Good afternoon, ladies and gentlemen. My name is Elizabeth Coutts, and I am the Chair of EBOS Group Limited. I'm delighted to welcome you to today's annual meeting in Auckland. Today's meeting is being held in person and online via the Computershare online meeting platform. This allows shareholders, proxies, and guests who could not join us to watch a live webcast of the meeting and read the company documents associated with the meeting. Welcome to you all. For those of you attending the meeting virtually, if you have a question to submit during the meeting, please select the Q&A tab on the right half of your screen at any time and type your question. If you need assistance, please also use the Q&A tab. A Computershare representative will respond directly to you if you have a problem. Please also note that your questions may be moderated.
If we receive multiple questions on one topic, they may be amalgamated together, and I will address questions at the relevant time of today's meeting. We will also take questions from the floor here in Auckland. Voting today will be conducted by way of a poll on all items of business. To provide you with enough time to vote, I will shortly open the voting for all resolutions. Those eligible to vote can do so on the voting forms provided, or alternatively, you can cast your vote using the vote tab on the Computershare online meeting platform. Shareholders viewing online can also vote via the platform. To vote via the platform, please click on the vote tab and select your voting direction from the options shown. Your vote has been cast when the tick appears. You can change your vote up until when I announce voting is closed.
I am advised that a quorum is present. I therefore declare the meeting open. I also declare voting open on all items of business. I will give you a warning before I move to close the voting. Now to the business of the meeting. My first duty today is to introduce your directors and executives. Today we have all directors and our Chief Executive Officer and CFO here in Auckland. Joining me are my fellow directors, Stuart McLauchlan, Tracey Batten, Mark Bloom, Julie Tay, Matt Muscio, and Coline McConville . Also seated on the stage is our Chief Executive Officer, Adam Hall, who is presenting his first EBOS annual meeting, and our Chief Financial Officer, Alistair Gray. Stuart and Mark are seeking to be re-elected as EBOS directors and will be addressing the meeting later. You will also hear from Coline McConville , who is seeking election as a director.
For those in this room, you will have the opportunity to meet the directors and executives at afternoon tea following today's proceedings. Also in attendance today is Bryce Henderson, representing our auditors, Deloitte, and Roger Wallace, our legal advisor from Chapman Tripp. Today's meeting is comprised of three parts. First, I will provide shareholders with a summary of the highlights from the past year, and then Adam will provide you with further details on the group's financial performance and activity over the last year, and that will be followed by the formal business. We have four resolutions for shareholder approval today. There are no apologies. As the notice of meeting has been circulated to all shareholders, I will take as read the notice convening the meeting.
I am pleased to be here today to update you on EBOS Group's 2025 financial year performance, which highlights our continued track record of strong revenue growth and operational excellence. I would like to start with a video that captures the key highlights and activities at EBOS in the last 12 months. As you have just seen, a great deal of activity took place throughout the year, and our FY 2025 result demonstrates the value of EBOS's portfolio with multiple growth levers and significant investment in capability and capacity to achieve future growth and stronger profitability. We operate in attractive markets with supportive megatrends across both our healthcare and animal care segments, and EBOS's diversified portfolio positions us well for long-term growth. Having said that, we are operating in an environment influenced by near-term macro pressures, which we do need to work through.
In FY 2025, we reinforced our leading positions across the healthcare and animal care sectors across New Zealand, Australia, and Southeast Asia. We acquired businesses in medical technology and animal care sectors and expanded our healthcare distribution network across New Zealand and Australia, building capacity and driving efficiencies. We remain a leading pharmaceutical wholesaler in Australia and the largest in New Zealand and one of New Zealand and Australia's largest healthcare-focused contract logistics providers. Our TerryWhite Chemmart network is the largest health services-focused community pharmacy network in Australia. We are New Zealand and Australia's largest hospital medicines wholesaler and one of the largest independent medical technology distributors across New Zealand, Australia, and Southeast Asia. In animal care, we operate New Zealand and Australia's largest dry dog food brand by volume in the pet specialty category and leading vet wholesale businesses in both countries.
Having delivered a solid result in FY 2025, the current financial year is set to be a year of transition as we manage the near-term macro pressures. We will focus on positioning our business for the future by making considered and disciplined investments and achieving operational efficiencies from our investments, enabling us to continue to meet market growth and gain market share. As we then look to FY 2027 and outer years, we will see the benefits of our distribution centre renewal program, which will be substantially completed this year. We will also benefit from the additional funding from the Australian government and recognition of our essential role in the healthcare supply chain and the substantial investments we make to undertake this role.
As we have done in the past, you can expect that we will continue to do disciplined bolt-on acquisitions to further drive sustainable growth, creating further value for our shareholders. Adam will provide further detail on the distribution centre, on the distribution renewal program, and these developments in his presentation. FY 2025 continued our long-standing track record of delivering consistent performance for the benefit of our shareholders. We've been able to generate double-digit earnings growth over the last 10 years, together with consistent dividend growth, noting that the FY 2025 dividend to shareholders was maintained at the same level as FY 2024. EBOS remains committed to sustainable development and community engagement across the regions it operates in. During the year, the group advanced the planning for a 5 MW ground-mounted array at Parks, New South Wales, complementing an existing 500-kW installation.
EBOS expanded its long-standing partnership with not-for-profit organization Green Fleet, increasing our year-on-year donations by 10%. We also acquired land in South Gippsland, Victoria, with a reforestation initiative with planting having commenced. EBOS also remains on track to transition over 95% by number of SKUs of its grocery brand packaging to recyclable materials by early 2026. The safety and welfare of our employees is critical to our continued success, and integral to this is the role performed by our leaders in shaping the safety culture of our organization. Our group-wide Executive Leadership Safety Walks initiative improves leadership visibility at our sites, enabling leaders to better understand how workplace risks are being managed, facilitating regular positive interactions between senior managers and their teams, and identifying opportunities for improvement. Directors also undertake site visits and observe key safety risks and controls and how work is being done.
A new initiative we have termed Lifesavers was also introduced, which reinforces minimum standards and appropriate controls for reducing the risk of injury or harm to workers undertaking high-risk activities. The Lifesavers were developed through consultation with key stakeholders and will continue to enhance our health and safety culture. We also continue to support various initiatives and organizations aligned to our purpose of advancing opportunities to enrich lives. This included strategic partnerships with organizations such as Ovarian Cancer Australia and Lansar, New Zealand. I earlier acknowledged our new CEO, Adam Hall. Adam is a highly accomplished global executive with a strong track record in strategic growth and operational excellence. In his previous roles, he successfully led significant growth in earnings and scale while driving innovation and efficiency, and we look forward to him continuing that success at EBOS.
Consistent with EBOS's board renewal process, Coline McConville was reappointed as a Non-Executive Director with effect from 1st of February, 2025 and will stand for election at this meeting. In making any appointment to the board, the directors have regard to its skills mix, which sets out the desired skills of the board as a whole and reflects the group's operations and strategic priorities. We also appoint an external consultant to support a rigorous process and conduct background checks. Coline's appointment followed a global search, and we were impressed by Coline's international experience across a range of industries, both as an executive and director. EBOS has appointed five new directors since July 2021 and is now comprised of seven Non-Executive Directors, of which six are independent. The directors declared a final dividend of NZD 61.50 per share.
This brings a full-year dividend to NZD 118.50 per share, which, as I referred to earlier, maintained the dividend at the same level as FY 2024. The dividend payout ratio was 83.8% on an underlying basis. The increased payout ratio reflects the board's confidence in the group's growth outlook and overall financial capacity. I would again like to acknowledge the contribution of the executive leadership team and all employees across New Zealand, Australia, and Southeast Asia, and thank them for their dedication and commitment to our company. To all our shareholders, thank you for your ongoing support and the board, executives, and employees of EBOS. I will now hand over to Adam for more in-depth review of the operational performance and outlook for the business. Thank you.
Good afternoon, everyone, and thank you for joining us today. It's a privilege to be here with you, and I'd like to begin by acknowledging the support of our shareholders, our board, and the broader EBOS team. Since stepping into the role, I've had the opportunity to visit most of our operations across New Zealand, Australia, and Southeast Asia. What I've seen is a business with deep capabilities, strong leadership positions, and an entrepreneurial culture that's focused on delivering for customers and the communities in which we operate. As the Chair noted in her opening address, EBOS is now setting the stage for its future, with FY 2026 representing a year of strategic positioning for the group. In particular, we will conclude our major multi-year investment in uplifting our distribution centre network to position us for future growth.
It is also a year where we will embed recent acquisitions and navigate through evolving market dynamics. The business will be well prepared for its next phase of sustainable growth into FY 2027 and beyond. Before I talk through each of the four businesses, I'll quickly recap our performance for FY 2025. In FY 2025, we achieved revenue growth of 12% on an underlying basis, totaling NZD 12.3 billion, and delivered underlying EBITDA of NZD 585 million. This was in line with the guidance we had set earlier in the year. Our Symbion healthcare and distribution business added over 320 pharmacy wholesale customers. TerryWhite Chemmart expanded its network by an additional 34 stores. Our medical technology business delivered impressive growth, particularly in Southeast Asia. Finally, our animal care business posted a resilient result, with Black Hawk and VitaPet brands growing share despite a soft consumer environment.
The group continued to make strategic investments with the new Kemp's Creek facility commissioned this month and with the deployment of capital for bolt-on M&A to strengthen our segment positions and diversify our earnings. Importantly, as the Chair mentioned, we maintained our full-year dividend at NZD 118.50 per share. This reflects the board's confidence in the group's future earnings capacity. Overall, the performance reflects the strength of our diversified portfolio and our ability to execute in challenging market conditions. Looking ahead to FY 2026, today we reaffirm our existing FY 2026 guidance that was provided to the market in August. The existing guidance has us targeting underlying group EBITDA of between NZD 615 million- NZD 635 million. This represents approximately 7% growth at the midpoint. The guidance provided to the market comprised additional detail on capital expenditure, depreciation, amortization, and net finance costs, and the guidance on these items is also reaffirmed.
We expect a slightly higher contribution of earnings in the second half of FY 2026, with the ramp-up of the benefits of the DC renewal program. Supporting our outlook statement, we have several key milestones for EBOS. These include the commissioning and ramp-up of our new Kemp’s Creek distribution center in Sydney, which I'll cover in more detail later, the opening of our Perth contract logistics facility, completion of our eight-site DC renewal program, continued expansion of the TerryWhite Chemmart network and digital engagement, new product launches in animal care, strategic wins in Southeast Asia medical technology, integration of SVS and Next Generation Pet Foods, and we’ll also be hosting an Investor Day in Q4 of FY 2026, where we’ll share deeper insights into our long-term strategy and capital management framework.
Turning to each of our four businesses and starting with Symbion and healthcare distribution, this business continues to be a critical engine of growth and capability within the EBOS portfolio. As I’ve mentioned a few times now, FY 2026 marks the final year of major investment in our distribution center infrastructure. Most notably, the commissioning of our new Symbion Sydney distribution center at Kemp’s Creek, which went live this month. Hospital medicines and consumables continue to grow, particularly in oncology, supported by an evolving drug pipeline and emerging therapies. Our contract logistics business is expanding naturally, with the Perth facility set to open in 2026. This will complete our Australian footprint in contract logistics, and it positions EBOS to participate in national pharmaceutical contract tendering. We’re also expanding cold storage capacity to support growth in specialty medicines. Our healthcare distribution assets are clear examples of how EBOS strategically deploys capital.
We are investing in capacity for growth, building infrastructure that scales, and positioning the business to capture long-term value. As we move into FY 2027 and beyond, we expect to unlock both operational and financial leverage across this business. Now, the Australian government recognizes the essential role of pharmacy in the healthcare sector. In 2024, there were two landmark agreements signed. The First Pharmacy Wholesaler Agreement increases the CSO funding pool and improves the sustainability of funding for wholesalers, and also the Eighth Community Pharmacy Agreement supports pharmacy services and medication access. Collectively, both agreements provide security of funding for the industry and our pharmacy customers. Before I talk a bit more about the DC renewal journey we have been on, here is a short video that showcases our new Kemp's Creek facility. What a terrific video of our latest and greatest facility.
As I mentioned earlier, Kemp's Creek is a powerful example of how EBOS is investing to build the infrastructure that will modernize our network and support our long-term growth objectives. It's the most technologically advanced wholesale site in our whole network, and it reflects our commitment to operational excellence, automation, and customer service. This slide outlines the strategic pillars of our DC renewal program. This program has been a multi-year effort to modernize our infrastructure, expand our footprint, and streamline operations across New Zealand and Australia. Let me briefly walk through the three strategic pillars and the rationale for our investments. The first pillar, growth. We've expanded our network capacity to meet rising demand in high-value healthcare markets. By the end of FY 2026, we will have completed our Australian footprint in our pre-wholesaling network. This includes the new Perth contract logistics facility, enabling us to serve more customers more efficiently.
The second pillar, productivity and renewal. We've modernized our infrastructure with automation, advanced our IT systems, and embedded sustainability improvements. These upgrades are already driving better service levels, and we expect these productivity benefits to ramp up in FY 2027. The Kemp's Creek site is a standout example. It will deliver automation benefits and enhanced scalability. It's a strategic asset that positions us to win in a competitive pharmacy wholesale market. The last pillar, consolidation. We've streamlined operations across sites, removed duplication, and improved scalability. This includes consolidating our New Zealand footprint through ProPharma and Onelink and enhancing our hospital distribution capabilities. From FY 2027 onwards, we expect to see a step down in annual CapEx, approximately 30% lower on a like-for-like basis. We expect to improve our ROCE across the network, targeting approximately 15% over time. Finally, we will deliver enhanced service levels and operational leverage.
This program has been a significant investment in EBOS' future. We're excited to see the benefits begin to materialize. Following the overview of our DC renewal program, I'd like to highlight a specific example of how EBOS deploys capital strategically to support long-term growth. This slide showcases the evolution of our contract logistics footprint in Australia and how these investments align with our broader strategic objectives. In Sydney, our original site, which opened in 2018, is fully utilized. In response to growing demand, we commissioned a second site in 2023, which is already operating at 70% utilization. This rapid ramp-up reflects the strength of our customer relationships and the increasing demand for specialized, high-value pharmaceutical logistics services. In Perth, we're currently developing a new contract logistics facility scheduled to open in 2026.
This site will create a national footprint and enable EBOS to participate in national pharmaceutical contracts, a key strategic priority for the business. Our facilities have been designed to offer premium services, including repacking, refrigeration, and secure storage, and will serve the high-value global pharma pre-wholesale market. The second Sydney site and the new Perth site demonstrate a disciplined approach to capital allocation. Our TerryWhite Chemmart business continues to be a cornerstone of EBOS' healthcare strategy. In FY 2025, we added 34 new stores to the TerryWhite Chemmart network, bringing us to over 620 locations nationwide. This expansion reflects the strength of our value proposition and the trust that we've built with pharmacists and customers alike. We expect this growth to continue into the future. TerryWhite Chemmart's network partners administered nearly 1 million vaccinations, reinforcing its position as the provider of choice for health services.
We saw over 1.2 million prescription transactions placed online via the MyTWC app, demonstrating strong customer engagement and digital adoption. Looking ahead to FY 2026, we're focused on driving momentum through continued network expansion, launching new TWC-branded products, and accelerating adoption of our digital platforms. In FY 2027 and beyond, we see significant opportunity to unlock new growth horizons through our care clinic service expansion, retail media monetization, and digital health solutions. TWC is not just a pharmacy network. It's a health services platform, and we're excited about the journey ahead. The MyTWC app is at the heart of our digital strategy in retail pharmacy. Our MyTWC app is a fully integrated platform that connects customers, pharmacists, and services. It drives engagement, loyalty, and sales across the entire TerryWhite Chemmart network.
It also comes, bless you, with a rich dataset with over 95 million interactions, and this gives us deep insights into our customers' behaviors and preferences. In FY 2025, we saw approximately 800,000 registered users on the platform. That's up 30% year on year. 2.5 million scripts processed, which is about one every 13 seconds. We also saw that our MyTWC members were 2.7 x more likely to add front-of-shop items, increasing their overall basket size. In the future, we're focused on unlocking even more value through digitizing workflows to enable pharmacists' productivity, expanding the reach through telehealth, e-scripts, and virtual bookings. That strengthens TWC's role as the destination for both digital and in-pharmacy services. MyTWC is more than an app. It's a strategic enabler of EBOS' retail pharmacy vision. Moving on to another growth driver for EBOS and one of the best performers in the portfolio, our medical technology business.
In this business, we are presently focused on further strengthening our presence across Southeast Asia, leveraging our multi-country distributor advantage to fill therapeutic white spaces in markets like Indonesia, Singapore, the Philippines, Thailand, Malaysia, Vietnam, and Hong Kong. Our portfolio spans a wide range of surgical and interventional technologies, including spine, orthopedics, oncology, cardiology, ophthalmology, neurosurgery, neurovascular, and plastics and reconstruction. We continue to onboard new OEM suppliers, enhancing our ability to offer comprehensive solutions to hospitals and surgeons across the region. Biologics is another area of momentum, and surgeon demand for allograft solutions continues to grow, driven by clinical outcomes and procedural innovation. We're investing in new product development across emerging therapy areas and expanding our allograft solutions. In short, medical technology is evolving from a high-performing segment into a core growth driver for EBOS. It combines strong market fundamentals, strategic execution, and a disciplined approach to capital deployment.
I'm excited about the opportunities ahead for this business. Onto our last business in the portfolio and another that has continued to deliver strong performance, animal care. Starting with our branded business, Black Hawk and VitaPet both gained share in FY 2025, supported by new product development and our manufacturing capability. The acquisition of Next Generation Pet Foods has strengthened our portfolio, providing entry into high-margin categories like air-dried treats. Looking ahead to FY 2027, we expect to build on this momentum through extending leadership in premium yet affordable pet nutrition and unlocking further margin resilience through scale and innovation. Turning to vet wholesale, the acquisition of SVS has established EBOS as the leading vet wholesaler in New Zealand.
Together with our Lyppard business in Australia, we now have a trans-Tasman platform that is well positioned to benefit from lifecycle economics, particularly as the COVID-era pet cohort starts to age and drives higher veterinary spend. Animal care is a clear example of how EBOS combines strategic M&A, operational execution, and market insight to deliver long-term value. Innovation with product development continues to be a core driver of growth in animal care, and over the last few years, we've expanded Black Hawk's life-stage portfolio with new offerings across puppy, mature, and healthy benefit categories. Across VitaPet, we extended our range into the grocery channel, capturing new consumer segments and increasing brand visibility. Our manufacturing footprint has also evolved. Since 1973, dog rolls have been produced in New Zealand at Superior Pet Foods, with Superior joining EBOS in 2023.
Air-dried treats will be manufactured by Next Generation Pet Foods in Queensland, and of course, we built an amazing site in Parkes, New South Wales that produces our Black Hawk Kibble products. These investments give us greater control over quality, innovation, and cost. It positions us to respond quickly to changing consumer preferences, as evidenced by the evolution of the life-stage portfolio of products across Black Hawk. Looking ahead, we're excited to continue building on this momentum with a strong pipeline of new product development and a clear strategy to extend our position in the premium pet nutrition market. To conclude today's presentation, I want to reaffirm the EBOS investment proposition and share what energizes me about leading this exceptional business.
Healthcare and animal care continue to experience sustained increases in consumer and institutional spend, driven by demographic shifts, innovation, and evolving customer preferences, including a desire for a longer health span. These macro opportunities are well matched by EBOS' core capabilities. In a growing but complex market, we are trusted to connect with care, notably in wholesale, distribution, and animal nutrition. For investors, this means we are levered to ongoing healthcare spend. It is this exposure that's underpinned our track record of consistent growth. As referenced earlier by the Chair, we maintain and continue to build upon our leading positions, where we are a leading pharmaceutical wholesaler in Australia and New Zealand and one of New Zealand and Australia's largest healthcare-focused contract logistics providers. We are the leading healthcare services-focused community pharmacy network in Australia through TerryWhite Chemmart.
We're also New Zealand and Australia's leading hospital medicines wholesaler and one of New Zealand, Australia, and Southeast Asia's leading medical distributors. We're also New Zealand and Australia's largest dry dog food brand in pet specialty and ANZ's leading vet wholesaler. These positions are underpinned by EBOS' shared capability framework. This is represented by a culture of entrepreneurship, operational excellence, and the ability to identify and invest ahead of growth opportunities and disciplined portfolio management that consistently delivers long-term shareholder value. This culminates in a resilient, diversified business, your business, that is well positioned for sustainable growth. Thank you for your time this afternoon. I'll now hand back to the Chair to go through the formal items of the meeting.
Thank you, Adam. We will now proceed with the formal business of the meeting. The first item of business is to consider and receive the annual report. The annual report contains the financial statements, directors' report, and the auditor's report for the year ended 30th of June , 2025. A formal resolution is not required. We will then move on to the other matters to be put to a vote. We have four ordinary resolutions to deal with today. Resolution one is the election of Coline McConville as a director. Coline, who was appointed as a director with effect from 1st of February , 2025, is now required to be put forward for election by shareholders at the annual meeting. Resolution two is the re-election of Stuart McLauchlan as a director.
Stuart, who is required to retire by rotation, is now required to be put forward for re-election by shareholders at the annual meeting today. Resolution three is the re-election of Mark Bloom as a director. Mark, who is required to retire by rotation, is now required to be put forward for re-election by shareholders at the annual meeting. Resolution four is to authorize the directors to fix the fees and expenses of the auditor. As required under the NZX listing rules, voting will be conducted by poll in respect of each resolution. Shareholders will have an opportunity to ask questions as each resolution is proposed. If you wish to ask a question online, I ask that you follow the directions previously advised and use the Q&A tab on the Computer share platform. Your question will come through immediately, but may I request your patience as the questions are sent through.
Those attending here in Auckland can either use the app or raise your hand, and a member of our team will hand you a microphone. I remind you that only shareholders and valid proxy holders are permitted to vote or ask questions. The directors hold proxies representing 138,110,022 shares. In respect of all resolutions, where a director holds an undirected or discretionary proxy, they intend to vote those proxies in favor of the resolutions. The annual report and financial statements were subject to audit by Deloitte, who gave an unqualified audit opinion. The annual report and financial statements were audited and lodged prior to the annual meeting, and there was no formal resolution required to be put to the meeting. I will, however, take questions on the annual report and financial statements and any other aspect of the business you may want to discuss.
The auditors, Deloitte, are represented here today by Mr. Bryce Henderson. Are there any questions on the annual report, please? We have a question over here. Thank you.
Yes, thank you. Yes, Colin Upchurch, shareholder. We've heard an awful lot of positive stuff today, and that's just wonderful. I'm a bearer of a simple brain. Just one aspect of the annual report I'd just like a bit of guidance on, and that is the earnings per share has crashed 22% between the two financial years, and I don't quite understand what's driven that, given the fact that most of the other aspects in the annual report seem to be positive. If I could get some guidance on what's happened to that decline in shareholder share of the profits, and secondly, what might a bearer of a simple brain expect perhaps that statistic to look like at this time in the future next year?
Okay, thank you. Do you want to answer that, Adam?
Yes, so the change in EPS from the financial year 2024 to the financial year 2025 was significantly influenced by the change in the Chemist Warehouse Australia contract. We announced that that contract came to an end on July 1, 2025, and it was present throughout the 2024 financial year, but not in the FY 2025 year. I'm delighted that despite the fact that we'd lost that major customer, our colleagues in the Symbion and healthcare distribution business were able to win back over 300 new customers, representing about NZD 540 million of annual revenue, in partial replacement of the NZD 2 billion or so of revenue that was lost when the Chemist Warehouse Australia contract came to an end. That's the key driver of that particular change.
As you just heard me a few moments ago, we reaffirmed guidance for FY 2026, which is about a 7% growth in underlying EBITDA at the midpoint, and I think we're looking forward to sharing more information on that at the half in February.
Thank you, Adam. We have a quite similar question online. Would you like to, and the question is, turnover of NZD 23.2 billion and net profit after tax NZD 250 million, thus only 1.7% profit. What is being done to lift these margins?
Thank you very much. I think there's two separate pieces that go to addressing this point. One is in the FY 2025 results that we presented in August, we pointed out that there was an evolving, highly competitive pharmacy wholesale market, which is where our largest business unit, Symbion, earns its margins. That represents a challenging environment, and in response, the team are very focused on rolling out those new facilities that we showed you earlier, including the Kemp's Creek facility, which should have a benefit in automation. The second piece that's a little sort of harder to see is a rise in what's called high-cost medicines. Whether it's the GLP-1s or some of the new oncology drugs, these are medicines that can be up to NZD 20,000 or NZD 30,000 per dose.
Although we would receive a similar or a capped dollar figure when that passes through Symbion, which at the moment is in the order of NZD 120, the margin as a percentage will fall. It's still good business for us to carry the GLP-1s, and those are increasing both in Australia and New Zealand, but as a percentage margin, it looks like that number has fallen with the rise in high-value medicines. Thank you.
Thank you, Adam. Are there any other questions in the room? I do have another question online, and this is from the New Zealand Shareholders Association, so thank you for that. The company ensures that lead audit partners are rotated at five years as required by the NZX listing rules. NZSA also expects disclosure of the appointment dates of the lead audit partner in audit firm and the annual report to provide transparency for investors. Can you please comment? Thank you for your feedback. Coincidentally, our representative and the shareholder are sitting all but one seat from our audit partner, Bryce Henderson. He's in his first year as lead audit partner. Bryce, anything else that you would like to add since you're in the front row?
We have a policy, as you know, under the law to rotate every five years. That creates fresh ideas. You have the intellectual property and capital of the firm, which is maintained, but the partner refreshing does allow different ideas and views. While we are all part of the same firm, we obviously have different views and different ways of attacking or addressing points. I think we'll have to address a lot of the points.
Thank you, Bryce. Great that everyone can meet you. Thank you. I don't have any other questions online. Is there any, oh, here we are. We have a question in the room over here. Thank you.
My client is a shareholder. First of all, the board must be congratulated on the results over the last few years, and in some instances, they're very spectacular. My question is to do with the South Island of New Zealand, namely Christchurch and Dunedin and the West Coast. How is the network growth there?
Thank you. That's a good question. I really want to give it to one of my colleagues, Stuart McLauchlan, who resides in Dunedin and really covers the South Island forward, but I'm actually going to give it back to Adam.
Thank you, guys. Thank you very much for the question. We try to provide the best possible service to pharmacists across New Zealand, both in the North Island and the South Island. As part of the new facilities that you saw on the page, particularly Onelink and ProPharma, we see that as an opportunity to consolidate, to lower our cost, and therefore provide a better net cost service to all New Zealanders, again, both North Island and South Island.
Thank you, Adam. We've got a question over here. Thank you.
First question concerns the CEO transition. Shareholders were told in the interim report in February that the company's long-standing CEO, John Cullity, wanted to retire and would conclude at the end of the June financial review and that he would be succeeded by Adam Hall. In the selection of Mr. Hall, the board chose someone from outside the company rather than one of EBOS's existing executives. If you would, could you give the background and the process that was followed in making that selection?
Thank you. Yes, I can do that. We appointed a search consultant, and we did two things. We, first of all, decided what skills and attributes we were looking for in our new CEO, and then we had our search consultant undertake a global search. The board then reviewed all of the applicants, and also interviewed all applicants who were shortlisted. As a result of that, we have appointed Adam Hall. That was the process.
The second question concerns the company's borrowing capacity. In the presentation that accompanied the four-year final results, the phrase "debt headroom" was used, and the figure that was given was NZD 250 million. I assume that meant the company's potential borrowing capacity for future acquisitions was NZD 250 million. That was my interpretation. I see in the borrowing section of the annual report that there are unused banking facilities available to EBOS, and I think the figure is NZD 719 million. If you could clarify for me how much money is actually available for future acquisitions.
Happy to answer that. Adam?
Yeah, absolutely. I really appreciate the fact that you've taken the time to go through the annual report. We take a lot of care in preparing it, and we're delighted that you've found it of use. The NZD 250 million, you're absolutely spot on. That represents the capital that's available for the programmatic approach to bolt-on M&A that's been a hallmark of success at EBOS long before I've arrived, and it's a real source of shareholder value. You're absolutely correct also that there's a larger amount of undrawn capacity on the balance sheet, and that represents the prudence that the financial policy of EBOS has been conducted with over the last few years, led by Stuart on the Audit Committee, and then, of course, Alistair as the CFO.
Thank you, Adam.
The next topic is the company's profitability and its effect on the share price, both the year just passed and the current year that we're now in. It seems to be a sort of a taboo at these annual meetings that everything is discussed except the share price, but there was such a prominent fall this year that I think it can't be avoided. A previous questioner alluded to it, but in my opinion, it hasn't been gone into anywhere near as thoroughly as it needs to. I was extremely disappointed, Liz, at your presentation and the fact that in the last couple of months you have not even addressed this topic. I'm now going to try to address it, saying at the outset that any questioning I do might appear somewhat clumsy.
It is somewhat clumsy because I'm addressing the Board of Directors who all know more about accounting and EBOS Group's accounting than I do, and I'm addressing a room full of shareholders who probably don't even know what I'm talking about. Nevertheless, I'm going to proceed. What I'm trying to get at with this line of questioning is that shareholders can come away from the meeting with a better understanding of what happened, what caused such a drastic fall in the company's share price. Mr. Hall has just mentioned the Chemist Warehouse contract, but we knew a year or two years ago that that contract was due to expire, and John Cullity made extensive efforts to notify shareholders and the share market in general by providing two sets of accounts, one including the Chemist Warehouse Australia profitability and the other one excluding the Chemist Warehouse profitability.
The final result that was issued two months ago should not have come as any surprise, yet it did. Before I proceed any further, I'm now going to give you the opportunity to add to the explanation as to what happened, why the market was so disappointed in that share price, with share result.
Thank you.
First of all, the management team and I take the recent decline in the share price very seriously. We know that that is a topic of great concern to every shareholder. I think you've pointed very correctly to what has happened in the build-up to the August results. In July of 2024, the company provided a guidance range for the FY 2025 year. That guidance was then reaffirmed at the half and then at the AGM, reaffirmed in April at the capital raise, and then the underlying EBITDA was delivered in that range in the August 2025 full-year result. Your question, what was new? What happened? We pointed in that result to two important changes in the market. One was the increased competition in pharmacy wholesale, where our margins were tightening across the board.
The second point was the softening in animal care, where we've seen, for the first time in a while, the animal food market in Australia declined, and in New Zealand, I should add as well, where consumers were spending less money on animal food and indeed were deferring the purchase of new pets. What we outlined in that meeting and what we've outlined today is the team's response. We absolutely need to be able to drive better margins in pharmacy wholesale, coming from a position of lowest cost, which means higher productivity in each of our facilities. That was what underlined slide 23, which had those three swim lanes of the opportunities, including automation in our facilities. The second is new product development in animal care.
I don't know if you heard me mention it, but despite the fact that the category shrank, our revenue in animal food grew in FY 2025, and that's because of the introduction of continued new products in the market. The animal care team has this wonderful track record of new products. If I can add just one final thing, and then I'll hand it back to you, sir. One of the new products that we were always going to bring to market was a freeze-dried treat in the Black Hawk range that's sold out already of the first run of products. We're looking to continue bringing new innovation in animal food to help offset that trend in the market.
Thank you for that. The second part of the question in regard to the company's share price that I would like shareholders to come away from this meeting with is some assurances that it won't happen again. I'll point out to you that a year or so ago, if not longer, John Cullity issued an underlying EBITDA forecast for an entire year in advance for EBOS on the 2024-2025 year. I'll mention here before I forget it, before I continue that question, I know you are making a presentation to the market in the fourth quarter of this year, and I am, for what it's worth, suggesting to the board that that be the end of providing one-year guidance to the market. It hasn't done the company's share price any good, and it just gives opportunities for short-term speculation when those targets are met or they are not met.
Back to the question. John Cullity provided an underlying EBITDA guidance a year or so ago. He met that guidance, and as a result of meeting that guidance, he got an incentive bonus payment for his one-year performance of the company. I understand that the executives also have those kinds of underlying EBITDA performance metrics that they are expected to meet in order to get incentive payments and bonuses. I put it to you, first of all, just to state the obvious, that shareholders don't get rewarded for underlying EBITDA. They only get rewarded for share price growth and dividends and dividend growth. I'm worried that the remuneration of the executive managerial class at EBOS is being incentivized to meet targets that are entirely different than the targets that the share market is valuing the company on and measuring the share price on.
I mentioned Mr. Hall has made a couple of months ago, and he reaffirmed today, a one-year guidance of underlying EBITDA of NZD 615 million- NZD 635 million. He has not mentioned anything about statutory EBITDA, earnings per share, underlying earnings per share, statutory earnings per share, and all these kinds of metrics that have seemed to result in such a disappointment to the company's larger shareholders that they have knocked 25% off the value of the company. Why is that not going to happen again, that Mr. Hall will get his one-year incentive payment for meeting the underlying EBITDA target, but yet if he doesn't meet any of those other targets, why wouldn't the share price fall again?
I will answer that. First of all, you are correct, the executives have a short-term incentive, which is based on one year's performance. In addition to the short-term incentive, they have a long-term incentive, and that long-term incentive has previously been based on EPS growth, which is exactly what you're looking for. This year, we've added another criteria, which is ROCE, a return on equity , and we've set that target at 15%. Those two KPIs together, the impact growth, which is EPS, as well as the ROCE, should give the incentive to the executive to drive performance to get the share price up. That is the major change that I can say that we have made in response to that. We have introduced another KPI in the LTI, and executives need to stay three years to earn, to qualify to get that LTI.
I would also add in that this last year, in the June 2025 period, the executive did not achieve the LTI because they did not meet those long-term growth incentives. There has been a cost to them.
Liz, may I just add, just in regards to your point around the underlying EBITDA and it flowing through to the other line items on the financial statement, in FY 2026, because it's a year of transition, we knew that we needed to provide a little extra information to the market. You've seen that we've not only provided underlying EBITDA, but the three major line items to help people understand the full income statement, including CapEx, depreciation, and interest costs.
What is your last point? The underlying EBITDA and three other metrics, did you say?
That's right. That's correct. In the August 2025 results, you can see us provide guidance not only for underlying EBITDA, but also for those three line items underneath.
The three line items?
The depreciation interest guidance this year is provided to an impact level.
Okay, thank you for your responses. I know people are getting hungry, but I would like to encourage shareholders that have got questions in this regard to let the directors hear from you right now because they deserve to hear from you. You know, putting out a result like this this year, it's pretty bloody horrible. I tell you that if you do the same thing again next year, you will probably, if you have your meeting here, you'll be speaking to an empty room.
Thank you for your comments. We have another question.
I think when we go through the results, it looks very promising because I attended 10 EGMs, and I think this is the only company which is showing lots of positive things. When the gentleman actually told that the stock price has crashed, I'm a bit surprised. My worry is if there is an investor who wants to hold this stock for five years, now if we go through the balance sheet, it has a NZD 7 billion balance sheet, and NZD 2 billion are goodwill. If the company makes NZD 250 million profit a year, and if there's a 50% deposition on goodwill, I've lost basically four years of profit. If I buy this stock with a five-year perspective, how can I be sure that the goodwill is valued at a right price?
Thank you very much for your question, and I appreciate it again, similar to the prior gentleman that y ou've taken the time to go through our balance sheet, which is of great interest to Alistair and the rest of us. Essentially, the point that Liz made earlier around the long-term incentives, the target for the whole company is to earn a return on capital employed of 15%, which includes goodwill. We need to get there over time by deploying the assets that you saw in the DC renewal program. That is absolutely what the company is aiming at. When we're able to demonstrate that 15, as we demonstrate those increasing returns, that will in turn benefit all shareholders.
Yeah, that is exactly to add to the gentleman's argument that he had read that last year the incentive was around EBITDA. Now she has said that it is about return on equity, but you are using the word return on capital employed. I think if we just go through the basic financial theories, return on capital employed is a better parameter to value a performance. Shouldn't the executives' pay be connected with return on capital employed rather than return on equity?
I think maybe there was a slight misunderstanding. You are correct. Liz referred to return on capital employed before. There's no return on equity measure, only a return on capital employed measure.
I think it should include, capital will include that plus equity. I think that would be a better way to measure the performance of an executive. Anyway, that was just another question. One second question is, why a company has so many legal entities? When we go through the subsidiaries, so many companies in Australia are having 100% voting rights, 100%. Why a pharmaceutical company needs so many subsidiaries? I see there are like around hundred lists.
Thank you very much for your question. It's actually one of the things that points to one of the hallmarks of success at EBOS, which is this long track record of acquisitions. The company, back before it merged with Symbion in 2008, was a much smaller company. It's been built piece by piece with highly value accretive transactions, step by step, all through that period. Sometimes it's hard to consolidate away the stub entities that remain. That's a part of the driver of the reason why there's a proliferation in names. It's because the company has a track record of generating returns. Thank you for the question. I think there was one more over here, John.
I'd like to ask a very short question, trying to address the elephant in the room. The elephant is that on Monday, one week, all the advisors, all the market analysts, and every shareholder thought the shares were worth NZD 40 - NZD 42. By Wednesday, they were NZD 35. By the following Monday, they were NZD 30. The share market has the concept of continual disclosure. The purpose of that is to avoid the sort of catastrophic shock that occurs. It seems to me that something was missing. I don't know what it was, but something dramatic and completely unseen by hundreds of market analysts with all their knowledge and all their records didn't spot what was happening. The company knew, of course, but there's just something missing somewhere in the equation between the shareholders and the company. I'd like to ask if you've got any ideas about that.
Do you want to answer that?
I appreciate you raising it like the other gentleman did a few moments ago in terms of the share price decline. I think what you've pointed to is how precipitous it was. Let me start again by saying that the guidance was given at the EBITDA level for the FY 2025 year, and that guidance was reaffirmed and met through the year. It was reaffirmed in the AGM, the half, the capital raise in April. I think what became clear as we were preparing the results was this underlying weakness in both competition for pharmacy wholesale and in weakness in the animal consumer business. I think that, together with the capital program that we've outlined today, was a difference to what the market was expecting. That, in turn, has led to those precipitous conditions.
Thank you, Adam. There's a question here. Thank you.
Hello. I'm [Shemple Lake], this chap over here. It probably feels very reflected in the room. I'm at Shemple Lake, just a poor fellow over there]. Looking at the summary of results, really the main ones I see are the revenue, statutory net profit after tax, dividends per share, underlying EBITDA. The main sort of features of the report, it would be very good to have, rather than presented like that on that page, for we simple people to have five years with them all set up in a manner that a child could read. Comparing, we'd be able to just go through the five years and say, yeah, we can absolutely see what's going on there. It would be far more beneficial to all of us to have them set out in that way. I actually don't understand. I think I don't understand why that's not the case.
You know EBOS has done very well. Over time, it's a wonderful record. It would be good to see it set out in that way.
Thank you for that. We will take that on board. Thank you. Do you have any other questions in the room? I thought there was one in that direction. No? Doesn't appear to be any more. OK, thank you. We will now move to Resolution 1 relating to the election of Coline McConville as a Director. The resolution is, it is resolved that Coline McConville be elected as a Director of the company. I now invite Coline to make a statement to the meeting. Thank you, Coline.
Thank you, Liz. Hello, everyone. I'm Coline McConville, and I'm delighted to be here today in beautiful Auckland, seeking your support for my election as a Non-Executive Director of EBOS, having been appointed to the board in February of this year. I was born and bred in rural Australia, but attended university in Sydney, completing the dual degrees of Bachelor of Jurisprudence and Bachelor of Laws at the University of New South Wales. I also completed an MBA, Master of Business Administration at Harvard Business School in Boston, USA. The early years of my career were spent as a strategy consultant with LEK in Australia and Germany, and also with McKinsey in Australia and the U.K.
My first ever project with LEK when I joined way back in 1989, which shows you how old I am, was in New Zealand and involved visiting all of your main cities and towns to conduct interviews. This was an incredible opportunity to start to discover your exceptionally beautiful and interesting country. My executive career involved building and then operating an international media business based out of the U.K. Through focused and rapid expansion by acquisition, as well as organically, I was lucky enough to be able to build the business from a few hundred million of turnover to several billion and expand the geographic footprint from a handful of countries to over 50 countries, including New Zealand and Australia, of course. They were the first ones I expanded into.
I entered the Chinese market in 1997 through a strategic joint venture and bought or partnered with companies across Southeast Asia and Europe. My final executive role was as CEO of this multinational business. In parallel, I started my non-executive career back in 2000, joining the board of what was the U.K.'s largest mortgage bank, which gave me invaluable experience with a very large and highly regulated publicly quoted business. Over the past 25 years, I've served as a Non-Executive Director on 12 boards in sectors varying from distribution to retail to fast-moving consumer goods to financial services and private equity. I have served as Deputy Chair, Audit Chair, and Remuneration Chair at various of these companies, which have ranged in market capitalization from small to medium-sized, all the way through to the FTSE 20.
I currently sit on the board of 3i Group PLC in the U.K., a large publicly listed private equity and infrastructure business where I'm also Remuneration Chair. I also sit on the board of 2E AG, the German stock market listed vertically integrated travel business. I'm looking forward to bringing my skills and experience in strategy, governance, people, international expansion, and mergers and acquisitions to the benefit of EBOS and all of its stakeholders and shareholders. Through what has been a thoroughly professional and in-depth introduction to all business areas during my induction program over recent months, I have come to understand and really appreciate what a valuable culture EBOS has, entrepreneurial, fast-moving, performance and growth-oriented, and yet grounded in strong values and integrity and led by really exceptional people who are passionate, hardworking, and very, very good at what they do.
I want to thank Liz and the whole board for putting their faith in me and giving me this wonderful opportunity to contribute to the continued and growing success of EBOS. Thank you.
Thank you, Coline. Are there any questions from the floor on this resolution? If there are questions online from this resolution, there don't appear to be any questions. I will now move the adoption of Resolution 1. Thank you. We now move to Resolution 2 regarding the election of Stuart McLauchlan as a director. The resolution is, it is resolved that Stuart McLauchlan be re-elected as a director of the company. I now invite Stuart to make a statement to the meeting.
Thank you, Liz. Fellow board members, shareholders, thank you for this opportunity to offer myself for re-election. It is a pleasure and privilege to serve on the board and to have contributed to the performance, growth, and success of EBOS. I currently chair the Audit and Risk Committee, and I'm a member of the Remuneration Committee. I believe my industry knowledge, including nine years as Chair of Pharmac, my family having owned a pharmacy wholesaling business, as well as my wider governance experience, has and will be of value to EBOS going forward. EBOS is a great New Zealand company with a strong reputation, proven business strategy, and considerable financial strength. On that basis, I ask for your support for my re-election as a director of EBOS today. Thank you.
Thank you, Stuart. Are there any questions from the floor on this resolution? There do not appear to be. Are there questions online? There are no questions online. I will now move the adoption of Resolution 2. The next item of business relates to Resolution 3 regarding the election of Mark Bloom as a director. The resolution is, it is resolved that Mark Bloom be re-elected as a director of the company. I now invite Mark to make a statement to the meeting.
Hi, good afternoon. My name is Mark Bloom. I'm pleased to be standing for re-election today, having been appointed by the board as a Non-Executive Director in 2022. I appreciate you joining us today and for giving me the opportunity to cover some relevant details of my career and my background. I have a Bachelor of Commerce degree, as well as a Bachelor of Accounting. I'm a registered Chartered Accountant in Australia and New Zealand with a CA qualification. I retired from my full-time executive career as a finance executive in April of 2019. My executive career spanned 36 years as CFO and an Executive Director at top 20 listed entities in real estate and insurance and financial services. I spent 16 years at Westfield and Scentre Group after having spent 20 years in insurance and financial services at Liberty Life in South Africa and Manulife Financial in Toronto.
As CFO of Scentre Group, which is Westfield in Australia and New Zealand, I was responsible for establishing a full-spectrum finance team and established new bank and bond financing in global and local markets of NZD 13 billion. Liberty Life was a top 10 JSE listed group in financial services, including life, health, and short-term insurance and funds management. I was a member of the main board, as well as a member of the board of all operating subsidiaries. I was responsible for all aspects of finance across the wider group. I currently sit on other boards of large listed companies in Australia. AGL Energy operates Australia's largest private electricity generation portfolio and supplies around 4.6 million energy and telecommunications customer services. AGL is at the epicenter of the energy transition in Australia.
At AGL, I am Chairman of the Audit and Risk Management Committee and a member of the Safety and Sustainability Committee. Abacus Storage King is a diversified Australian REIT with investments in self-storage sectors. Abacus owns and operates the Storage King brand of self-storage, which you are probably familiar with, both in New Zealand and Australia. At Abacus, I'm a member of the People Performance Committee and the Audit and Risk Committee. I believe that through my experience as a senior executive at large listed companies, together with my experience as a Non-Executive Director across multiple industries, I have built a solid knowledge base to allow me to fulfill my role and contribute effectively to the EBOS board. Just like all of you, I am also a shareholder in EBOS. EBOS is a great company with a proud 100-year history, a strong reputation, exceptional growth, and proven financial strength.
I would be honored to receive your support for my re-election today. It will be my privilege to serve you on the board of EBOS. Thank you.
Thank you, Mark. Are there any questions from the floor on this resolution? No, and I see that there's no questions online. I now move the adoption of Resolution 3. The final resolution relates to the auditor's remuneration. Deloitte is the current auditor of the company and is automatically reappointed in accordance with the Companies Act. It is proposed that the directors be authorized to fix the fees and expenses of the auditor. The resolution is, it is resolved that the directors of the company be authorized to fix the fees and expenses of Deloitte as auditor of the company. Are there any questions from the floor on this resolution, please? There are no questions coming through online. No questions. I now move the adoption of Resolution 4. Thank you. Before we move on to the voting, does anyone have any other business?
I forgot this one. In the borrowing section of the annual report, there is also an item in there in regard to NZD 45 million that is allocated to Southeast Asia in some currency that I'm not familiar with. The question I ask in that regard is, is there an executive in Southeast Asia that has got the authority to spend NZD 45 million on behalf of the company for acquisitions? Does any of that type of expenditure acquisition have to go through the CEO and through the board?
I can confirm that there is no executive in Southeast Asia that has the authority. In fact, an expenditure of that level would come to the board. Are there any other questions?
There's one on the screen.
Oh, sorry. There's a question on the climate statement, our favorite topic. In relation to your climate statement, there are limited assurances from Bureau Veritas regarding Scope 1 and Scope 2 emissions data. Other elements of the climate statement are not assured. New Zealand Shareholders Association encourages EBOS to extend assurance scope in future years to strengthen its confidence in the reliability of disclosures. Can we please comment? Adam, you're allowed to comment. You're learning about climate statements in New Zealand and now Australia.
That's right. We undertake a thorough process, including verification, engagement of experienced advisors, and Audit Committee supervision before the board considers and then approves the climate statement.
Thank you, Adam. Are there any other questions in the room? No? There's one more question from the Shareholders Association. New Zealand Shareholders Association looks for evidence of ongoing succession or staggered appointment dates that reduce the risks associated with effective knowledge transfer in the event of succession. We also prefer a maximum of nine to 12 years in the exceptional circumstances that may apply. We note that Chair Elizabeth Coutts has served since 2003. However, an effective reverse takeover of some memo occurred in 2013. Can you please comment on board and chair succession? What I can say is, since I took over as Chair, or just before that, Stuart McLauchlan joined. Then since then, we have brought on an entirely new board, staggered over the last five years. I am on my last term. No decision has been made exactly when I will step down.
What I do tell people is that we have a relatively new board and a very new CEO and a relatively new CFO. I will be there until the board feels that they are comfortable that it's time for me to step down. In the meantime, I am there to support a lot of new people around me. Thank you very much for the question. Any other questions from the room? No? No more questions online. OK. I'll now move to conduct the poll. As I advised earlier, today's vote is conducted both online by Computers hare meeting platform and by voting cards. Ladies and gentlemen, before I conclude, I just want to make sure you've had plenty of time to do your voting. Ladies and gentlemen, that concludes our discussion on the items of business. In a minute, I will close the voting system.
Please ensure that you've cast your vote in all resolutions. I will now pause to make sure that you've had plenty of time to finalize your votes. Are we there? Voting is now closed. The voting papers in the room are being collected. Please ensure that you have signed your voting paper. After the votes have been counted and confirmed, the results of the poll will be released to the ASX and the NZX and will be displayed on the company's website. I now declare the meeting closed. Thank you very much for your attendance. It's very much appreciated. We invite those here in Auckland to join us for afternoon tea. Thank you very much. Great to see everyone today.