard Walley, OAM, to perform a Welcome to Country on behalf of the Traditional Owners of this part of Western Australia, the Whadjuk Noongar people. Ladies and gentlemen, please welcome Dr. Walley.
[Indigenous Language] Kaya wanja, po kilala na ng ginang and buyo ng alam mo't buyo wajak buyo wearing buyo mamang ginang alam na maingay niyong karin maingay ng ginang yan kaya pawi naman na ng kwot ko na nakarak na nabuyo na ng kwot mamang ginang na ngala ko remote na recome ginang yan ngali ay ngala jersey of ginang na nakaya acts of good spirit to keep everyone safe. This is called the wajak section of the language group acts of good spirit to give those who are presenting today the ability to articulate your message, those who receive the message have the capacity to share it and pass it on to those who require it.
At the end of this presentation may the good spirit take each and every one of us safely back to our families. After I do my presentation here in my song I won't stay for the AGM, much as I love speeches and hearing questions I'd have to go. So mamang may the good spirit be with us. I'd like to thank you for including a welcome. We do not take it for granted. It's a sign of respect to us and regardless of who you are or where you're from, respect is our greatest asset mamang.
Well, good afternoon everyone and welcome to this meeting.
I'm Michael Chaney, the Chairman of Wesfarmers. I'm advised that we have a quorum present, and I now officially open the 44th Annual General Meeting of Wesfarmers Limited. Can I start by thanking Dr. Richard Walley for his welcome to country on behalf of the Noongar people, the Traditional Owners of this part of Australia from which I'm joining you all today, and I pay my respects to their elders past and present. Thank you to everyone who's joined today's meeting in person or online. We're pleased to be hosting a hybrid Annual General Meeting from Wesfarmers from Perth with our board and executive leadership team and hundreds of shareholders in this room. I think we had about 1,350 registrations and others, of course, who are participating online.
As you can imagine, an event like this takes a huge amount of organizing, and I'd like to acknowledge a person who's organized AGMs here for as long as I can remember, and this will be her last. That's Chris Dargie. Where are you, Chris? Somewhere here in the audience. Chris is up the back, but Chris has done a fabulous job over the years, and everything has always run very smoothly, and we wish you very well in your retirement. Now, I'm joining you today for those online from the Perth Convention and Exhibition Centre, and on stage with me are our Managing Director, Rob Scott, and our Company Secretary, Sheldon Renkema.
Also joining us are our Board of Directors, and there are three directors standing for re-election or election today: Mike Roche, Sharon Warburton, and Julie Coates, and you'll be hearing from them later in the meeting when they'll seek your support for election. But first, I invite my director colleagues to stand while I introduce them. Firstly, Jennifer Westacott , who's been a board member since 2013, and Jennifer's retiring as a director at the conclusion of today's AGM. Next to Jennifer is Mike Roche, who joined the board in 2019 and is Chairman of the Remuneration Committee. Alongside Mike, Sharon Warburton, the Chair of the Audit and Risk Committee and a member of the board since 2019. Next to Sharon is Alison Watkins, who joined the board in 2021.
Alongside Alison is Alan Cransberg, who also joined the board in 2021, and then Kate Munnings, who joined the board just last year in 2024. And then alongside Kate is Tom von Oertzen , who joined the board last year as well, and then Julie Coates, who joined the board this year and is seeking re-election today. Bill English, who joined the board in 2018, is unable to be here today due to some unanticipated personal commitments. Also, thank you, directors. Also with us today at today's meeting, seated at the front are the group's senior executives, including the Managing Directors of our division, some of whom, of course, those who were in the room heard from a bit earlier today. I welcome them on your behalf and thank them very much for their efforts and the efforts of their teams during the year.
You might have noticed I've got a slight low voice. I caught something. The board visited India a couple of weeks ago, and a few of us caught what I would call a heavy cold, but it's hung around, so I hope you'll excuse me if I turn away and cough occasionally. As you would have seen coming into the meeting, all of our businesses are well represented here today, and I know how pleased they all are to have been able to demonstrate their products and services to you outside before the meeting. If you have any particular matters that you wish to raise that go into detail of their operations, please make contact with them after the formal meeting, and they'll all be outside and would be very pleased and available to talk to you.
We also have in attendance today Wesfarmers Audit Partner from EY, Mike Cunningham, who's able to answer any questions on the audit and related matters. Lastly, I extend a special welcome to all of our current team members and also to all former directors and executives and team members who've joined us here today. On to some procedural matters. Many of our shareholders have taken the opportunity to submit their voting instructions and questions through the online voting platform, and we thank them for doing so in advance. As outlined in our notice of meeting, shareholders and proxy holders may vote and submit questions during this meeting either in person or using the Lumi AGM online platform. All resolutions will be decided on a poll.
To provide ample opportunity for shareholders and proxy holders, including those participating in the meeting online to submit their votes, I now open the poll on all resolutions. I'll provide a reminder to submit any outstanding votes later in the meeting before the poll is closed. Sebastian Verna from Computers hare will act as the returning officer for the purposes of conducting and determining the results of the poll on each occasion, and the results will be announced through the ASX Company Announcements platform later today and will also be available on the Wesfarmers website. We'll now play a short video outlining further procedural matters, which I have to say I appreciate because in some past years I've had to read them all, and I think it's much better if we watch a professional.
For shareholders and proxy holders eligible to vote at the meeting who are joining the meeting in person, you will have a voting card which has a voting paper printed on one side. If you are acting as a proxy and have been directed how to vote, please sign and lodge your blue voting card. If you don't, the vote will default to the Chairman as proxy, and the Chairman will vote in accordance with the shareholders' instructions. If no instructions have been given regarding a resolution, the Chairman will vote in favor of that resolution. When you have completed your vote, please place your voting cards in one of the boxes which will be handed around by the Computershare representatives at the conclusion of the formal business.
For shareholders and proxy holders who are participating in this AGM online through the online platform and who are eligible to vote at this meeting, a voting icon will appear on your device or navigation bar. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options for each resolution: for, against, or abstain. There is no need to press submit or click the enter button, as your vote will be automatically recorded. You may change your vote during the meeting until the Chairman declares the poll closed. If you wish to ask a question, you must be a shareholder or their attorney, proxy, or authorized company representative. These attendees will have the option to ask questions both orally and by submitting them in writing through the online platform.
If your question has already been asked by another shareholder and answered or otherwise addressed during the meeting, please do not ask it again. Consistent with the approach taken at previous AGMs, the Chairman will respond to questions relating to a particular item of business during discussion on that item. The Chairman will also answer general questions at the end of the meeting while voting results are being counted. In the interests of all participants, please ensure that your questions are relevant to the resolution being considered and are also relevant to all shareholders. When the Chairman calls for questions, if you're in the room, please proceed to the microphone nearest to you, show your green, blue, or yellow card, and give your name to the attendant who will introduce you. If you are representing an organization, please say who you represent.
You will see that we have microphone points around the room. In order to enable all shareholders a reasonable opportunity to be heard, if you have a number of questions on a particular item of business, please ask them together when you come forward. If you are a shareholder or proxy holder participating in the meeting online, please submit any written questions on any item of business as early as possible during the meeting. To minimize repetition and to maximize the number of questions that can be responded to during the meeting, written questions submitted through the online platform may be moderated, for example, by amalgamating into one question or choosing the broadest question which covers questions on the same topic.
As time is limited, it may not be possible to respond to all questions during the meeting, and the Chairman may choose to limit the number of questions per person. If that is the case or if there are questions that might be better addressed on an individual basis, the company will respond to relevant questions after the meeting.
When the Chairman takes questions on the relevant item of business, written questions submitted online relating to that item will be read by an external moderator to the meeting. If you are online and wish to ask a question in writing, press or click the messaging icon, which can be found on the navigation bar on your screen. This will open a new screen. Select the category that relates to your question from the list, then type your question in the Ask a Question box before clicking the arrow to submit.
A copy of your submitted questions, along with any written responses from the moderating team, can be viewed by selecting My Messages. If you are online and wish to ask a question orally, click on the Request to Speak button, which can be found in the broadcast panel. This will pause the webcast. You can check your name is appearing correctly and then enter the topic of your question. Submit your request and follow the instructions to allow microphone access, then connect to the queue. You will then listen to the meeting on this page in real time with no delay while waiting to ask your question. When it's time to ask your question, there will be a beep, and you'll be asked to proceed with your question.
If you are attending the AGM in person and need assistance with how to vote or ask questions during the meeting, please speak to one of the Computershare representatives around the room. If you are participating in the meeting online, a user guide is available on the online platform as well as on the annual general meeting section on the Wesfarmers website. This guide sets out instructions on how to submit your vote and ask questions during the meeting. If you are having any issues with the online platform, please refer to the user guide or call Lumi on the number shown. Transcripts of the Chairman and Managing Director's addresses will be available on the Wesfarmers website and on the ASX Company Announcements platform. A recording of the meeting will be made available on the Wesfarmers website after the meeting.
I hope you found that video helpful. Please submit your votes any time from now until I close the poll at the end of the formal items of business. Are there any questions about the poll procedure? We could always run through that video again. If there are no questions, as you would be aware from the notice of meeting, there are five items of business to be discussed when we move into the formal proceedings. But before that, I'll make some general observations about the last 12 months and the business environment, and then I'll hand over to Rob Scott, who will provide us with some reflections on current trading and the outlook for the group.
Before we do so, I'd like to take this opportunity to reflect on the past year and provide an overview of Wesfarmers' performance and its contributions to the Australian community and make some observations about the external environment generally. I'll also provide an update on the external audit tender, which was initiated by the Audit and Risk Committee earlier this year, and outline recent changes to the board before handing over to Rob. Against a backdrop of ongoing volatility and uncertainty in global and domestic economies, I'm pleased to report that Wesfarmers delivered another strong year of performance. Your company delivered a record net profit after tax, excluding significant items, of $2.7 billion, up 3.8% on the prior year. The board declared increased fully franked dividends of $2.06 for the year per share, which was up 4%.
This strong result once again demonstrates, I think, the real benefit of our diversified conglomerate model where weaknesses in one business may be offset by strong performances in other businesses. For the financial year, year-on-year profit increases were recorded by Bunnings and the Kmart Group, by Office works, and Wesfarmers Health. Returns from Chemicals, Energy and Fertilisers and from the Industrial and Safety Division declined, largely due to reduced international commodity prices and restructuring activities respectively. A core strength of Wesfarmers is our disciplined approach to capital allocation and capital management. Consistent with this focus and subject to your approval today, in December, we'll make an additional $1.50 per share distribution to shareholders. The $1.50 go right ahead. You'll see, actually, the vote, surprisingly, as you'll see a bit later, is 99.9% in favor.
It comprises a capital return of $1.10 and an additional fully franked dividend of $0.40 per share. The distribution has been enabled by recent portfolio actions, being the disposal of the remaining 4.9% of Coles that we held, the divestment of Coregas and of Wesfarmers' LPG and LNG distribution businesses. After the distribution, the group will retain a very strong balance sheet, providing flexibility to navigate a range of economic scenarios and the capacity to invest in our businesses and in new opportunities as they arise. As you know, the group's primary objective is to provide a satisfactory return to shareholders, and we've defined satisfactory as being in the top quartile of companies on the ASX over the long term.
We adopted that purpose statement in 1984 when we listed, and it's really pleasing to us, and I know to our faithful long-term shareholders, including many of you here today, that we've achieved that purpose, that objective over the 41 years since, with Wesfarmers' returns to shareholders exceeding those of all other companies that were listed on the share market at the time, and those returns have amounted to about 20% per annum compound. For those of you here today who've been with the company since listing, I'm sure it's remarkable that what began as a $28 million farmers cooperative could become a company worth today just short of $100 billion.
The reason, I think, is that not only have we held fast to that stated corporate purpose, but equally importantly, that we've appreciated the importance of looking after our key stakeholders: our team members, our customers, our suppliers, as well as the environment and the communities in which we operate. Our stakeholders have, in turn, been loyal to us, to our mutual benefit. Of course, people buying shares today are interested in future returns, not those in the past. I'd like to assure you all that, notwithstanding our track record, we're always on guard against suffering hubris, thinking that we can relax and the returns will keep coming. The fact is we operate in a very competitive world, and it'll only be through constant innovation and reinvention that your company will continue to prosper. Over the last 12 months, we've seen Wesfarmers' share price rise significantly.
Now, while some of that increase has been due to what I'd say heightened exuberance in the stock market, Wesfarmers' reputation and historical performance has no doubt also been an important factor. The state of the share market at any time is something that's totally outside our control, but there are things we can control: running our businesses as effectively as we can, seeking out and creating new ways for them to operate with new products or in new fields or geographies, managing our portfolio of businesses, acquiring new ones or disposing of existing ones, some of which we did in the last year, where we believe that will add to shareholder value. Finally, keeping abreast of global trends and changes which could represent threats to our businesses or opportunities, and artificial intelligence being one current example of that. We'll keep on doing those things.
They're what keep us busy every day. Providing good returns to our shareholders is our focus, but frankly, those returns are dwarfed by the huge contribution your company makes to Australian communities and the economy, something I think that's not generally well appreciated. I think it's no better illustrated by considering what happened to the $46 billion of revenues that we received in the 2024-2025 financial year. The answer is that $43 billion, or 93% of it, went out of the company to other parties: to our suppliers, to our team members, to governments, and to the community. The remaining 7% went to our shareholders or was retained to fund future growth. This breakdown of our financial performance highlights, I think, the importance of large companies in our economy, and that's a fact, really, that is not well enough recognized.
A good example of that latter problem is the recommendation of Australia's Productivity Commission for an additional 5% cash flow tax on large companies. Well, as it is, Wesfarmers pays corporate tax of 30% on its Australian profits, plus another 8% in payroll tax and other government taxes and charges, including an additional cash flow tax of 5%. Our total adjusted tax take would be 43%, which would make Australia's tax regime one of the most onerous in the world, and have no doubt it would drive investment offshore. A lot is said about the need to improve Australia's productivity performance, and I totally agree with that. Innovation and new investment lead to productivity increases. Driving investment away would have the opposite effect. It's widely accepted by economists that Australia's corporate and personal income tax levels are too high. They need to be reduced.
But given the state of fiscal policy that can only really be achieved through wholesale tax reform, standing back and considering all state and federal taxes and restructuring them in a more efficient way. Piecemeal approaches will not do the trick. It's very disappointing, I think, that our political leaders seem unwilling to address this. I think it's time to think about the long-term needs of Australia and stop worrying about near-term political risks. A similar issue is the cost of overbearing regulation on economic development. It was very heartening to see general agreement on this at the recent Commonwealth Economic Roundtable event. But doing something material about it will require strong political will in the face of some stakeholders' protests.
In that respect, it was very encouraging, you might have read last week, to hear of the discussions between the Commonwealth and West Australian governments about streamlining major project approvals and removing current duplication, which increases costs and delays in investment. I just don't think people appreciate the effect of a delay on an investment. It means often investments don't occur because there's a real cost in total project returns, investment returns of delays. Meanwhile, instability at international levels threatens economic growth around the world. In response to China's recent actions on rare earths and their derivatives, President Trump's announcement of an additional 100% tariff on Chinese exports to apply from this Saturday, if implemented, could cause huge disruption to trade and to the world economy. Every company would feel the effect of that in some way.
Hopefully, the talks that are scheduled in South Korea today will help to avoid such an outcome. Faced with such uncertainties, our strategy at Wesfarmers is, firstly, to maintain a strong balance sheet and, secondly, to focus on the things that we can control, as I described earlier. Uncertainties bring opportunities as well as threats, and we're confident that we're well equipped to take advantage of and to counter them, respectively. Now, as mentioned in this year's annual report, the Audit and Risk Committee of the board initiated an external audit tender process, given the long-standing tenure of our existing external auditor, Ernst & Young. As a result of a thorough process, I can announce today an intention to appoint KPMG as external auditor from July 1, 2027, subject to shareholder approval at the 2027 AGM and subject to ASIC consenting to the resignation of EY.
That'll allow for an orderly handover of the external audit and permit KPMG to complete existing consulting engagements to ensure that the firm's independence on commencing is preserved when they commence as external auditor. I'd like to acknowledge and thank EY for the contribution the firm has made to Wesfarmers. On retirement in 2027, EY will have been the firm's auditor for almost 49 years. They've done an outstanding job. Turning now to the board, I'd like to report changes that have taken place in the past year and those that will continue in the coming year. In 2024, we welcomed Kate Munnings and Tom von Oertzen to the board, and Julie Coates joined us in July 2025. With their qualifications and experience, I'm sure they'll all make very valuable contributions to the board's deliberations.
At today's meeting, we farewell Jennifer Westacott after 12 years as a director or 12 and a half years, actually. The board has benefited greatly from Jennifer's background and experience in business and in government and in the community. She's been a tremendous contributor to the board, and we thank Jennifer for that great contribution to the success of Wesfarmers, and we wish her well in her future endeavors. In 2023, I announced that I will retire after next year's AGM at the end of my current term. It's been a real privilege to serve this remarkable company, first in an executive and then in a non-executive capacity, and I'm deeply grateful for the support of my fellow directors and our leadership team and our team members, and I look forward to my final year.
I'm delighted to announce again that Ken MacKenzie will join the board on 1 June and take over as chairman following the end of the AGM at this time next year. Ken and his wife, Dorothy, are with us here today. Ken, I wonder if you'd mind standing, please, in place of the audience. Ken brings extensive experience as a chairman and senior executive in large complex businesses operating across multiple industries and jurisdictions. Most recently, as you'd be aware, I'm sure he served as Chair of BHP Group and prior to that as Managing Director and Chief Executive Officer of Amcor Limited, a very successful global packaging company.
Based on my conversations with Ken, it's clear that he shares the same views about corporate governance and management and capital allocation and those philosophies that have underpinned Wesfarmers' success for more than four decades, and we very much look forward to him becoming our 12th chairman. In closing, I'd like to acknowledge the outstanding contribution of our 118,000 team members, led so ably by our Managing Director and CEO, Rob Scott, to whom I will now hand over for his remarks.
Thank you very much, Chairman, and thank you, Dr. Walley, for your welcome. As the Chairman outlined, our result in the 2025 financial year highlights the quality and resilience of our portfolio and teams.
A focus on operating excellence and our disciplined approach to capital allocation enabled us to keep our prices low, support our teams, partner responsibly with suppliers, invest in our local communities, and pay tax to governments. Strong execution of our strategic agenda positions the group well for the future and supports the continued delivery of satisfactory long-term returns to shareholders. Today, I'd like to talk to you about three points. Firstly, how Wesfarmers is adapting for the future. Secondly, how we're improving lives and livelihoods, and then how we are importantly driving productivity. I'm really pleased with the progress made to strengthen our portfolio. Investments and portfolio actions position the group for long-term growth and returns. Our businesses continue to drive product innovation and range expansion to meet changing customer needs and to grow their addressable markets.
Bunnings continued to invest in its store network, enhancing its omnichannel customer experience. This includes the rollout of a new Tool Shop format to 175 stores, showcasing a wider range of leading brands and products and contributing to Bunnings' higher sales and earnings. Kmart implemented its new store format in five stores with positive early trading results. Investments in Kmart Group's digital platforms grew customer engagement and omnichannel spending, with monthly active app users doubling over the year to 1.3 million. Officeworks acquired Box of Books to complement its education offer and upgraded 25 stores with a new technology layout to enhance offer presentation and experience to customers. At WesCEF, our Covalent joint venture achieved a major milestone, delivering first product at the Kwinana Lithium Refinery in July this year.
The 2026 financial year will be a transitional year for Covalent, with production expected to ramp up over the next 18 months. The refinery will be a unique asset globally, expected to support satisfactory long-term returns with its attractive cost structure. In health, Priceline Pharmacy achieved strong sales growth through network expansion and further investment in key value lines to lower prices for customers. Health continued to explore new formats to expand its addressable market, including through Atomica and InstantScripts Pharmacy Health Hub. Our investment in the OnePass membership program continued to support incremental sales and earnings in our retail divisions. This year, we launched a group retail media network, which is well positioned to deliver new revenue streams. I'm also pleased with the actions taken this year to renew our portfolio.
In Industrial and Safety, we sold the Coregas business for $770 million, delivering significant value for shareholders and supporting, in part, the proposed $1.50 capital return that the chairman mentioned earlier. The decision to wind down Catch and redeploy its assets and capabilities has eliminated operating losses and further strengthened Kmart Group through improved centralized online fulfillment capabilities. Wesfarmers' success is built on customer trust, team member commitment, and our connection to local communities. We're committed to improving lives and livelihoods in our communities, providing well-paid jobs to team members, and supporting their development with rewarding careers. Our retailers are committed to delivering value and helping customers manage cost of living pressures without compromising on quality or service. We support thousands of suppliers, fostering ethical and sustainable sourcing. The chairman has spoken to our broader economic contribution, including taxes paid to government and investment in local communities.
Around 13 million Australians have an interest in Wesfarmers through their superannuation. We also recognize the critical importance of taking care of the environment, not only for businesses but for future generations. This year, we reduced Group Scope 1 and Scope 2 emissions by 9.3%. Bunnings Officeworks and now Kmart have achieved their 100% renewable energy targets. Together, these contributions evidence the critical role that Wesfarmers plays in supporting Australia's prosperity and resilience. On productivity, there's been a lot of public debate around productivity, which, as the chairman said, must remain a priority if we are to improve Australia's prosperity. At Wesfarmers, we're committed to finding more efficient ways of working. We know this requires sustained investment, disciplined execution, and importantly, a mindset of managing our businesses for the long term and not optimizing just for short-term profits.
Across the group, we're driving productivity and improving service by simplifying how we work, digitizing our operations, and leveraging AI and data where it makes sense. In Bunnings, improved team member productivity and inventory efficiency has been enabled through investment in in-store technology and a new demand and replenishment system. Kmart Group has benefited from the integration of Kmart and Target systems and processes. Kmart Group has also continued to digitize operations, for example, expanding its RFID capabilities to improve product availability and service to customers. In Industrial and Safety, the operating model reset was enabled by recent systems investments, materially improving customer service and costs, which are expected to support long-term earnings growth. Our businesses are increasingly using AI, including in areas such as demand forecasting to enhance our team member and customer experience, and in areas such as marketing and to improve product availability.
Bunnings and Officeworks have launched voice-activated AI tools that help our team members access product information to better serve customers. We've made great progress, and there are further opportunities ahead. I'd now like to comment on our 118,000 team members across the group. We recognize that the value of a workforce that reflects the communities where we operate is critical. With our diverse workforce, we access the best talent available to help connect with our customers and to harness the creativity and problem-solving skills that our team possess. Our leadership team and our board remain in gender balance, and we maintain indigenous employment parity. In the last year, some of our talented leaders stepped into key leadership roles within our group leadership team, including Aleksandra Spaseska as Managing Director of Kmart, who you heard earlier, together with Aaron Hood as Managing Director of WesCEF.
More recently, John Gualtieri at Officeworks and Leah Balter at OneDigital. We're really proud to be able to focus on internal promotions here. I'd also like to recognize and thank Ian Bailey, who retired as the Managing Director of Kmart Group. Ian has played a pivotal role in Kmart's growth, and he remains with the group as Chairman of our Anko Global business. Our thanks also go to Sarah Hunter and Nicole Sheffield, who transitioned out of their roles as Managing Director of Officeworks and OneDigital, respectively. As always, safety comes first at Wesfarmers. We take our responsibility to create safe, inclusive, and respectful workforces very seriously. While group total recordable injury frequency rate has improved this year to 9.5, during the year, we experienced a significant worsening of retail crime and customer threatening situations.
Over the last 12 months, we recorded 13,500 customer threatening incidents across our retail stores. This included more than 1,000 instances of physical assault and several hundred threats of serious harm with a weapon. These are not issues just focused on Wesfarmers. These are broader societal community issues. Customer threatening situations at Kmart Group increased 29% for the year. At Bunnings, incidents involving serious threats of harm increased by 66%. In response, we've strengthened security in high-risk locations. We've increased training for team members, including to help them with de-escalation strategies, and we've deployed body-worn cameras where appropriate in some areas. We share intelligence with our retail peers, with governments, and with the police because they all have an important role to play in addressing this growing hazard.
Now, we support sensible reform, including tougher, nationally consistent penalties for violent retail crime and a national conversation to enable controlled, responsible use of technology to exclude known violent offenders from retail environments, which is in the community interest. Our position at Wesfarmers is clear. Our team members must be safe and respected at work, and we will keep investing, partnering, and advocating until we see sustained improvement. Now, I'd like to provide an update on the group's recent trading performance. The Australian economy remains resilient, supported by a growing population, low unemployment, and improving household disposable income. At our full-year results in August, we noted a modest improvement in consumer demand to the start of the 2025 financial year. Since then, consumer demand has remained positive, but cost of living pressures remain a challenge for some households, and some consumers maintain a cautious outlook.
Cost pressure, especially in relation to domestic costs, presents challenges for many businesses, and this is weighing on business demand and investment in Australia. These pressures are reflected across Wesfarmers' divisions through higher domestic supply chain, labor, energy, and regulatory costs, and some subdued business-to-business sales growth. For these reasons, the group businesses continue to invest in productivity initiatives to help offset these higher costs and maintain competitive prices for our customers. In this economic environment, the group's retail businesses are very well positioned with their strong value credentials and product ranges that have broad customer appeal. They remain focused on disciplined execution with performance for the first half of the 2026 financial year, subject, of course, to the important trading period that we're leading into with Black Friday and Christmas ahead of us.
Bunnings' year-to-date sales growth is ahead of growth recorded in the second half of the 2025 financial year, supported by solid trading in the consumer segment. The commercial segment has also delivered positive sales growth despite the soft sales to builder customers, which reflects the ongoing supply-side challenges resulting in weak residential construction activity. Kmart Group is benefiting from the strong value credentials and quality of its Anko products, with year-to-date sales growth broadly in line with the second half of last financial year. The business continues to invest in various projects that are expected to deliver long-term cost and operational benefits, such as improving supply chain capabilities, including its next-generation fulfillment center, upgrading digital platforms, including the launch of a marketplace, together with other areas of digitizing operations. Officeworks' sales momentum has continued for the full year... the full-year results in August.
Earnings for the first half, however, will be impacted by lower operating margins and costs associated with resetting the operating model and some restructuring activities, together with an ERP replacement project, which is underway. As a result of these additional costs and margin impacts, earnings for the first half are estimated to be between $15- $25 million lower than in the prior corresponding period. While the reset of the operating model and these restructuring changes will impact earnings this financial year, the benefit of the changes are expected to result in lower costs of doing business and improved financial performance in the years ahead.
In the Health division, Priceline Pharmacy continues to deliver strong network sales growth, supported by better retail execution, network expansion, and price reductions on key value lines, together with the introduction of new and exclusive brands that are resonating really well with customers. Performance in the wholesale segment continues to improve, but trading remains competitive in that space. Strong online sales growth in the retail and Health divisions has been supported by our investments in omnichannel capabilities in recent years. The insights provided by the group shared data asset and the continued growth of the OnePass membership program are contributing to incremental sales and earnings in retail and the Health divisions. In WesCEF, the ramp-up activity associated with the Covalent Lithium refinery continues to progress well.
As previously indicated, earnings in Chemicals, Energy and Fertilisers this year are expected to be impacted by higher contracted natural gas costs in WA, as well as lower expected LPG content in processed gas. Of course, earnings in these businesses are always subject to global commodity prices. In the Industrial and Safety division, trading conditions remain challenging, with earnings impacted by subdued demand across the mining and resources sector. Following the reset of the operating model, key operating metrics in Blackwoods, including customer Net Promoter Scores and new customer win rates, are ahead of expectations. In closing, Wesfarmers is well positioned for the future. Our balance sheet is strong, and it ensures we have the capacity to invest in our businesses, adapt to dynamic markets, and take advantage of opportunities as they arise.
Compared to this time last year, our businesses are more productive, more efficient, and have more growth opportunities. I want to thank our board for their continued advice and support and our leadership team as well, together with team members across the group for their broader commitment towards our corporate objective. I'd now like to hand back to the chairman. Thank you.
Well, thank you, Rob. Now on to the formal business of the meeting. I refer to the minutes of the 43rd Annual General Meeting of the company held on October 31st last year. I've reviewed the minutes, and I've signed them as a true and correct record of that meeting. The minutes are available for inspection at the shareholder registration desk and the company's registered office. Voting on all resolutions today will be carried out by a poll, as I mentioned earlier. All resolutions are ordinary resolutions requiring approval by a majority of the shareholders who vote on that resolution or a majority of the shares. As Chairman of the meeting, I've been nominated as shareholder's proxy. I intend to vote all undirected and available proxies in favor of each of the resolutions.
There are also voting restrictions for some resolutions, as outlined in the notice of meeting, which apply to those who have an interest in the resolutions and certain of their related parties. A reminder that if you're having any issues casting your vote or submitting a question, please speak to a Computershare representative if you're attending here in person today, or if you're participating online, please refer to the user's guide on the Wesfarmers website or call Lumi on the number shown on the slide. The proxy votes and direct votes that have been submitted in advance of the meeting will be set out on the slide shown for each resolution. I'll provide details of the percentage of for and against for the benefit of all of those listening to the meeting online.
As mentioned earlier, the final results of each poll will be available on the ASX company announcements platform and on the Wesfarmers website later today. I'll now proceed to the formal business of the meeting. The notice of annual general meeting was distributed to shareholders on or before Friday, 26 September 2025, and I'll take the notice as read. We'll now proceed with the items of business listed in the notice of meeting. For each item of business, we'll display the wording of the relevant resolution on the slides in front of you here and online. For those listening to the meeting online, please refer to the notice of meeting for the relevant wording.
Now, the first item is to receive and consider the financial statements and the reports of the directors and the auditor for the year ended 30 June 2025, which have been included in the company's annual report. Fiona Campbell and Mike Cunningham from EY were the signing audit partners for the company for the 2025 financial year. Mike Cunningham is here and available to answer questions on the audit and related matters. I'll shortly invite shareholders to ask in person or submit online any questions that they have regarding this resolution on the accounts. For those shareholders and proxy holders participating online, just a brief reminder, there's a brief delay in the broadcast. Please follow the instructions outlined earlier to ask your questions online. Now, are there any questions on item one?
No, Chairman. Apologies, Chairman. There are no questions for item one.
Oh, sorry, what was that?
There are no questions for item.
No questions online. If you have a question, just go to one of the attendants with a number in front of them. It looks like there are no questions here on this item. If there aren't any further questions, I'll now move on to the next item of business. The next item is for the re-election and the election of directors. Mike Roche, Sharon Warburton, and Jennifer Westacott are retiring by rotation at this meeting today. Mike and Sharon are offering themselves for re-election. While, as I mentioned earlier, Jennifer will conclude her directorship at the end of this meeting. Again, I want to thank Jennifer for that contribution. It's been fantastic. Julie Coates was appointed as a director in May this year and offers herself for election today.
Displayed on the screen is the position in relation to votes and proxies received on the re-election and election of directors prior to any revocations that may have been made during the meeting. For those who are listening online, there are 98.07% of the votes in favor of Mike's re-election, 92.87% of the votes in favor of Sharon's re-election, and 99.27% of the votes in favor of Julie's election. The first director to speak today is Mike Roche , who was appointed to the board in February 2019. Mike, would you mind coming up to the stage, please?
Good afternoon, ladies and gentlemen. Good afternoon, shareholders. Thank you for considering my re-election as a non-executive director. I feel privileged to stand before you and outline what contributions I believe I can continue to make to the board. My background is I have over 40 years' experience in financial services. 30 years of that has been in investment banking, most of which was for a global investment bank where I advised a lot of the major corporates, private equity, and government across multiple industries and multiple jurisdictions. I was Head of Mergers and Acquisitions for the final 10 years, and I served two terms on the Australian Federal Government Takeovers Panel . Prior to that, I was a Senior Actuary advising on long-term funding and investment. I'm currently a non-executive director of Macquarie and two private companies, one owned by a global private equity firm, Apollo.
Also, my wife and I, Geraldine, founded and remain directors of Sally Foundation, which is our own private charity. What have I found since I've been on the Wesfarmers board? It's been really interesting to see the company from inside. You see it from outside. I guess as a director, I've seen it from inside. What I see is a very high-quality company with exceptional people and depth of talent, well-positioned businesses, and a strong ethos of community engagement. Most importantly, the company maximizes and maintains its hard-earned reputation for genuinely thinking long-term and seeking to maximize return to shareholders, but as you've heard, only doing that by looking after customers, staff, environment, shareholders, etc. Since 2019, I've been chair of remuneration and attended every audit and risk committee and been proactively engaged in discussions around portfolio optimization.
That's where I've sought to bring my experience to support strategic decisions and try and position us for the challenges and opportunities ahead. My style is to try and bring questioning outside-in perspective to our deliberations. I think this external lens is critical. My focus remains on helping the organization make sound decisions whilst preserving its well-earned reputation. I grew up on a farm in regional Australia, and that taught me resilience and the importance of long-term thinking, qualities that I think they've always been important, but they're particularly important at the moment given current market uncertainties. As an actuary, long-term thinking is what that's all about. Having started my career in the mid-1970s recession, I've weathered multiple economic cycles, which I think is helpful for whatever lies ahead. Because the global landscape, it's evolving rapidly.
Whether it's regulatory changes, technology, geopolitical, this creates a need to think strategically and adaptively. I think my background is suitable for that and adds experience to the oversight of Wesfarmers' diverse operations. I've learned over the years that independent thinking is critical. Being part of an effective team, however, is what creates real value. I'm proud to be part of what I've observed to be exactly that kind of team at both the management level and the board level in Wesfarmers. I can assure you that I'll always act in the best interest of Wesfarmers and, most importantly, your best interest as shareholders. My skill set, I think, complements that of other board members and enhances our collective ability to provide overall effective guidance and oversight. I look forward to your continuing support. Thank you.
Thank you very much, Mike. I invite shareholders to ask any questions on this resolution. Ruth, are there any questions online?
No, Chairman.
Okay. I don't think there are any questions in the room. So I'll now introduce Sharon Warburton. Sharon was appointed to the board in August 2019. Sharon, would you mind coming up onto the stage, please?
Thank you, Chairman. Good afternoon, ladies and gentlemen. Thank you for this opportunity. First, I want to tell you a little bit about me. I am a proud West Australian. I spent my childhood in the Northwest, growing up in a town called Exmouth. These days, when I'm not in a boardroom or on an aircraft, I reside in the . During my career, I have lived and worked in the U.K., Abu Dhabi, in the Middle East, as well as in Sydney. I would summarize my executive career as globally focused with large corporations in roles specializing in finance, strategy, risk management, and mergers and acquisitions. Turning now to my financial qualifications. I am a fellow of the Institute of Chartered Accountants, Australia and New Zealand, and I am a fellow of the Australian Institute of Company Directors.
Finance and risk management has changed a lot since I went to university, and it continues to change. These days, I find myself committing significant personal time when I'm not in the boardroom to continuing my education in areas that are important to Wesfarmers and the other companies in my portfolio. I find myself spending more and more time in the areas of risk management like cybersecurity, like data protection and privacy, and sustainability reporting and assurance. I describe myself as a full-time company director, and I've been a full-time company director for over a decade now. My director roles to date have largely been in businesses in the global mining sector across the full mining value chain and across a range of commodities. However, I've also had roles in a range of other industries, including energy distribution and transmission, data centers, engineering services, and commercial property.
Today, as well as my role here at Wesfarmers, I am a non-executive director for two other large ASX-listed resource companies, South32 Limited and Northern Star Resources Limited. I have also just assumed the role of Chairman of the Audit and Risk Committee at South32 Limited. I find playing this role as Chairman of the Audit and Risk Committee across a range of organizations enables me to see and encourage the cross-fertilization of industry best practice. It enables me to see the depth of both the Australian and the global auditing communities, and it enables me to learn from different perspectives, particularly on risk and governance matters. Since I spoke to you three years ago, I have retired from my part-time role as a member of the Federal Government's Takeovers Panel, and I also retired from my ASX board-listed role at Worley Limited.
However, I continue to serve as an independent non-executive director of one of Australia's largest indigenous corporations, the Karlka Nyiyaparli people, based out of Port Hedland in the Pilbara region. For me, working with the Traditional Owners' elders has been an incredible learning experience. In closing, I have now served as a non-executive director and chairman of the audit and risk committee here at Wesfarmers for over six years. It is an absolute privilege to work alongside my colleagues and the outstanding board of directors. I believe I bring complementary skills to the board, including in the areas of strategy, governance, accounting, finance, and risk management, and I would be grateful for your vote of support today. Thank you very much.
Well, thank you, Sharon. I invite shareholders to ask any questions in relation to this resolution. Firstly, Ruth, do you have any questions online?
No questions, Chairman.
Okay. No questions in the room. So in that case, we will move on to allow me to introduce Julie Coates. Julie was appointed to the board on the 1st of May this year, and she was previously Managing Director of CSR and had a lot of retail involvements as well. But I'll let Julie tell you about that.
Thank you, Chair. Good afternoon, everyone. I was very pleased to join the board earlier this year. Today, I seek your support for my election to the board of your company. Wesfarmers is an iconic Australian company, and I'm pleased to have the opportunity to serve you on your board. There's a couple of things about me that I'd like to highlight to support my election. I, too, grew up on a dairy farm in country Victoria. So, like Wesfarmers, my beginnings were on the land, and this has shaped my work ethic and my values. Much of my career has been working in retail, which is of relevance to the Wesfarmers group. I worked at Target and then was involved in the startup of the Officew orks business. I'm very proud to say I was employee number two right back in 1993.
I was also at the Woolworths Group for 12 years, first as the Human Resources Director, then the Chief and Distribution of Fast-Moving Consumer Goods, running Goodman Fielder in both Australia and New Zealand. I was also on the board of Coca-Cola Amatil at that time. As Michael said, my last executive role was as the Managing Director and CEO of CSR, a proud Australian business for over 169 years. I felt very fortunate to be able to lead that business for five years before it was acquired for a significant premium for the benefit of all stakeholders, particularly its shareholders. Finally, I commit to bring all that I have learned to my role on the Wesfarmers board to support our objective of delivering satisfactory returns to shareholders. Thank you.
Well, thank you, Julie. Are there any questions on this resolution? Ruth, no questions.
No questions, Chairman.
I think none in the room. Or is that one coming? Yes, a microphone number three. Microphone three. Microphone five.
Mr. Chairman, microphone five. May I introduce Patrick Berg, who is a shareholder?
Thank you for taking my question. Just a quick one. Why are you changing auditors from EY to KPMG if you were with them for so long?
Well, thank you for the question. As I mentioned, EY has been the company's auditors for a very, very long time, far longer than any firm normally audits a listed company. But they've done a great job, as I mentioned during my address. As you know, under the law, the lead audit partner is required to change every, I think, it's six years. I've always described when people in the past said to me, "How come you keep the same auditors?" I've commented, "It's a bit like O'Reilly's axe. He's had it for 50 years, and he's changed the head twice and the handle four times." Because you do get this rotation of partners. So we've been very satisfied with the very professional job that EY has done. There is an increasing trend to go out to tender for your external audit after a period.
In the UK, companies are required to do so, I think, after 10 years. It's becoming a lot more common in Australia, as you would have seen. We felt that it was an appropriate time to go out to tender and to see what the other firms had to offer. We got very good submissions from the firms and, in the end, decided to appoint KPMG as external auditor. Of course, it's no reflection on EY. Similar things are happening in other companies where EY gets appointed. I think it's always good to have a new firm, a new set of faces looking at the accounts, a new approach, and so on. It's part of modern corporate life that I think you'll see external auditors change more frequently than they traditionally have in Wesfarmers. Was there a question at microphone three? No.
If there are no further questions, we'll move on. I ask that you vote on resolutions 2A- 2C. Each of them is independent and should be voted on separately. Shareholders voting in person should place a Mike in the for, against, or abstain box for each resolution 2A- 2C on your green voting cards. Similarly, proxy holders voting in person who've been given open votes should place a Mike in the appropriate box on your blue voting card to indicate whether you're voting the open votes, for, against, or abstaining. Shareholders who've already voted will have received a yellow card and don't need to do anything further. If you need assistance in completing your voting card, please raise your hand, and a Computershare staff member will come over and help you.
Shareholders and proxy holders voting online should follow the instructions already provided, and the user guide is available on the voting platform as well as on the Wesfarmers website. If you need any assistance, as I said earlier, just call Lumi on the number that's shown on the slide. Now, item three relates to the company's remuneration report for the year ended 30 June 2025. Displayed on the screen is the position in relation to direct votes and proxies received on this resolution prior to any revocations that may have been made during this meeting. For the benefit of those listening online, there are 97.95% of votes in favor of this resolution.
The remuneration report, which is in the annual report, provides information regarding the remuneration of our senior executives and directors who are considered to be key management personnel of the group, and they can be found on pages 96- 125 of the annual report. We appreciate the engagement from shareholders in relation to our remuneration practices. I can assure you that the board remains absolutely committed to an executive remuneration framework underpinned by our guiding principles on remuneration that is really focused on driving leadership performance and behaviours to deliver satisfactory returns to shareholders over the long term. The total remuneration for senior executives is set at levels that reflect the executive's contribution, competencies, and capabilities, and at a level that enables Wesfarmers to attract and retain the best people.
The remuneration report, including the covering letter from the chair of the committee, Mike Roche, provides a detailed explanation of the outcomes for the 2025 year, so I won't repeat them here. The remuneration report continues to address the desire for transparency regarding our remuneration framework and outcomes, specifically in regard to variable remuneration. So I now invite shareholders to ask any questions on the remuneration report. Ruth, question online.
Chairman, I have a number of questions submitted to the meeting by Mr. Stephen Mayne. In relation to this item, he asks the following: I voted in favor of this resolution, but suspect there will be more than 2,000 retail shareholders who voted against, particularly after seeing the 7% share price drop today. However, under your current disclosure practices, you won't reveal the shareholder turnout. The annual report says we have 479,215 shareholders, but less than 2% of them will have bothered to vote today. Will you voluntarily follow the lead of Qantas, Suncorp, Tabcorp, Myer, Stockland, ASX, Computershare, and many other companies, and disclose the voting results as at the scheme meeting where you also reveal how many shareholders voted for and against each item? This will make public Wesfarmers retail shareholder sentiment on issues like remuneration, rather than having the voting results dominated by US-based index funds.
Such disclosure will also stimulate future retail shareholder participation. You have the data, so please let the sun shine in on Australia's chronically low retail voting rates.
Well, thank you, Stephen. I think you've asked this question before. The requirements of the listing rules and the act are that we announce the results of voting in accordance with the number of votes cast in favor or against or abstain. And that's exactly what we do. We haven't discussed the matter of whether it would be worthwhile doing what you suggest. Certainly, when we have in the more distant past, we've decided that we should conform to the requirements of the law, and that's what we continue to do. And Ruth, was there another question?
No further questions, Chairman.
Okay. Are there any questions from the floor? Yes, number three.
Mr. Chairman, microphone three. May I introduce Roman Tsnitsnikov , who is a shareholder?
Thank you, Mr. Chairman. My name is Roman Tsnitsnikov , and I'm a long-term shareholder. I come all the way from Sydney to thank you, Mr. Chairman, to thank your board and your great management team, and to ask a couple of questions. My first question is, why are all AGMs here in Perth only? I have many shareholders in many national companies, and many of them are doing their AGMs all over Australia. This way, the board and the management will hear all shareholders and make the right decision. My second question is, why are different departments of this company making different policies? Let me explain. Well-known brands like Bunnings, everyone knows their policies. They will bid any price, and anyone knows the best price and best quality is Bunnings. Totally different policy applies to the Priceline Pharmacy.
I will start that even price differences between different pharmacies can be 400%. This is prescription medicine that should be equal value. I'm talking in Sydney CBD in space of two minutes' walk between each other. Doesn't make any sense. More to it, when there is this issue at the Priceline Pharmacy, I was told to buy from a competitor like a warehouse pharmacy where prices were even lower. I understand that pharmacies are a very competitive business, but to send our customers to a competitor is too much. Before I finish, I would like to look at the earnings between Bunnings Group, $2.36 billion, and Wesfarmers Health Group, only $64 million. Actually, you can see that Wesfarmers Health Group is the lowest earning between all the groups. Thank you.
Thank you very much for those questions. Certainly, on the second question, the policy of the company has always been to allow its businesses, its different divisions, to run autonomously. We think that's been a real strength of the business, that if you give the manager of the business the authority to make decisions, such as pricing decisions, they have a very close understanding of the competitive environment and how they should be positioning themselves. So if you look at Priceline, for example, there may be products where the price is higher than in another pharmacy, but it can be made up for, and I think it is made up for, much higher levels of service and advice. That's a decision that the management has made, and which, as I think you see from all the results, has proved to be a very successful process.
I think we'll continue to do that. Each business, if you look at Officew orks, they have the same sort of price guarantee that Bunnings has. In the case of Kmart, they're an everyday low-price organisation like Bunnings. It has been a very successful strategy. Rob, would you like to comment on the first point?
Thanks, Chairman. Just maybe a couple of points to add there. There's unique regulation that impacts pharmacies where it's the responsibility of a pharmacist to dispense prescription drugs, and they have the right to set the price as they believe is appropriate. That applies across all pharmacies. One area where I know that the team at Priceline have made amazing progress is a lot of what we call the front-of-store products, so the non-prescription products, where the team have lowered the prices of over 150 everyday lines to be very competitive. So the price positioning of the Priceline franchise stores now has improved materially, and that is what is leading to improved sales. But if you look across many independent different pharmacists around the country, the current regulation means that each independent pharmacist ultimately has responsibility for dispensing prescription drugs and setting the prices.
But hopefully, all of our shareholders will avail themselves of the fantastic and improved prices that you'll find across the Priceline network.
Yeah, Rob, maybe I'll talk about the first one. As far as the annual general meeting goes, we have always held it here in Perth, and I think it's likely we'll do so for the foreseeable future. We've got the advantage now of being able to have hybrid meetings so that shareholders in other cities can go online and participate and ask questions and so on. The Wesfarmers annual meeting is a pretty unique one in Australia. For one thing, we've got all the events outside, which many of you came early to participate in, and we have our divisional people there, and it's a very big setup. I think replicating that in another city would be a more expensive thing to do and be inconvenient for people travelling. When you think of it, it's not just the board, but a lot of team members involved.
I think also we are very much a West Australian-based company, and we started here and we're the biggest company in West Australia on the stock exchange. We have a huge number of original retail shareholders, i.e., pharma shareholders, many of whom got their co-op stock through trading bonuses and come along faithfully every year. I think that makes us a little different to other national companies that maybe have a bigger spread of retail shareholders around the country. So that's how we feel about it. The third question was really about the difference in profits between Bunnings and Health. Interestingly, when we acquired Bunnings, the hardware business was making about a fifth of the profits that Health is currently making. It's grown from, I must be around $10 million- $2.5 billion a year in profit.
When we acquired Australian Pharmaceutical Industries, it was because we identified the Health industry as one with potential for growth and that this would give us a foothold in an industry that would grow because of aging population and so on. We continue to look. We've made a few smaller acquisitions since then, things like telehealth and so on, but we continue to look at large acquisitions in the Health industry as we do across the board in other industries. We haven't currently, to date, found anything that we thought was worth acquiring and would add shareholder value. You may well find in due course that the Health business and the division is as big as the Bunnings division, or you may find that it's a lot smaller because we haven't outlaid funds on acquisitions we thought were too expensive. Are there any other questions, please?
No? None from you, Ruth. So we'll move on and ask you to vote on Resolution Three. The next item on the agenda is Item Four that relates to the grant of deferred shares and performance shares to the Group Managing Director. Displayed on the screen coming up is the position in relation to direct votes and proxies received on this resolution prior to any revocations. For the benefit of those listening online, there are 98.2% votes in favour of this resolution. The board, as I inferred earlier, believes that it's in shareholders' interest to provide the group with equity-based incentives to ensure that there's sufficient alignment between the returns that shareholders get in due course and the returns that the executives get. Approval is sought for the grant of deferred shares and performance shares to Mr.
Scott under what we call the Key Executive Equity Performance Plan on the terms set out in the explanatory notes in your notice of meetings. I ask shareholders to ask any questions on this resolution. None from you, Ruth.
No, Chairman.
Any questions on the floor? Okay. I'd ask you then to vote on Resolution Four. Now, as we're moving into the final item of business for the meeting, I'll take this opportunity to remind those who are eligible to vote at this meeting who have not yet cast their votes that I'll close the poll shortly after the final item of business. Please ensure that you cast your votes before that time. The next item relates to the return on capital to the shareholders. Displayed on the screen is the position in relation to votes and proxies received before any revocations. For the benefit of those listening online, there are, as I mentioned earlier in the meeting, 99.48% of votes in favour of this resolution.
Now, the board proposes to undertake a capital return to shareholders of $1.10 per share, or approximately $1.249 billion, subject to the approval sought under this resolution on or about the 4th of December. If the capital return is approved, the board's decided that a fully franked special dividend of $0.40 per share, or approximately $454 million, will be paid to the shareholders on the same date. The initiative is being undertaken to return a portion of Wesfarmers Group's surplus capital equitably to shareholders, and I think it does demonstrate our commitment to efficient capital management. Are there any questions on this resolution? None online.
No questions online, Chairman.
And none on the floor. Okay. I'd ask you now to vote on Resolution Oh. Sorry. Microphone One.
Mr. Chairman, Microphone One. May I introduce Jane Denton, who is a shareholder?
Good afternoon, Chairman. My question relates to the future planning regarding the issuance of a special dividend versus the potential for future growth and acquisition opportunities. IG.com, Australia's leading CFD and share trading platform, referred specifically to the sale of Coregas, at the time of sale at least, as Wesfarmers' recycling assets to unlock value and potentially fund future acquisitions. In the CEO's address, Mr. Scott said under the Adapting for the Future section, he refers to actions taken in renewing Wesfarmers' portfolio, stating it delivers significant value for shareholders and that at least in part it supports the $1.50 capital management distribution. Whereas the wind-down and redistribution of assets, such as Catch, has had readily noticeable data reflecting its positive outcome on Kmart, hence growth in Wesfarmers overall. As the Chairman, Mr.
Chaney said earlier, the more than 99% affirmative vote for the dividend to be given, the uncertainty of the cost of living and markets going forward, little is more certain than cash in hand. I'll not pretend to have a better understanding for this reason, and I reiterate that the outcome is happily welcomed by the majority. But would this enormity of money not have been better directed at facilitating growth in the company itself to uphold its share price, which is already presumed as inflated, rather than supporting the issue of a dividend?
Yeah, thanks very much, Mr. Denton. Wesfarmers actually had a record over the 41 years of its listing of returning capital by way of a capital return or special dividends to shareholders, in addition to having a payout ratio of our profits of between 80% and 90%. We do the latter, by the way, because franking credits are of no value to the company, but are of real value to shareholders. We say, why would we hoard them in here and never be able to get rid of franking credits when they're of real value outside? Capital returns can be done when the tax office approves that you've, for example, disposed of an asset like Coregas or 4.9% of Coles, and that's a capital asset, and you're able to return it to your shareholders.
Now, when you come to make a decision about whether you should do that, the main driver really is how efficient is your balance sheet. The fact is that equity has a higher cost than debt, and so it's important to have a balance of equity and debt. Obviously, not too much debt because you might go broke if things go badly, but a reasonable amount of debt because it has a lower after-tax cost compared to equity. What you take account of is the rating agency's view of your current balance sheet. So if you look at it before this proposal, we were under gear. That is, we had a huge amount of headroom between where we were on a ratio, for example, of earnings to debt compared to what the rating agency's allowance is for our credit rating.
We look at that and we model it and we say, if we return $1.10 of capital and a special dividend of $0.40, what will our ratio be? What will our debt to equity ratio be? It's still way below the limits that the rating agencies believe are important. At all times, I think we've been conservatively geared, i.e., we haven't had a huge amount of debt in the balance sheet or more than we think is prudent, and the same applies and will apply after this capital return. Finally, the question you raise really is, instead of returning capital, why don't you go out and invest in assets? All I can say to that is we'd love to, if we can find investments where the numbers add up. In some companies, they have a view that capital is limited.
Actually, capital is not limited. It's unlimited except on a few days after the GFC because banks and shareholders will always provide you with capital if you have a good investment. We've always had a practice of, we're under geared. We've got too much cash. We'll give it back to shareholders because they can do something with it. If we need it to make a big acquisition, they'll give it back to us in return. The challenge is not limit of capital. It's limit of investment opportunities where the numbers add up. I mentioned in my earlier speech that the imposition, for example, of a 5% cash flow tax would make every investment less viable. You'd find less opportunities in Australia than you currently find.
That's an explanation of why we do this, but it is always with a strong shareholder return focus. Any more questions on the capital return and dividend? Okay. Thank you very much. Well, that now concludes the formal business of the meeting, and I intend to close the poll. If you're eligible at this meeting and you haven't yet cast your vote, please do so now and ensure that you then insert your papers into the boxes being carried around the room. We'll just give a couple of minutes to allow people to do that.
You only had one answer.
Yeah.
Thanks.
Are there any final voting cards that people haven't put in? I invite you to put up your hand if there are, and somebody will come to you. Thank you all for taking the time to vote on the resolutions. I think it's safe now, unless there are hands up, to declare the poll closed. Shortly, we'll move to general questions. But prior to inviting you to ask any general questions, there are a couple of other matters for me to highlight. We've got a great turnout here today. For those shareholders and proxy holders who are in the meeting room, representatives from each of our divisions, as I said, are available outside, so you can always ask them any customer questions.
In the meantime, we also have an information desk at the counter where you register for invitation, information about Wesfarmers and staff members and so on. Quite a few shareholders are still receiving communications and dividend advice in paper form, which is pretty costly for the company. We'd really like to encourage all shareholders to opt into electronic shareholder communications. That'll reduce our mailing costs substantially. It's actually a more secure, convenient, and sustainable way of receiving communications. Shareholders who register today at the shareholder information booth to receive all shareholder communications electronically will be entitled to a $10 Bunnings gift card, which, as you know, buys you more than $10 worth of things. Please take note of that. If you would like to, please fill in the forms.
Note that light refreshments will be served at the conclusion of the meeting. But if, as some have already done, you want to leave before that, thank you very much for your attendance. I don't think general business questions will go for very long, but I invite any shareholders now to ask any question about any matter of general business. Ruth.
Thank you, Chairman. We have a number online. The first is from Mr. Michael Mammolo and Mrs. Louise Mammolo , who ask, how do the workforce plans across the Wesfarmers divisions deal with AI impacts on workforce numbers?
Yeah, I wonder Rob, you might like to comment on that.
Sure. Thanks very much. Well, there's a lot going on in the AI space, and we're very aware that it will have implications to ways of working and jobs and so forth. The way that we're approaching it at Wesfarmers is in a number of areas. First of all, we're trying to learn as much as we possibly can around the responsible applications of AI and ways in which it can help our teams, help our customers, help our businesses be more successful. Secondly, we've also put in place responsible AI policies to govern the way in which we will implement any AI use cases and functionality to make sure we do so in a very robust and responsible way.
In terms of the key areas of opportunity for our teams and for jobs within Wesfarmers, look, frankly, a lot of our jobs, there's only so much that AI can do. When you're running a chemicals plant or in a store environment, we continue to need a lot of people, and people are one of our key assets and differentiators. But we're using AI in areas such as helping our teams in Bunnings and Officeworks access a lot of technical information to service customers. We're also reflecting on ways in which customers can use AI to better search for product information and to transact with our products. The areas where I think GenAI will have the greatest implications are likely to be areas back office functions such as contact centers, call centers, coding, a lot of software development and coding roles. We're already seeing those implications.
I'd say in the short term, at least, I think that our team will see AI as an enabler to help them do their job more effectively. We've run a number of training programs to help our team members and our leaders across the group understand the opportunities and the possibilities afforded through GenAI.
Thanks. Thanks, Rob. Ruth.
Thank you, Chairman. I have a question from Mr. Henry Kay, who says, in relation to the CEO's speech earlier, that the company is improving the diversity of its workforce. I ask, how many people with disabilities have been hired within Wesfarmers?
Thanks very much for that question. In terms of team members that identify as having a disability, and my sense is that the real number is a lot higher than this, but we have over 1,700 team members across the group that identify as having a disability. For example, over 2% of Kmart's team, so about 1,000 team members identify as having a disability in Kmart. It's about 600 in Bunnings. About 100 team members declare a physical disability at Officeworks. As I said, I have no doubt that the real number is higher. What we have done across our businesses is tried to make efforts to adapt workplaces to create more opportunities for team members with disabilities. I'd say both Kmart and Bunnings have made some great progress in this regard.
For example, in Kmart, we've seen the jobs available for team members with disabilities triple over the last few years. That has also been supported by a partnership that the Kmart Group's entered into with the Commonwealth Government to help look at ways in which we can create these opportunities. I think there's still a lot more to do. When you think about the broader disability space, there's a very large proportion of Australians that have an enormous amount to offer in the workplace and to offer our businesses. I think there are further opportunities for us to create those opportunities.
Thanks, Rob. Ruth.
Thank you, Chairman. Mr. Teong Yeo has two questions regarding Wesfarmers Health. The first is that the current return on capital is 3.8%, up from 3.2% last year. What is the estimated timeframe for the business to achieve a return on capital greater than Wesfarmers' cost of capital? Furthermore, can we shareholders take it that Wesfarmers Health has an effective strategy to counter Chemist Warehouse's dominant market position?
Thanks for that question. Yes, the return on capital is low at the moment. In fact, at today's board meeting, we did our routine three-year review, which we do after an acquisition. So we looked at how did the outcomes compare to the forecasts that we made when we made the acquisition, in that case of API. The answer is that it's very much in line. In terms of EBT earnings before tax, it's in line. In terms of return on capital, it's slightly below the projection a couple of years ago because of increase in inventories. If you look then at the corporate plan of the Health division, which every year we do a five-year corporate plan and revise it every year, it shows the return on capital going into much more satisfactory levels over the next five years.
That requires, obviously, very good management by the team in Health and also a favorable environment, I guess, or an environment that's no worse than it is today. But we have confidence that Emily and her team can give us a better return on capital and certainly approaching the cost of capital for the group, in fact, above the cost of capital of the group. Ruth, there was a second part to that question.
Sorry, Chairman. This is just in relation to an effective strategy to counteract Chemist Warehouse.
Chemist Warehouse is now a listed company, and no doubt they have their challenges, as every company does. We've certainly, under Emily, got a very clear strategy about how we should go forward. And we think we'll be able to compete very well with them. Certainly, on the service side, it's something that Priceline is noted for. And so we're confident that we'll be a pretty solid competitor. Any more questions online?
Thank you, Chairman. I have two related questions from Mr. Stephen Mayne. The first is, Wesfarmers leaders seem to have a strange approach to chair succession, going for the long-dated handover after many years of service. Why did we announce on the 28th of August that former Amcor CEO and BHP Chair Ken MacKenzie would succeed Michael Chaney as Chair way into the future on the 29th of October in 2026? Furthermore, why is Ken only joining the board on the 1st of June 2026, giving himself less than four months to learn the ropes before taking the top job? Good governance normally sees chair succession handled more quickly and from within. Why hasn't Mr.
Chaney done this at Wesfarmers, similar to what has happened with his friend Richard Goyder at Qantas and the AFL, two organizations that have also had to go outside for a new chair due to poor internal succession management? Mr. Mayne's second question is directed at Ms. Westacott and asking her, as the longest-serving director up for election today and a member of the board nomination committee, could she please comment on why the company has failed to manage chair succession internally, which is best practice, instead recruiting Ken MacKenzie as the next chair who won't join the board until June next year? We've historically managed to see CEO succession internally, which is great, but it appears that no one on the board was trained up to succeed Michael Chaney, and we've instead had to look outside to find a successor.
He concludes there is a little discussed conflict of interest with CEOs and chairs of public companies, which is to not bring on potential successors in order to extend one's tenure in the top job due to a lack of internal challenges. He asks, does Ms. Warburton agree that this is what might have happened at Wesfarmers and that the nomination committee has fallen short on those chair succession questions?
I can answer both of those because they're very much for the whole board and with a resounding no to most of them. I know, Stephen, if you're listening, you like everyone else who's commented and who certainly has spoken to me will think the appointment of Ken to take over this time next year is a fantastic outcome. Where to start on your questions, I suppose the first thing to say is Wesfarmers has always, I think proudly, had a record of long-term succession planning. We do that with regard to our management, where we go through succession plans every year, and we know who's likely to retire in a couple of years and who can come up behind them. It's no different at the board.
We know who will retire from the board in a year, two years, three years, and we very early set about on a process to see who might replace them. Sometimes we appoint search consultants or headhunters. Sometimes we just use our own knowledge of who's around. In the case of my retirement, I can assure you there was no... I had no interest in extending my tenure. I did announce, I decided a couple of years ago to say this will be my last term because I reckon 76 is old enough, and I might forget where the boardroom is. So we then set about, really, a couple of years ago, talking about who might succeed me. As we went through it, there were certainly some of the directors who may well have been able to take on the job.
But the board was unanimous when we looked at potential candidates outside, which, of course, you've got a responsibility to do, that Mr. MacKenzie was top of the list. If he were willing to come on board, we had a unanimous view that it would be the best outcome. As far as timing goes, Ken retired from BHP at the end of March, and he was, in my discussions with him, made the point that he really wanted to take a year off corporate life before he did anything else. So the timing worked out perfectly where he could come on mid-next year and then take over, subject to your approval as shareholders, at next year's AGM. In terms of hitting the ground running, Ken has actually signed a non-disclosure agreement with the company and has access to board papers in the meantime.
He attended our board meeting yesterday and today. He'll attend a meeting we're having in March in Melbourne. We'll be very much, I think, up to speed on the real issues facing the company by the time he comes on in June. I can tell you from personal experience that if you're going to become chairman, you really don't want to join the board a year before you become chairman because you're sort of champing at the bit and waiting to do it. I think it's a perfect bit of timing, actually. Ruth, any more?
One final question online, Chairman. This is from Ms. Carly Aschenbrenner , who asks, "Chairman, can you please expand upon your comment in the Chairman's message in the annual report related to suggestions of a 5% cash flow rate for large corporations and explain how that would erode the competitiveness of Wesfarmers?"
Well, Carly, very nice to hear from you. I don't know if you had a chance to hear my address where I did go into that in some detail. The answer is that our corporate tax rate at the moment is 30%, and we pay a full corporate tax rate. If you look at payroll tax and other taxes levied by governments, it's 38% in total. If you add the cash flow tax, it's 43%. That compares to a corporate tax rate half that in other countries, in other Western countries. It simply makes investing in Australia, would make investing in Australia far more challenging. Investing is a very simple process. You look at the cost of the investment and the cash flows that you're going to get for it for whatever term.
If the cash flows are diminished by a much higher corporate tax rate, then the bottom line doesn't justify the initial investment. It's as simple as that. That's why people argue for a reduction in the corporate tax rate, which in the end probably would cause governments not to have to outlay any more money because while they get reduced taxes, they get increased economic activity, which itself is taxed. We thought the proposed cash flow tax was not a good idea at all. The plan of the Productivity Commission, or the idea really was that you'd get a rebate from that tax for investment, capital investment you made. The danger of that, of two dangers, I think. One is tax avoidance might rear its head again and finding ways of calling something capital that was not.
Secondly, it might cause companies to make investments that were sub-optimal, that is, that didn't meet the investor hurdle rate. That goes to productivity. What we need in Australia is investments that are productive, not investments that you're making in order to avoid some sort of tax. For those reasons, we've had a very strong view that it would be a bad idea. Any more questions? Ruth, none from you.
No further online.
Number six.
Thank you. Mr. Chairman, microphone six. May I introduce Cyril Thomann, who's a proxy holder?
Thank you, Mr. Chairman. My question relates to Wesfarmers' 2025 climate disclosures. A recent report by Market Forces identified Wesfarmers as one of Australia's largest users of manufacturing gas. The report found that approximately 56% of Wesfarmers' Scope 1 emissions come from its use of gas in the production of ammonia. Wesfarmers' CSBP ammonia production facility was the ninth largest manufacturing gas user in the country. Another major ammonia production facility, Incitec Pivot's Phosphate Hill, is at risk of permanent closure, with its CEO citing high gas prices as one of the major financial contributing factors. In financial year 2024, WA gas prices were two and a half times higher than they were ten years ago, this despite gas production and therefore gas supply more than doubling in Western Australia over the same period.
Given the significant financial risks associated with continued reliance on gas as a primary fuel source, including rising gas prices, rising network costs, and rising costs of ACCU purchases under the Safeguard Mechanism, is Wesfarmers looking into setting quantitative targets to reduce gas use at facilities like CSBP?
Well, thanks very much for that question, Mr. Thomann . The answer to your question at the end there is yes. While we might be the ninth largest user of gas for chemicals manufacturers, or the figure you quoted, we're actually a very small user in the scheme of things. If you look here in Western Australia, you know more than 50% of electricity is generated using gas. We, as you say, are a producer of ammonia. We're also an importer of ammonia. But what we've done in the last couple of years is invested very heavily in adding agents to our nitric acid plants to greatly reduce their emissions. They're called catalysts. We started with the nitric acid plant number three at a cost, I think, of about $13 or $14 million.
We're going to be adding catalysts to plants one and two at a total cost of about $65 million, half of which is going to be contributed by the government. That'll reduce emissions of CO2 from those plants by, is it 95%, Rob? A huge amount. Now, their costs, in that case, about $80 million, for which there's no evident financial benefit. But it's part of our commitment to reduce our emissions. Wesfarmers, as a group, is actually a very low emitter of Scope 1 and 2 CO2 equivalent emissions. But the WesCEF operations down at Kwinana have the majority of the emissions. This is one way they're going to meet their 30% reduction by 2030 target. Beyond that, we've been looking at things like carbon capture and storage, sending gas up to a depleted gas field in the Perth Basin. The economics of that are very challenging.
You need a pipeline or reusing an old pipeline. But it's work that we're still progressing. You'll hear people like us say we're committed to a zero 2050 target, but it requires technological developments. Carbon capture and storage is potentially one of those. It's something we take very seriously. When you say, are we going to set some quantitative targets for reducing gas consumption in our plants, it effectively, the answer is yes because of the reasons I've given you. If not gas consumption, then the effects of gas consumption.
Wesfarmers has partnered with ARENA to participate in the Parmelia Green Hydrogen Project to feed its operations in Kwinana. The study concluded that the ammonia plant has the potential to displace feed gas and fuel gas with delivered green hydrogen. Has Wesfarmers or its project partners developed timelines around this project, including time-bound targets for quantities of green hydrogen use at the ammonia production plant?
I don't believe so. The whole question of green hydrogen and the economics of green ammonia are really up in the air. It's very challenging, as we've seen with hydrogen itself, to make economic sense of producing hydrogen. Green ammonia is in the same category. We spend money looking at the possibilities. There may be technological breakthroughs, but it's not something we could give you any timeline on. I think we're destined here in Western Australia to be producing ammonia, utilizing gas, and importing ammonia from elsewhere for quite some years yet.
Thank you very much.
Number four.
Mr. Chairman, microphone four. May I introduce Crawford Taylor, who is a shareholder?
Thank you, Mr. Chairman, Crawford Taylor. I would like to ask a follow-up question around AI, but more from an economic sense. Rob has spoken about the potential benefits for the Wesfarmers businesses and the efficiencies that AI might create. Mine is more from a broad economic sense about the impacts that AI could have on the number of people in employment within the Australian economy and therefore driving and having an impact on consumer demand. Wesfarmers is a consumer business. Has the board strategized about this and come up with any plans or considering options how they might negate this? Thank you.
Yeah, thank you, Mr. Taylor. The answer is it's impossible to do so because no one knows where AI is headed and what it will lead to. So we're very active in our consideration of AI. Today at the board, we had, I think, a 40-minute session from our lawyers about director's duties in relation to data and artificial intelligence. But no one, including the huge companies that are building data centers and promoting AI, knows where it will lead. And so you can't sit there and say, well, this is our strategy because it'll lead to the elimination of X jobs. It may actually lead to an increase in jobs. And if you ask me what employment will look like a year from now in Wesfarmers, it's likely to be higher rather than lower because we have growing businesses. But it's something we have to monitor.
We've got a duty, really, to make sure that our company is protected from developments, including AI. We'll continue to do that very actively. We've got a number of use cases, so-called, around the group. If you go into Bunnings, they'll have a device that uses AI to give a much richer product information experience. There are things like that that we will utilize that I think won't have an effect on employment. If I could just finish with a comment about AI. Anil Sabharwal was on our board for a few years. He was a senior executive at Google. When ChatGPT first came out, he said, I'll tell you what worries the tech industry. It's the unknowns ahead of us rather than the things you can forecast.
You can sit there and say, AI can eliminate white-collar jobs or AI can make things more efficient. But when the iPhone was released, everyone sort of looked at it and said, well, this is a lovely device. We'll be able to send text and put it in our pocket and make phone calls and so on. No one at the time imagined the near destruction of the camera industry or the taxi industry or the problems associated with social media or things called apps, of which there are hundreds of thousands. They're the unpredictable things. His point was there'll be things that AI leads to that we can't imagine. Some of them may be really bad or some of them may be good, like increasing productivity, maybe even increasing employment in different ways. But it's a big unknown.
I can assure you that management is very focused on it and will monitor it as it evolves. The board will do the same. Go ahead.
Thank you, Mr. Chairman. Maybe just as a follow-up to that and maybe some telltale signs of what we're seeing in the broader economies, not only here but overseas, we have seen companies starting to announce significant layoffs as a result of AI. Could this question the diversity of the Wesfarmers model when we are so weighted towards the consumer element as a result? Question. Thank you.
Yeah, as I say, it's hard to know. There's one very substantial Australian company that announced layoffs and a few weeks later announced there were no layoffs. I think that illustrates the uncertainties that face us all. Yes, number six.
Thanks, Chairman. May I introduce Sebastian Zammit, who's a shareholder?
Good afternoon, Mr. Chairman. I've got four questions here for you. If you want to answer one as I ask you.
No, just let me have all four.
Is it true that Wesfarmers are contemplating shifting management operations to the eastern states?
And the second one?
My wife and I are shareholders in this, I call it, a wonderful company. I'm very pleased with what you guys have given us in return. But my wife and I are shareholders, but we only get one vote because we bought the shareholding in one. Mr. and Mrs.
Yeah.
Yeah, you understand what I'm saying, yeah.
Yeah.
Now, the other one is, would you consider having a Wesfarmers shareholders discount card? I think it would be of great benefit, I would say, to the share price as we used to have some years ago with Coles. The last one comes from my son. He had an experience when he went into a Bunnings store. He had a problem there with a dog. Now, I'm not a dog owner. If there are dog owners, I don't think they'd agree with what I've got to say. I don't believe that dogs should be allowed into Bunnings stores. We've never had any real, not that I've heard of, real instances where dogs have been a major problem. But they can be. I mean, they even turn on their owners. So I'd like you, with the board, to reconsider your dog policy, please.
Thanks, Mr. Zammit. With regard to your first questions, most of our operations are headquartered outside Western Australia already. So if you look at Bunnings, Kmart Group, Officew orks, their headquarters are in the eastern states. And so is most of their business. So that will continue. The head office is in Perth. And the business here is headquartered in Perth or in the suburbs. And I think the head office is likely to stay here. But it makes sense to have head offices of those operating companies closer to where the majority of the stores are. With regard to your shareholdings, what counts, as I said earlier in response to Mr. Mayne's question, is the number of shares that are cast in favor or against.
If you and your wife have a joint shareholding, you could actually, if you had a different view, one of you could vote half of them against and one for. You might think that was a waste of time because the net result is zero. But that's your choice. Thirdly, on a discount card, all I can say is when I asked Joe Boros, who was running Bunnings, "Hey, Joe, can't you give us employees?" Because I was still an executive. "Can't you give us a discount card?" He replied, "If we gave people like you discount cards, we wouldn't have everyday low prices." There's no intention to do that for shareholders. But shareholders have the benefit of using their dividends and buying things at low prices came out of Bunnings. As far as the dog question goes, I am a dog lover.
I've always thought it's a great policy. I think the people in Bunnings would take a lot of convincing that banning dogs would be a bad thing commerce-wise. I know a lot of people enjoy the fact they can bring their dog into the store. Amongst other things, creates, I think, a good culture in the store of a sort of relaxed atmosphere. I'm afraid I can't give you any assurance unless Ian Bailey sitting there says, "No, Chairman, you're wrong." He's shaking his head. I think the dog policy's here to stay.
Well, Mr. Chairman, if I go into Bunnings again, the only thing I'd like to be attacked by is a bunch of women, not a bunch of dogs. Thank you.
I think it's politically very incorrect to say that. Okay, any other questions? We're probably done. Number three.
Mr. Chairman, microphone three. May I introduce Seung Chang, who is a shareholder?
Good afternoon, Mr. Chairman. I've got two questions. One relating to succession and the second one relating to retail theft . But before I start, I'd like to pay a compliment to our managing director, Rob Scott, for solving a coffee malfunction earlier. If he didn't solve it, I wouldn't be standing here for 10 minutes nonstop. Not only did he show great leadership by getting someone, he came back five minutes later to make sure it was done. That's leadership. My first question, Mr. Chairman, about succession. You're not too old. President Trump is three years older than you and has much greater responsibility.
I think, if I might, I think that proves the point.
Okay. In your role as previous chairman of other companies, you had one golden rule. That golden rule was if the culture is great, succession always comes internally. Is this succession of the chairman's role abnormal? Because that's what you preached. So that's my first question. My second question is about retail theft. I have seen it. I've been in the middle of it where people take things and run. Some of them get the teller to ring up the items, and then they run. That's actually a bit more of a headache because the teller has to decide, what do I do? Marrying that up against what the managing director said about, can I find out what is the theft rate? Can you make some comments on that?
Why is it that the Privacy Commissioner is stymieing everything you're trying to do, whether it's cameras, whether in fact, the suggestion about dogs, maybe we need guard dogs at your Bunnings. Thank you, Mr. Chairman.
Thanks. Well, I'm not sure what I can add to my earlier comments about succession. But at the end of the day, you want the best person in the job. While I said we had people internally who could have done it, everyone agreed unanimously that if Ken were available, he'd be the right sort of guy. One of the challenges, actually, of chairing Wesfarmers is that it is a very different company. It's a conglomerate. People used to say conglomerates don't work. You should spin all the bits off and have separate companies. Well, Wesfarmers has proven that it's not right in every case. We've been very successful.
I think if you got the wrong person in there, you might get a person from outside who wanted to spin off parts of the business and be a retailer or try and run the company themselves. That wouldn't happen, I guess, with internal candidates. And so appointing anyone from outside, I think, is always an issue that do we know this person well enough and so on. Well, we know Ken very well through various involvements over the years and what we've read about him. I mean, Ken gives lectures in capital management and runs courses for Chief Executives. And he's a very, very highly regarded person in Australia for focus on shareholder returns. And that's why the board felt that if he were able to come on board and willing to come on board, he'd be a terrific appointment. He will, of course, join us in June.
He'll have access to board papers over the next year. In that sense, he's an internal appointment. We've had a lot of people taking on senior positions who we brought in a year before, proved their worth, and made them Chairman. So I don't have any doubt there'll be a smooth handover, and the company will be in the right hands. The second was on Rob. More a question for you, I think.
Regarding retail theft and the implications and the.
What about the Privacy Commissioner and so on?
Oh, would you like me? I can.
Yeah.
Yeah. You're absolutely correct that one of the flow and implications of the customer-threatening situations is that they're often aligned with retail theft. Across the country, we've seen estimates that retail theft accounts for in excess of $8 billion. Unfortunately, all of us are paying the price of retail theft because it is a significant cost of doing business. Across Wesfarmers businesses, the difference between what we would say is an excessive level of theft versus there's no such thing probably as a normal level, but a more average level, it's hundreds of millions of dollars. It is quite significant. We're obviously doing a lot of things to try and improve that through leveraging technology, improving business processes, security, and some of the other points I mentioned.
As you called out, we are in a dispute with the Privacy Commissioner at the moment around the use of certain technologies to try and combat violent assaults and retail theft. We're currently in a legal dispute on that one because we think it is worth fighting for the safety of our team, for the safety of our customers, and for the betterment of the community. This is something that we are fighting. I can't comment more specifically on the action other than to say that I think this is one of those areas where taking a highly technical, legalistic approach to regulation is probably not going to drive the right outcome.
Given the severity of this issue in the community, it would be timely to step back and think about, are there responsible ways in which we could utilize technology to make our retail environment safer for customers and team members?
Thanks, Rob. Are there any other questions? Ruth?
Chairman, I have two final questions online. The first from Mr. Kee Fat Tan and Ms. Beng Sim Soh , which is a follow-up question on the AGM location. They ask, could Wesfarmers perhaps organize annual shareholder briefing events around the country?
I'll take that on board. We can talk about it as a board. It's actually not a bad idea. We used to do it when we had a major restructuring of the cooperative. We do it around country towns. We always got a pretty good crowd along the Albany and Esperance and Bunbury and so on. It is something we could do. So I'll undertake to discuss that with the board and see what we come up with.
Thank you, Chairman. I've got a final question from Mr. Stephen Mayne, who asks if Chairman-elect Ken MacKenzie is being paid to attend board meetings or at least having his travel costs covered by shareholders. If so, will the full amount of what we pay him be disclosed in the 2025-26 annual report, even though he'll only join the board on June 1st next year? Is there a formal agreement around his pre-appointment activities? Is it a gentleman's handshake agreement between chairs? What is his title at the moment? Is it consultant?
Ken, have you got a title? The answer is no, we're not paying Ken at all. He won't be paid any director's fees until he comes on the board on June 1st. We have paid his fares and the fares for his wife to come over this week because we've got a big board farewell dinner for Jennifer. Ken was going to attend the board meeting today, but without fee. So we're getting tremendous value at the moment.
I think that might be all the questions. There are no more from the floor, are there? Rob, can you say anything?
Well, thank you very much for joining us. I trust there are some sausage rolls left for those of you who've stayed and some wine. Thank you for your interest in the company. I declare that all resolutions have been passed. As I said earlier, an announcement with those results will be released through the ASX platform and on the company's website. I thank you again. Please join us outside for refreshments. By the way, we're delighted to have entertainment this afternoon from one of Wesfarmers' arts partners, the West Australian Opera in the area outside this room. They're singing today Wesfarmers' young artists. Thank you very much.