Good morning, ladies and gentlemen. Welcome to the 98th meeting of Australian Foundation Investment Company Limited. My name is Craig Drummond, Chairman of your company. The Company Secretary has confirmed that a quorum is present, and I'll now open the meeting. Today's meeting is being held as a hybrid meeting and is being recorded. Today's presentation has been released to the ASX and made available on the company's website. I'd like to begin by acknowledging the traditional owners and custodians of all the lands that we are gathered on today and pay my respects to elders, past and present. May I introduce the people on the stage with me? To my left, we have our Managing Director, Alison Gibson.
Morning.
My fellow non-executive directors, Rebecca Dee-Bradbury. Sorry, she is not on my left, she is on my right. Julie Fahey. Julie. Katie Hudson.
Morning.
Graeme Liebelt.
Morning.
Richard Murray.
Morning.
David Peever.
Morning.
Also on stage we have our Company Secretary, Matthew Rowe.
Good morning.
Our Chief Financial Officer, Andrew Porter.
Good morning.
Our Head of Business Development and Investor Relations, Claire Aitchison.
Morning.
Mark Freeman retired as Chief Executive Officer and Managing Director at the end of the 2026 financial year. The board would like to acknowledge Mark for his leadership, and we wish Mark all the best for his future endeavors. Alison Gibson was appointed Chief Executive Officer and Managing Director of the company with effect from July 2026. Prior to taking on the role of CEO, Alison, as an experienced investment professional, established and managed the Australian equities team at HESTA. Alison is well known to the company, having previously worked with the AFIC group of LICs for 10 years until 2021. Alison has been using her first few months to connect with shareholders, their advisors, and the team. In due course, we'll be hearing from Portfolio Manager Brett McNeill, and Assistant Portfolio Manager Winston Chong.
We are also joined by other members of the investment team in the front row of the audience. I would also like to take this opportunity to introduce Kate Logan, partner of the company's auditors, PricewaterhouseCoopers, who is available to answer questions today on the audit and the preparation and content of the auditor's report at the end of the presentation.
Before I go any further, I would like to note a change to the composition of your board. David Peever, a director since 2013, will retire from the board at the conclusion of today's meeting. On behalf of the board, I want to thank David Peever for his significant contribution and dedicated service over more than a decade, and wish him well for the future. Thank you, David Peever . I'm also pleased to advise that Tom Palmer will join the board as a non-executive director effective from the 12th of October, 2026.
Tom Palmer was Chief Executive Officer of Newmont from 2019 to 2025, where he led transformative transactions, including the Goldcorp and Newcrest acquisitions. Prior to that, he spent 20 years at Rio Tinto. His detailed knowledge of the mining and resources sector and broad international experience will complement the board's existing mix of skills, and we look forward to welcoming him.
I remind shareholders using the online platform that while questions can be submitted at any time, I will not address them until the relevant time in the meeting. To ask a question, click on the Ask a Question button at the top or bottom of your screen. If you have not entered your shareholder number or proxy number, you'll be required to provide these details before you can proceed. Once your shareholder or proxy number has been verified, you can choose to ask your question in writing or orally.
If you require further guidance, please click on the Virtual Meeting Online Guide link on your screen. Please also note that your questions may be moderated, or if we receive multiple questions on the same topic, amalgamated together. To cast your vote, click on Get a Voting Card button on your screen. Where prompted, please provide your shareholder or proxy number and follow the prompts. Once verified, a voting card will be issued and you'll be able to lodge your votes. Click Submit Vote at the bottom of the voting card to lodge your votes. If you have multiple holdings, you'll need to obtain a voting card for each holding. Shareholders, authorized representatives, and appointed proxies in attendance here in Melbourne would have been issued a yellow card to vote on each resolution.
If you' re eligible to vote and you have n't received a yellow card, please see a representative of the share registry, MUFG Corporate Markets, in the foyer. If you have any questions about how to complete the voting card, please see a representative from the share registry here today. I now declare voting open on all items of business. I will give you a warning before I move to close voting. Before we move to the business of the meeting, I'd like to provide some additional comments. Ladies and gentlemen, the investment team will talk in detail about the portfolio and performance shortly. I wanted to acknowledge that performance of the portfolio for the financial year was below expectations.
Particularly in the first half of the year, due to a lack of exposure to small and mid-cap resources companies, quality being out of favor in a number of individual stock positions, which the team will talk to in the presentation. Improvement in performance is a key focus for the board, and we have taken steps to address this. There were a significant number of changes in the last 12 months, including the appointment of Alison Gibson as CEO in July 2026. Brett McNeill was appointed as portfolio manager late last year. Alison Gibson is well-placed to lead the company given her investment expertise, combined with her knowledge and passion for the investment approach of AFIC. Alison Gibson will talk about what she sees as the key areas of improvement shortly.
However, she has already made strong progress enhancing the processes that equip our investment team to deliver on AFIC's investment objectives. One of the key objectives of AFIC is to provide shareholders with a stable to growing stream of franked dividends. We'r e proud of the fact that we have not cut the dividend in times of stress, such as COVID and the GFC, and that shareholders were able to rely on their AFIC dividend at these times. To meet this objective, the board has made the following decisions. Firstly, to move to quarterly dividends, with the first quarterly ordinary dividend of AUD 0.0675 per share and a special dividend of AUD 0.025 per share being determined this morning to be paid in November, with subsequent equivalent dividends being paid in February, May, and August.
Subject, of course, as always, to no material unforeseen adverse market conditions and final board approval. The board intends to return surplus franking credits to shareholders in a timely manner whilst maintaining an adequate level of franking reserves. This is reflected in this morning's announcement, in which the board noted its intention to determine a special dividend of AUD 0.10 per share to be paid in equal quarterly installments for the 2027 financial year. The company currently intends to buy back shares in a meaningful way when trading at a material discount, as this is value accretive for shareholders. To that end, AUD 243 million worth of shares were bought back in FY 2026, reflecting the extent of value that the discount in net tangible assets offered.
As announced in the interim results in January 2026, the board made a decision not to proceed with the establishment of a separate international listed investment company, at this stage predominantly due to market conditions. On the back of this decision, we have revised our investment approach by increasing the concentration of the portfolio to our highest conviction positions. We have retained the international exposure in the AFIC portfolio for three reasons. Firstly, the portfolio provides diversification to companies and sectors that are not available in the domestic market. Secondly, it provides options in the event that the ASX continues to reduce in size and breadth. And thirdly, the research provides valuable insights for companies in the domestic portfolio. The portfolio remains small in size at 1.5% of the AFIC portfolio at 30th of June, 2026.
This position sizing will remain while the strategy proves itself to earn a greater allocation of capital. The international investment team are here today and will be around after the meeting if shareholders have any questions. We thank shareholders for their continued support and are committed to delivering improved outcomes. We continue to believe AFIC provides an attractive investment option for all investors, with access to a low-cost, actively managed portfolio with an investor-friendly structure. Moving on to the business of the meeting, I'll take the notice of meeting as read. With regards to the minutes of the 97th annual general meeting, they've been signed as a correct record and are available to shareholders for inspection today. The first agenda item is the consideration of the financial statements and reports for the year ended 30th June, 2026.
We'll do this via a presentation, after which I' ll ask shareholders to comment or to raise any questions, either about the presentation or of the auditors if they have any questions about the audit. I'll now pass to our Managing Director, Alison Gibson.
Thank you, Craig Drummond, and good morning to you all. It's an absolute pleasure and a real privilege to be here serving you, our shareholders, as CEO and Managing Director of AFIC. Thank you all to people in the room for coming today and braving the weather, and thank you to those joining online. I'll now turn to our presentation, and the usual disclaimer, which really just says we're here to talk about the company and not to give individual financial advice, because we don't know your personal circumstances. This is the agenda for today. I'll make a few comments and say a few words and provide the details on the dividend update, as Craig's already talked about and announced today. Andrew Porter, our CFO, will talk through the financial results for FY 2026.
Brett McNeill, our Portfolio Manager, will give an update on the portfolio, and then he and Winston Chong, our Assistant Portfolio Manager, will talk to the market update and outlook. As Craig Drummond noted earlier, I'm returning to the group, having previously worked for the business for 10 years until 2021. In the last five years, I worked to establish and run the internal Australian equities team for HESTA.
I'm incredibly excited to be back serving shareholders and working alongside our board and team at the AFIC group. I've been with the business nearly three months now, and I wanted to spend a little time today talking to a couple of key questions that I've been asked since returning. Those being, why am I rejoining the group, and what am I looking to improve? Turning to why I'm rejoining the group, firstly, it's about purpose.
I believe in why AFIC was created in the first place. Most fund managers exist to make money for themselves via fees. AFIC was created to work solely for shareholders and to provide them with an actively managed portfolio at a low cost. We're essentially a not-for-profit, working directly for shareholders with no external fees, and that purpose is something that is really important to me personally. Secondly, it's about the people. I remember being a young analyst working for JBWere, and I was covering the infrastructure sector.
I was asked to come up and talk to the AFIC board, and I did so quite nervously, moved into the AFIC boardroom, sat down, gave my investment thesis on companies like Transurban and other infrastructure companies, talking about their prospects for dividends and earnings growth. At the end, the Chairman at the time, Bruce Teele, said, "Thanks very much, Alison Gibson. That's great. That's great information. But tell me about the people. Who's on the board? Who's on the management team? What's their track record for working for shareholders' interests?" That insight has really stayed with me my entire investing journey. It's always been important in terms of assessing companies that we invest in, who are the management and the board, and are they good allocators of capital?
I think it's equally as important when looking at the people that you work with every day. Are they people of high integrity? Do they have a shared sense of purpose that brings them to work each day? That is one of the reasons I'm rejoining AFIC. We have an incredibly experienced board and a dedicated team who work very hard each day because we take very seriously our role as stewards of shareholders' capital.
I'm also excited at the opportunity to build on AFIC's exceptionally strong foundations, our 98-year history of serving shareholders, our scale that allows us to deliver an actively managed portfolio at a low cost, that it's very competitive in the market. Our listed investment company structure that allows us to look through short-term volatility and take a long-term view. Our transparency and unique governance layer with a committed board acting in your interests.
Finally, I believe our structure offers a real opportunity to make a difference by building prosperity for our shareholders, no matter what stage of life they are in, by giving them ownership stakes in the best quality businesses. I believe in active management, that wealth is created quietly over decades through the power of compounding.
Turning to what I'm looking to improve. First and foremost, performance. AFIC has outperformed over the long term. But as the chart shows, the last five years have been particularly difficult, which has also dragged down the longer-term numbers. The market structure has changed. We've seen the rise of passive and systematic investing, which has increased single stock volatility, and we've seen some extreme share price moves on short-term factors and big swings between sectors. That's created quite a challenge for active managers across the industry.
I do believe this volatility, where the market is hyper-focused on short-term factors, does provide an opportunity for investors such as AFIC, who can take a long-term view. It's important to say that our investment philosophy won't change. We invest in quality companies that are run by strong management with sound balance sheets and generate attractive returns on capital. It' s served our shareholders well over the long term.
I do see an opportunity to refine the investment process to deliver stronger returns, an opportunity to enhance our risk management processes, and to be more intentional about where we actively position away from the index to generate superior returns. We have a talented, highly experienced, and dedicated investment team. My priority as CEO is to ensure that we have an environment that supports and enables them to be wholly focused on working for you, our shareholders.
Brett McNeill will talk a little later in the presentation about his observations and the changes he has made since taking over as portfolio manager late last year. The other area I see a need for improvement is in the communication of AFIC's value. AFIC is trading at a discount to its net tangible assets, or NTA. I believe we have a unique offering in the market, which is attractive to all investors at each stage of their life. It's important that we communicate this clearly. Investors currently have the opportunity to buy a portfolio of quality companies at a low cost at AUD 0.85 in the dollar, and the dividend yield on that discounted share price is very attractive.
Our heritage, experience through market cycles, talented team, and accessibility as a low-cost active manager are all clear advantages, and we need to do a better job at explaining that more clearly to current and future shareholders. As we embrace the future, we do so from a position of strength. Nearly 100 years of foundations built on trust and patient long-term investing. My focus now is to set the business up for the next 100 years and for the next generation of Australian shareholders. I'm mindful that active management faces real challenges today, but I believe we' re really well-positioned with our structural advantages. We offer active management, not just the largest companies in the index, at a low cost. We can genuinely take a long-term view when many others in the market cannot.
As I look ahead, I do so with great confidence and optimism about what comes next. With that, turning to our dividend update. One of the attractive things about a listed investment company structure compared to an ETF is the allowance for dividend and franking credit reserves, which provides superior income stability. AFIC has a long history of maintaining its dividend, and as Craig Drummond said, AFIC didn't cut the dividend when the market was cutting dividends in the GFC and in COVID. It maintained its dividend because of its reserves. Whilst AFIC must maintain some reserves for when the next inevitable disruption comes, when I look at this chart, it's clear we have excess franking credit reserves, and we' re keen to get those out into the hands of shareholders who value that franking.
As Craig Drummond mentioned, the board has announced today its intention to increase the ordinary dividend for the FY 2027 financial year to AUD 0.27 per share, fully franked, representing 2% growth on the previous year. The board have also announced its intention to determine a AUD 0.10 special dividend, fully franked, for FY 2027, subject to no material unforeseen adverse market conditions and final board approval. In total, that's AUD 0.37 per share, fully franked, including the special dividend. One of the things we've heard from investors is they would like to receive dividends more frequently, and as such, we're moving to quarterly dividends today, as Craig Drummond mentioned. At the current share price, the ordinary dividend represents a 5.8% fully franked yield grossed up for franking. Including the special dividend, that represents a 7.9% yield grossed up.
It's worth noting that the board will determine any future special dividends after FY 2027, taking into account ordinary earnings, the balance of franking credits, and the generation of realized capital gains, and is therefore subject to variation. With that, I want to say thank you for trusting us to manage your company, and I look forward to your questions later on and hopefully a cup of tea afterwards. I'll hand over to Andrew Porter, our CFO, to talk through the financial results.
Thank you, Alison Gibson, and good morning, ladies and gentlemen. As in previous years, I will briefly run through , somebody's done it quickly before me. There we go, back on where I wanted to be. As in previous years, I'll briefly run through some of the key financial metrics for the year. As with all of us, I will be here after the main part of the presentation if anybody wants to ask more questions about what the detail behind these figures are or indeed anything else. Profit for the year was up 3% to AUD 293.5 million.
Dividends we received were up, particularly unfranked dividends and trust distributions, which has an impact on the income tax that we have to pay and the franking credits that we therefore accumulate, and the options in the trading portfolio contributed more this year than last. The management expense ratio, or MER, for the year was 0.14%. This is equivalent to AUD 0.14 for every AUD 100 that you have invested in AFIC. As Alison Gibson has noted, this is simply the cost of running AFIC. Nobody else is making a profit out of this. There are costs in running a company that an ETF does not have, but there are the benefits. The company structure, its transparency, its closed-end nature, the ability to smooth and maintain dividends, as Alison Gibson has mentioned.
The major component of the MER is the portfolio value, as it is simply the cost as a proportion of the average portfolio. But the other element is the costs themselves. The non-vesting of the previous year's incentive payments was part of it, but only a minor part. Most of the cost reduction during the year came from the restructuring of the team, a reduction in the use of external advisors, and the expected reduction in share registry costs following the transfer, amongst other items. Both board and management have a focus on cost management, and this continues under Alison's leadership. What was not covered in the profit figure were the realized gains for the year, and indeed for last year, which led to the increase in the franking balance.
As at the end of the year, this balance had grown to AUD 0.55 per share, as you can see there, and hence the announcement about the special dividend today. This enabled the payout of further special dividends for last year, the AUD 0.05 on top of the AUD 0.265 ordinary dividend, and obviously the dividend forecast announced today. I should stress that the level of any special dividend can and will change over time.
We aim to keep a healthy reserve of franking credits to ensure that we can maintain the ordinary dividend in tough times, as we've discussed, which is why we will usually need to wait until the end of the financial year to ascertain what our realized gains have been and what the outlook for the next year is before we can decide or determine what any special dividend will be.
The portfolio size fell to just under the AUD 10 billion mark in June, caused not only by the portfolio performance, and accumulation returns, remember, include dividends paid, but also reflects the cash paid out for those dividends and the buyback. As you can see in the last box, and as Craig Drummond has mentioned, we have bought back AUD 243 million of stock during the year ending June 26. This was considerably more than the DRP/DSSP shares issued and reflects an investment decision to buy back shares at an attractive discount to the underlying portfolio value. I hope that's all clear. As I said, happy to answer any questions in more detail afterwards, but with that, I'll hand over to Brett McNeill and look forward to talking to many of you after the main presentation.
Thanks, Andrew Porter, and good morning, everyone. By way of introduction, I've been with the AFIC Group of companies for seven years now, after I joined as the portfolio manager for our Djerriwarrh Investments Limited back in October 2019. As Craig Drummond and Alison Gibson mentioned, I became the portfolio manager of AFIC late last year. Going back seven years ago, the main reason why I joined this group of companies is because I genuinely believe that this style of investing is the best way to invest. I believe in taking a long-term view, investing in quality companies primarily, and being in a longstanding, trusted, proven investment vehicle that's low cost and has that shareholder-friendly structure. That belief was developed over my career since I started working in markets and also some of my first introductions to the share market.
That primarily involved my late grandfather writing me letters about his investments in the share market, what he was invested in, and often sending me newspaper clippings of financial market topics, and it included things like his favorite investment companies, which included Australian Foundation Investment Company. Naturally for me, given that history, I certainly consider it an honor and a privilege to continue working for the group, as well as now being the portfolio manager of this portfolio, AFIC.
Before I go into some detail on our recent portfolio activity, I do want to give a brief recap of the key elements of our investment approach and how they're supported by what we see as our key competitive advantages. I strongly believe that we're in a unique position to deliver attractive income and growth for our shareholders over the long term.
The permanent capital nature of the listed investment company structure means we don't have to deal with fund inflows and outflows that managed funds and other investment vehicles do have to. I think this gives us greater scope to take that long-term view, particularly during times of market stress. The investor-friendly structure that we have, where the shareholders own the management rights to the portfolio, means that AFIC continues to be low cost, with no extra management or performance fees being taken out of the vehicle, and that allows for maximum passer of returns to investors.
Given what I certainly see as our unique position, our investment approach remains focused on owning high-quality companies within a diversified portfolio and having the right mix of income and growth, and this should allow us to deliver strong compounding returns over the long term. I think that AFIC way of investing, our investment approach, has certainly been well-proven over time, over the long term, but the recent underperformance, as Alison Gibson mentioned, has certainly given us good reason to review and identify some necessary improvements to our process. Some of the key enhancements that we've made include making a more rigorous assessment of a company's quality, particularly during times when the company being analyzed is under change.
They might have made a big acquisition or a change in management and the like. I think we now have to more rigorously assess that view, particularly of the long-term quality. Part of that as well is having a much greater level of debate and challenge within the investment team, and then also using additional risk management tools to complement the work done by the team already in this space. Whilst it's early days, the results so far from the improvements over really the last few months have been very encouraging. We've already had some great recommendations from the investment team, and these have made a meaningful contribution to our performance. This can be seen in AFIC's more recent performance, albeit short term, which includes our NTA total return being ahead of the benchmark for calendar year to date.
Given that backdrop, I'll now talk through some examples of the buying that we've been doing as a result, really, of these improvements and that longstanding process. Some of the more significant buying that we've done in recent times has been in Woolworths and Telstra. These are key stocks for AFIC's dividend income, and they're not just about delivering a high dividend yield on our purchase price, but importantly, a growing dividend stream over time. On the slide here, we show the dividends paid by these two companies over the last five financial years, along with the market's expectation for next year's dividend. If we look in the case of Woolworths on the left-hand side, they paid a special dividend to shareholders in FY 2024 before they had a much tougher year in 2025 with a lower ordinary dividend.
During that time, the share price fell significantly, especially in late 2025, and thankfully, we took advantage of that to increase our position in Woolworths, given that our long-term view of the company, which we tested rigorously, was unchanged. Pleasingly, Woolworths' performance has rebounded since then under new CEO, Amanda Bardwell, and shareholders have been rewarded by a strong increase in the dividend in the most recent financial year, and this looks set to grow again for financial year 2027.
In the case of Telstra, it's been a very consistent performer in recent years. CEO Vicki Brady, we think, has done a great job maximizing the value from Telstra's market-leading position, and their solid profit growth has translated to dividend growth and good share price performance. This has been a real benefit to our returns given the buying that we did around a year ago.
Both Woolworths and Telstra, we think are blue-chip companies operating in very attractive industries with a strong market position, and they remain core holdings for the AFIC portfolio. Looking now at two companies that we have bought recently, but more for growth than income, and these are ProMedicus and TechnologyOne. We show on the slide here the track record of EPS growth over the last five financial years for ProMedicus and TechnologyOne, along with the market's expectations for their EPS for the next financial year. We see both of these companies as having a number of very attractive characteristics, which are a core part of our quality assessment of them. We think they have both got very strong and aligned management teams. They've both got strong balance sheets. They are in a net cash position.
They make a very high return on equity, and we think they've got terrific long-term growth potential. That is the quality and the growth side, but an important part of our investment process is always not buying at any price. The valuation that we buy at needs to make sense. After following these companies for a number of years, we decided to add both ProMedicus and TechnologyOne to the portfolio in February and March this year, and that was because the market sell-off of growth stocks gave us the opportunity to buy them at what we thought was a reasonable valuation. Again, early days, but pleasingly, both have already added good value to the portfolio. Turning now to gold. Gold has been one of the biggest stories in investment markets over the last few years.
A number of factors, such as government debt levels, as well as geopolitical tensions, have pushed the gold price up significantly, and that has made gold equity some of the best performers on the local share market in recent years. In recent years, AFIC has not owned any gold companies, but during the last year, we'd earmarked this sector for the portfolio as long as we could buy after identifying high-quality companies that we could add to the portfolio at attractive valuations.
The research that the team did identified two companies in particular in the large-cap space, being Newmont Corporation and Evolution Mining, and identified them as being very appropriate for our portfolios. When gold equities sold off in July this year, so only a few months ago, that gave us the opportunity to buy both of them for the portfolio.
In our view, both Newmont and Evolution are very well managed. They have high-quality assets, in particular being low-cost, large mines that are predominantly in stable locations such as Australia, Canada, and the U.S., and both have very strong balance sheets. They're both net cash. At current gold prices, both Newmont and Evolution are extremely profitable, which is the information that we show here on the charts. So in the case of Newmont, they're set to make around $13 billion in operating cash flow for their December end financial year 2026 result. For Evolution, they reported AUD 2.6 billion of operating cash flow for their June end financial year 2026. We think both these companies are using this significant cash flow in a very sensible way.
They are returning some to shareholders in the form of dividends and share buybacks in the case of Newmont, and fully franked dividends in the case of Evolution. As well as that, they continue to invest in the existing portfolio to set themselves up to continue to deliver long-term growth and returns. So far, it's been a relatively, obviously, new investment in gold, but for the portfolio, but it has been well timed in terms of adding value, and we think it really improves the quality and diversification for our portfolio. Just to touch quickly on some other stock purchases that we have made in recent times, we have added to our positions in retail companies, JB Hi-Fi and Sigma, as well as the investment platforms HUB24 and Netwealth.
Our biggest purchase over the last year has been buying back AFIC shares in the form of the share buyback that we have spoken about. Just rounding out the key transactions and portfolio activity with a few quick comments on the selling, which of course has funded the buying activity that we have just run through.
Basically, we've trimmed some holdings based largely on valuation and position sizes, and we've exited four companies largely on quality considerations. The trimming of NAB and Westpac was done much earlier in the year at what we saw as very full prices at the time. The BHP trimming was done as a result of some call option exercises after the share price performed very strongly. The Brambles and James Hardie position sizes were reduced, and that was based on our updated view of these companies' prospects.
In the case of Ampol, it's been a very good performer recently, but we think the long-term challenges to their business remain, and hence we have reduced this position into the current strength. The stocks on the right-hand side that were complete disposals were all smaller positions. None were previously in AFIC's top 25 holdings. We sold out of Sonic Healthcare, given our strong preference in the healthcare space for what we think are higher quality, higher growth companies like CSL, Cochlear, ResMed, and Fisher & Paykel Healthcare. Plus, we do think Sonic will struggle to meaningfully grow the dividend from current levels. For Worley, PEXA, and IDP, each of those three companies have been very disappointing investments for us, and we decided to fully exit the position given our original investment case had not played out.
Before I hand over to Winston Chong, I am just going to give a quick update on the international strategy and portfolio that Craig Drummond mentioned earlier. Even though a separate listing of the international portfolio has been shelved for now, we do retain some exposure to international equities within AFIC. The portfolio totaled AUD 157 million at the end of August, which represented 1.6% of AFIC's total portfolio. The portfolio at that time owned 20 stocks, with the biggest positions being Schneider Electric, Amazon, and Microsoft.
The portfolio is managed by Andrew Porter and Brock, and both of them are here today to answer any questions you might have on international later. With that update on the portfolio, I will now pass over to Winston Chong, and he is going to cover some of the key themes from the recent profit reporting season.
Thank you, Brett McNeill, and good morning, everyone. With reporting season wrapping up just over a month ago, we would like to share some of our themes that we are observing and some color on how the portfolio is positioned. The first theme is that some of the strongest share price moves we saw during reporting season were driven by relief rallies. That is stocks like CSL and Cochlear, which moved strongly on the back of the market's relief that results were not as bad as feared. This as opposed to strong underlying earnings upgrades.
Both CSL and Cochlear have been a drag on AFIC's portfolio performance in recent years. While it would have been easy to give up on them at the bottom, deciding to stick with them when the market was at maximum negativity ended up being the right decision for the portfolio.
Secondly, the consumer has come under the spotlight of late, with a number of negative trading updates from discretionary retailers as consumers battle with the impact of higher oil prices, inflation, and rates, preferencing spend on staples instead. In that environment, our preference is to be in the highest quality, lowest cost retailers with strong balance sheets, such as the likes of JB Hi-Fi and Wesfarmers. Softness has also been visible in the banking sector as property prices have rolled and mortgage application volumes declined after the federal budget tax changes.
That said, they appear to have stabilized for now, with the major banks now forecasting modest system credit growth for next year. Thirdly, corporate activity has been another feature of this reporting season, with a number of bids for companies in the last couple of months. This includes two smaller portfolio companies, Cleanaway and Equity Trustees, receiving bids.
Both outcomes are still unknown and are unfolding, with Cleanaway in due diligence and Equity Trustees rejecting their proposal but leaving the door open for better offers. Lastly, and importantly, we saw dividend growth that was good across the market, and I'll touch on this on the next slide. This chart shows the dividends from the 10 largest portfolio holdings that reported in August.
As you can see, dividend growth was very strong across the board, but especially buoyed by resources stocks like BHP, whose dividend was up 50% during the year. But also some very strong, solid growth from blue-chip industrials like Woolworths and Telstra that grew dividends double digits, and solid growth from Wesfarmers, Transurban, and CBA. CSL's dividend was down 8%, and whilst negative, fell a lot less than what the share price suggested it might earlier in the year.
This good growth in dividends has, on average, been slightly ahead of our expectations and provides a good setup for our operating income in FY 2027. Overall, a mixed reporting season, some weakness in the consumer, but also good to see some fundamental valuation come to the fore a bit through some of these relief rallies and takeover bids. And importantly, good to see a solid period of dividend growth for the portfolio. And with that, I'll hand back to Brett McNeill.
Thanks, Winston Chong. To finish this section of the presentation, we have just got a slide that shows a snapshot of the AFIC portfolio as at the end of August. The portfolio value of AUD 9.9 billion was spread across 59 stocks, and it equated to a net tangible asset backing per share of AUD 8.06. As you know, the franking credit reserves that Andrew Porter talked through are not part of that NTA. They would be valued on top of that. Overall, we're very confident that we are well-positioned across the portfolio and quality companies, with BHP being the largest position in the portfolio. Commonwealth Bank and Wesfarmers remain top 10 holdings for us, with the most recent trimming that we did being some months ago and at prices well above current levels.
CSL, that Winston Chong mentioned, remains a top five holding, given that we did maintain our position and thankfully benefited from the very strong rebound that it's had in recent months. Overall, financial year 2027 we think has started well for AFIC, particularly in terms of our dividend income that we received from the companies in the investment portfolio, but also our recent investment performance. Portfolio strategy continues to be focused on adding quality companies at attractive valuations, and in this context, buying back AFIC shares remains a strong consideration at current levels. With that, thank you very much for your attention, and I will now pass back to Craig.
Thank you, Alison Gibson, Andrew Porter, Brett McNeill, and Winston Chong. I would now like to invite questions from shareholders. For those in the room, we have microphones available, and if shareholders could please state their name when addressing the meeting and ask all questions through the chair, that would be appreciated. We have had a number of pre-submitted questions, and we'll be addressing those questions before moving to the questions from the floor and indeed online. Claire Aitchison, do we have any questions on the financial statements?
We do, Chair. Sorry, hope you can hear me. We've had a number of questions on performance over the time frames of one, three, five, and 10 years and what the board and management team are doing to address this.
Thank you. I think we're obviously very conscious of the performance over a five- to 10-year time frame, and I think you've seen from the presentations today we have addressed our disappointment on all of your behalf of performance over the last 12 months. But I think you've also heard from Alison Gibson and Brett McNeill about some of the changes that we are proposing to make. I wasn't intending to make any additional comment on performance because I think we've worked through that in the presentations. But your board is very conscious of performance, and it is an issue that we are constantly discussing with management.
We've also had multiple questions on the payment of quarterly dividends, with many people asking us to pay quarterly dividends.
I think those questions are now probably somewhat secondary, given the announcement today that we have moved to the payment of secondary dividends, with the first payment in November.
Is the board reviewing how conviction is sized when lagging holdings are added to, when calls are written over a position that is working?
The board, through the investment committee, is responsible for approving the transactions that are brought to the investment committee by the investment team. As non-executive directors, our role is to review the policies and procedures that the executive and the investment team have in place and assess their effectiveness. The investment team carry out the investment research and make all stock selections.
As Alison Gibson mentioned, she spent the first few months reviewing the structure of the team and the investment processes, and you've heard about some of the improvements that she and the team are making. I wanted to be clear, this question says, "What is the board doing around investments?" And the board does not select the stocks. That is for the investment team. We review the governance and the policies and procedures, and risk management around those stock selections.
What impact do you see the ETFs have on the performance of the Australian market, and how will AFIC differentiate itself from ETFs? Just to follow up, why should a new investor buy AFIC rather than an ETF?
I might pass to Alison Gibson for that.
Thanks, Craig Drummond. I talked earlier about the rise of passive index investing and the growth of ETFs in the market, and the impact that it's having. It has meant that a rising share of money is allocated to companies according to their size in the index, rather than their fundamentals. That supported the valuations of the largest companies. In recent years, it's made it harder for active valuation conscious investors to keep pace with the index. Over the long term, we believe that valuations are ultimately driven by company earnings and quality, and that's, as you've heard today, where our research is focused. I do believe that AFIC offers a compelling investment opportunity for investors. We provide an actively managed portfolio at a low cost, and with no external fees.
The LIC structure in particular, relative to an ETF, does enable us to retain profits and franking credit reserves, as I talked about earlier, and that steady stream of fully franked dividends over time. We've clearly demonstrated today that we' re looking to pay out those fully franked dividends to shareholders, as we know they're important. Thanks, Craig Drummond.
Chairman, we've had several questions on how the board handles potential conflicts of interest in our investments in other LICs, including the company's participation in the AUI, DUI scheme of arrangement.
Thanks, Claire Aitchison. The board and the investment committee have robust processes in place to manage any potential conflicts of interest, and have done for many years. Directors disclose their interest at each board meeting, and will recuse themself on any discussion on stocks where there is a potential conflict of interest. At the very least, directors with an interest in a particular security, as a non-executive director of another company, do not participate in the discussion, and we have on occasion asked directors to leave the meeting to ensure a full and frank discussion is had with the team. On the AUI, DUI situation in particular, DUI has been a longstanding holding of AFIC. It was bought when an attractive opportunity presented itself many, many years ago, and has provided an attractive yield.
Like many LICs, DUI was trading at a significant discount to NTA prior to its merger with AUI. AFIC received AUI shares as a result of the merger with DUI, and the holding will continue to be assessed through the normal investment processes. As chairman of the largest shareholder of AUI, I recused myself from any decision and any discussion in relation to the AUI, DUI scheme of arrangement, which I was under normal and usual conflicts processes the company follows, I followed to the letter of the law.
The investment team made the decision based on the investment merits at the time of that merger. To be very clear, I think for this shareholder who's asked the question, AFIC didn't actually buy a stake in AUI. It already had a stake in DUI, and it was simply receiving AUI scrip for its DUI holding.
Chairman, we've also had several questions regarding the on-market share buyback, including what level would cause the board to materially increase the share buyback, and how do we assess buying back shares against buying portfolio companies?
I might ask Brett McNeill, given Brett's making the investment decisions here.
Sure. Thanks, Craig Drummond. It follows on from the capital management strategy being discussed and decided between the investment team, and obviously at the board level, and once we've got that like we have, then it really becomes an investment decision. The considerations for further share buybacks really involve an assessment of where the AFIC share price is trading relative to the net tangible asset backing at the time. That's the key one. We also need to take into account other factors such as market levels at the time.
Other portfolio priorities in terms of other stocks we intend to buy, our funding position, which is why it's a decision really for not only myself and Winston Chong, but with Alison Gibson and Andrew's involvement there as well, given all those factors. With all of that in the mix, obviously we have judged the buyback to be a very compelling investment for the AFIC portfolio over the last year, given especially that discount to the net tangible asset backing. From here, we'll continue to assess it in the same way. We obviously made some comments about how we consider it to still be a very live option, compelling at current levels.
Thanks, Brett McNeill. Chairman, could the board outline whether this is a year to go further on selling holdings such as Commonwealth Bank and Wesfarmers, applying the after-tax proceeds to a larger special dividend prior to any changes to CGT legislation?
We have provided a larger special dividend today. In terms of the investment decision, would we sell more Commonwealth Bank and Wesfarmers, as an example, which would, in all likelihood, generate substantial capital gains? I'll pass to my colleague, Brett McNeill.
Yeah. Thanks, Craig Drummond. It will always be driven by a portfolio decision. We are never going to look to sell something to generate a large capital gain just so we can pay out a special dividend. The special dividend is the outcome of it to distribute the franking credits and the gains in a timely manner to shareholders. In regards to those two stocks, the majority of the selling was done over a year ago, so it was a big part of the financial year 2025 result. Over 12 months ago. We've continued to trim a bit of CommBank and Wesfarmers in the last 12 months, but not in recent months. That' s why I made the comment earlier that the last trimming we did of CBA and Wesfarmers was done at share prices well above current levels.
But I think it's fair to say whether it is those two stocks or any others, we clearly have the ability and the willingness to distribute any realized capital gains and franking credits in a timely manner. I think that is the key.
Thank you. Chairman, can you explain the growing discount to NTA, and what is the company doing about it, as there will be a drift of investors ultimately if nothing is done?
I think we've probably covered that topic a fair bit today. Alison covered it in her presentation. We obviously announced additional dividends today. Brett McNeill has talked about the buyback. I think Alison Gibson also made mention of performance clearly is very important, and communication is very important. So I think we have addressed that. But it is a function for all LICs in the market at this point in time.
Previously, the company's goal included beating the benchmark index over time. I see this is not discussed in the annual report or update to shareholders. Is this an avoidance tactic, as the company has not met this target? And what is management and the board doing about rectifying this aspect of underperformance?
I might pass this one to Alison Gibson. Thank you.
Thanks, Craig Drummond. The company does seek to generate attractive returns over the long term. While we have outperformed the index over the long term, as you saw on the charts, the shorter-term numbers have been disappointing, and we've talked to that in the presentation. Those shorter-term numbers have dragged down the longer-term performance numbers. It's something that we are very conscious of and a real focus of mine and the team, and we've talked to some of the improvements we are making to deliver improved performance over the long term.
Chairman, the total dividend was AUD 0.315, but EPS was AUD 0.2342. How should shareholders think about the sustainable ordinary dividend level versus distribution supported by realized capital gains and accumulated franking credits?
Well, I think you should think about the dividend. The ordinary dividend was AUD 0.265 versus AUD 0.235 ordinary EPS. There was a AUD 0.05 special paid last year. We do say in our release again today that in announcing a special dividend that there will be variability, and that is the nature of a special dividend. There will be variability, but we will be very focused on making sure that the ordinary dividend is stable to growing, which is our objective.
BHP now represents 11.7% of the portfolio. Given AFIC has no formal maximum stock or sector limits, what internal risk thresholds does the investment committee use before concentration becomes excessive?
Alison Gibson or Brett McNeill, would you like to cover that one?
Yeah, I can start if you like, Craig Drummond. It's a combination of looking at it the absolute weighting of the portfolio, which, yeah, is around 11%, but also the relative position. It's a big weighting in the benchmark. The key for us at the stock level, the bottom-up analysis, is we rate the quality of BHP very highly at the moment. We think the company's extremely well-placed. Very smooth management transition to Brandon Craig, and we've met with him, and he was very impressive. The chair as well, being Ross McEwan, who's preaching capital discipline at this point in time for BHP, which I think is very welcome. The balance sheet's extremely strong, much stronger than in previous strong commodity cycles. The portfolio's in great shape, particularly the copper and iron ore. And returns continue to be very strong.
We always need to, yeah, be mindful of that absolute weight, but I think taking into account the relative weight too, but with the quality overall.
Okay.
Thanks, Brett McNeill. Chairman, what does the board plan to do in view of the economic and political problems which affect many of the holdings of AFIC?
Thanks, Claire Aitchison. Look, the portfolio is diversified and, as you've heard today, continues to be focused on quality companies with strong balance sheets and competitive positions, which we believe are the best place to manage economic and political uncertainty. The investment community monitors the risk closely, and as a long-term investor with no need to sell to meet any redemptions, AFIC can use periods of volatility to add to high-quality companies at attractive prices. I think the environment is very uncertain, and we've seen a big uplift in long-term interest rates. But we do believe that by being involved in high-quality companies that are managed incredibly well and have got strong balance sheets, leaves us best placed to manage that uncertain economic environment.
Is the calculation of the share price premium to discount to NTA, which for those following along is figure seven in the annual review, based on pre-tax NTA per share or post-tax NTA, and which of the two measures is appropriate for shareholders to consider and why?
Okay. Andrew Porter.
Thank you, Chairman. It's a good question. The premium discount figure is based on the pre-tax NTA. When I say pre-tax, it's before the unrealized tax on shares we have not sold yet. It is after tax that we have realized. That's consistent with the weekly and monthly ASX releases. Both measures are published monthly. The pre-tax NTA is the industry standard, and we believe it appropriate for a long-term investor like AFIC, which does not intend to sell the whole portfolio. It's consistent with the market. It's what people normally think of their shares as being valued.
Because we are not intending to sell, the tax on the unrealized gains is unlikely to be paid in full. The post-tax NTA is essentially the balance sheet figure and shows what would happen if we did sell all of the portfolio. That' s not the intention.
Thank you, Andrew Porter. Chairman, we have a shareholder who is suggesting that you have the AGM in a different city each year. This would be more equitable and enable more people to attend who cannot. Have you considered putting this idea into practice rather than information meetings? I would like to know your thoughts on this.
I am going to hand to my colleague who organizes the AGMs, Matthew Rowe.
Oh, yeah. Well, firstly, thank you for the suggestion. Obviously stating the obvious, this AGM is hybrid, which allows shareholders to join from any location, and ask questions. We also, in addition to the AGM, we have two results meetings via webinar, and we go around the country to all the capital cities in the Investor Roadshow. When considering the AGM, we' re very mindful of cost, as Andrew and Alison has mentioned, so keeping our costs down and the additional travel costs, accommodation costs for not only the board, who are mostly based in Melbourne, but all the staff that have to attend. So that' s a primary driver, is just keeping our costs down.
Thanks, Matthew Rowe.
We've got two questions.
That was a no, was it? Just checking.
We'll take it under advice.
Yeah. Okay. Just checking.
Then we've got two questions regarding the exit of WiseTech Global and Sonic Healthcare. These companies have experienced large declines in their share prices in recent times. The questions, one, what prices were these companies sold for, and how close to their respective 52-week low prices were they sold when sold? Sorry. And two, were these companies sold for a capital loss?
Brett McNeill.
Sure. Thanks, Craig Drummond. Yeah. We do not give specific details on individual transactions, but just because the question has been asked, to give a bit of flavor on it. Sonic, I covered in the presentation. We sold it in recent months, and we did sell it at prices thankfully that are above the current share price. But again, that is early days. WiseTech Global we sold late last year. We exited that from the portfolio, and that was based really on quality considerations, particularly around the people and some other elements of the business.
Because of the timing, having sold that late last year, again, that was sold at a share price that is significantly above the current share price. Then in terms of the tax impact of that, combined, those two positions haven't had a material impact on our overall realized capital gain position.
Thank you. Thanks, Brett McNeill. Chairman, we have also had several questions on the performance of the international portfolio and the stocks currently held within the portfolio. Would you like to make some comments?
Sure. Thanks, Claire Aitchison. As noted in the presentation, the international portfolio represents 1.6% of the total portfolio of AFIC. The recent short-term performance has been slightly below the MSCI, M-S-C-I, largely due to the outperformance of particular sectors such as the AI-driven memory and storage sectors. But the longer-term numbers still remain ahead of the ASX 200, and over the last five years, for example, our international portfolio is up 8.5% versus the ASX 200 up 7.8%. I think we had in our presentation today, and it's available online, listed all of the stocks and the nature of the companies that we invest in in that international portfolio.
Thank you. We've had three questions on the company's approach to ESG, including how do we use our voting power to influence companies on their climate change policies? Do we see ourselves as an ethical portfolio, given our investments in BHP, Rio Tinto, and the big banks? And do we invest in any ventures that address climate change?
Thank you, Claire Aitchison. Alison Gibson, I might pass to you on that one.
Thank you, and thank you for raising the questions. Environmental, social, and governance factors, including climate, are considered in the investment framework by the investment team, and we engage with and vote on the companies that we own. AFIC isn't an ethical or ESG-screened fund and doesn't exclude particular sectors. Our objectives are to pay stable to growing ordinary dividends over time and to provide attractive total returns from a diversified portfolio of Australian companies. It is worth noting, though, that the carbon intensity of AFIC's portfolio is below that of the S&P/ASX 200 index.
Thanks, Alison Gibson. Chairman, can you please include a short glossary of key terms and communicate in a way that is accessible to the average English reader?
That's a fair question. Maybe it's because we're all finance people, and we take things for granted. I accept the feedback, and we will take that feedback on board to provide a clearer and simplified language in our future shareholder communications. We take that on board. Thank you for that feedback.
Why has the AFIC share price remained dormant for years despite rising U.S. share prices?
Well, as you, I think all know, AFIC predominantly invests in Australian companies, so its performance is driven by the Australian market rather than that of the U.S. share market. Over the last year, for example, the ASX 200 Industrials Accumulation Index, that's price plus dividend, has declined by 7.1%. It might not seem so, but that's actually the numbers. The ASX 200 Industrials Accumulation Index is down by 7.1% over the past year. So the share price of AFIC has also been affected at times in moving over the last few years from a small premium to NTA to a 14%-15% discount. So they're the two big factors. I think through COVID, we might have got to a 10% plus premium to NTA, and now we're at about a 13% or 14% discount.
That is a 20%+ move, plus, as I said, the Australian share market, certainly ex-gold and small resource companies, has noticeably underperformed the U.S. stock market.
Okay. AFIC is 98 years old. For all these years, it has been audited by PwC and its prior partners. Surely it is time for a change. In the U.K., the audit firm changes every 10 years.
Andrew Porter.
Thank you, Claire Aitchison. Yes, AFIC is 98 years old. I'm glad to say that our audit partner is not 98 years old. She is here in the front. Under Australian law, the lead audit partner must rotate every five years. We believe that does protect the independence of the auditor. We have a different audit partner every five years. The audit committee does review the independence, performance, and fees of the auditor each year, and it is also the plan to carry out a comprehensive review of the auditor in the near future, as recommended by the new ASX Corporate Governance Guidelines.
Thank you, Andrew Porter. That is it for the-
That is it.
pre-submitted.
Claire Aitchison, can we perhaps go online and see if there are any questions in relation to financial statements or presentation that we have discussed today?
We do. We also have a number of online questions. This shareholder has said, "In my view, the AI is a classic bubble, and a great deal of shareholder wealth will disappear. Can you assure me that AFIC will act with great caution and not get carried away by the hype and by overpriced high-risk shares in coming neo cloud ASX floats?
Every investment will be looked upon on its merits, and if that is a reference to Firmus, we're not going to comment on individual securities. Like everyone in the crowd here and online, we' re all educating ourselves and continuing to educate ourselves on AI, and certainly from a board's perspective, how we govern our executive and our investment team. For example, right now, I am about week five of an eight-week course online. This is my third course I've done on AI, and the whole market is moving so quickly. You need to continue, whether it is board management, the general population, you need to continue to educate yourself about those shifts. Brett McNeill, did you want to just make a comment in relation to AI investment?
Yeah, sure, Craig Drummond. Like any investment sector and theme, there's going to be good companies to get exposure to the theme and bad companies, and that's obviously a big part of our job. I'd say you look at what's in the portfolio at the moment, a company like Goodman Group, who builds data centers. So it's almost a bit of the picks and shovels play for the AI boom. The company has long-standing customer relationships, a high-quality valuable land bank, and expertise in building these facilities, which has been born out of the group's long-standing history in developing industrial sheds. Backing the people is a big part of it and the balance sheet, and that's why we own that company.
Other companies that might be looking to do the same, so these unnamed companies that might be launching IPOs in the data center space, we'd look at it through the same lens and assessment of the quality, the reliability of the revenue streams that are being forecast. We much prefer the stocks that we own at the moment than probably going into any new ones where we might not have a good view of the people.
Thanks, Brett McNeill.
Chairman, why wasn't Tom Palmer put up for election today as opposed to being announced today and then serving 12 months without a mandate? Did we use a recruitment firm to source him, or was it a director network job? Also, thank you to David Peever for his 13 years of service. It's always helpful for investors to have access to some exit perspectives from retiring independent directors. Could David Peever please comment on what he regards as the best two decisions AFIC made during his time on the board, and does he have any regrets?
Look, I'm happy to answer the first couple. I think it is unfair on David Peever to ask that question, but I am happy to give David Peever a microphone in a moment to chat about his time in an exit sense. I think putting him on the spot to ask what may be his best two decisions over the last 13 years is a little unfair. Let me talk about Tom Palmer. It was purely the circumstances of Tom's availability, and that is why Tom Palmer was appointed from the 12th of October. Nothing more, nothing less. Did we use a recruitment firm? No, we did not. There was a bunch of people that knew of Tom Palmer and knew of Tom's capability, and I think he is now absolutely outstanding candidate for our board.
Has been Chief Executive for six years of one of the largest global gold companies in the world, and having 20 years on Rio Tinto. Given David's expertise, another Rio Tinto CEO, it was just a perfect match for us. David Peever, do you want to just talk briefly about that period?
Yeah. Thank you, Craig Drummond, and thanks for the question. I would really have to think a lot about the best two decisions over 13 years, so I will happily discuss it over a cup of tea when I have had more time to think about it. I will say, first of all, in relation to Tom Palmer, I knew him, not well, but knew of him in Rio Tinto. He is a little bit younger than I' m, so he has got a good path forward in terms of his involvement with AFIC. He is an outstanding person and will bring lots of experience and expertise and also into base metals, which I didn't operate extensively in. He brings an awful lot to this board, and I commend him to you.
From my own perspective, it's been a real privilege to have served the shareholders over the last 13 years, and to have worked with all of the directors I have had the privilege over that time to have worked with and the executive team as well. From what I see today, and as a shareholder now, not a director, I feel that the business is very well-placed in terms of its people, its board, of course, and we are seeing that in the decisions that are being made. I' m quite confident about the trajectory of the business from here. Nevertheless, as a shareholder, will watch it with great interest, as you all do. Again, thank you all very much for the opportunity to serve AFIC over this period.
Thanks, David Peever. Claire Aitchison, back to you.
Thank you. Chairman, net profit after tax increased by 3%, while net profit per share increased by 3.1%. Since the number of shares decreased by 1.7%, the above two numbers seem inconsistent, and it should be 3% + 1.67%, which is 4.67%. What's going on here?
I will go straight to the CFO.
Well, first of all, thank you very much for reading the annual report. I should note to my team there, I told you somebody read it. It is a good question, and the answer, for those who are following at home, is in note A5, is that actually, the profit per share is calculated on the weighted average number of shares. So that is affected by when you do the DRP and when you do the buyback. If you adjust for that, the figures would be about 4.7%.
Thank you, Andrew Porter. Claire Aitchison.
Thanks, Andrew Porter . Could you advise how the increase in global long-term interest rate affects the company's investment portfolio, if at all?
So we've seen the 10-year bond rate in the U.S. go recently from a low 4%- 5.3% last night, which is a bit disturbing and reflects hotter than desired economic activity and probably, as we're seeing in Australia, slightly higher than expected inflation outcomes. That sets up clearly higher borrowing costs for everyone across the economy and will, generally speaking, down the track lead to a slower economic activity. Brett McNeill, do you want to talk about it in the context of the portfolio?
Sure. Thanks, Craig Drummond. First and foremost, it's a market impact. The rise in interest rates and bond yields should theoretically flow through to how investors value equities. In that context, with the rise in bond yields that Craig Drummond mentioned, it is somewhat surprising to us that the share market, both here and also the U.S., has held up as well as it has. Part of it, I think particularly the U.S., has been the fixation on artificial intelligence and the boom.
Bring it back to companies, the key thing where we should be capturing that and addressing it in our investment process through the quality framework is on strong balance sheets. An increase in debt costs can affect the whole market and theoretically impacts every company. We want to be somewhat insulated by being in companies that have strong balance sheets.
You look at the ones that have net cash balance sheets actually benefit from this. They'll get a higher return on their money, and we want to be avoiding, clearly, those companies that have significant borrowings and high gearing ratios that' ll be the most impacted by that. Then you look at the flow-on impacts into certain parts of the economy.
The housing market here is one that we have talked about, but also sectors like private credit, and we are seeing a bit of a shakeout in that at the moment. Pleasingly, we do not have any pure exposures to that type of the market. But I think it will be something that becomes much more of a focus for the market over the next six months. Into result season next year at current levels, because, theoretically, it should have an impact on market valuations.
Thanks, Brett McNeill. Chairman, the CEO mentioned AFIC's investment process. Do you think that a systematic investing or mathematical equities approach would be beneficial while keeping AFIC's current investment aims?
Alison Gibson, do you want to cover that? Probably more in your field.
Yes. Thanks, Craig Drummond. As we've talked today, we really think our focus on quality companies has delivered outperformance over the long term. Brett McNeill has talked to a number of enhancements to the investment process that he's made, and the team do look at quantitative factors when making their investment recommendations. Just recently, the team has been embracing AI to provide additional insights and analysis. I don't think a complete shift towards that sort of systematic mathematical investing, which is the flavor of the month at the moment, I don't think that is recommended. Our approach, which the team have talked to extensively on focusing on quality companies, has indeed served shareholders very well over the long term.
Thanks, Alison Gibson. We've had a shareholder here who's asked four questions and has requested that we ask them in full with no editing, so we will ensure to do that. The first question, or comment: Thank you for offering a best practice hybrid AGM today, and also for respecting the AGM process by spacing your group's four AGMs over two days, with plenty of time for debate and engagement. This is in stark contrast to Geoff Wilson's WAM Stable, which is running nine LIC AGMs on the one day, November 18, spaced 45 minutes apart. However, you declined to disclose the proxy position early to the ASX, along with the formal addresses, and are yet to embrace headcount disclosure in the poll results, which many now do. Why won't you do this?
Well, I think what we're doing is best practice currently, and I think that the very vast majority of corporations in this country do that. We are respectful of ensuring that we have a transparent process, and that's why we have spaced out our AGMs, and we give all shareholders, and today's a good example. We're reading out every question, whether it's online, pre-submitted, whereas we could address those questions with those individuals offline. We think it's better, from a transparency point of view, to read every question out and let all shareholders have exposure to those. I don't think, Matthew Rowe, unless there's anything that I've missed on that, I think what we are doing is best practice and is in line with-
I believe so, yes.
I believe in line with best practice amongst all the major corporations in Australia.
Okay. Thank you. At the 2022 AFIC AGM, yourself, who was then an AFIC director and not chair, said that being president of Geelong Football Club only took up one day a week of your time, and AFIC and Transurban were the only other board gigs. Since then, you have become chair of The Ian Potter Foundation, become the chair of AFIC, joined the Ramsay Health Care Board, and taken over as president of the Australian Football League in March this year. How many days a week has the Australian Football League presidency taken up over the past six months, and how can you possibly sustain this workload going forward?
Well, can I just say, in the last 12 months, I have not missed a scheduled or unscheduled meeting of any of the organizations that I am involved in. Personally, while I'm fit and healthy, well, you can be the judge of that, but while I'm fit and healthy, I am not in any way feeling out of control or under a position where I cannot cope with the workload I have got. In fact, I still continue to get my golf game once a week, and feel very much under control. Look, it's a fair question and I respect the question, and it is something that all of us in our lives need to make sure that we can cope with our workloads.
I don't disrespect the question, I think it is a fair question and I will continue to monitor my ability to do the roles that I' m currently responsible for. I want to assure you that I have currently no problems in dealing with my workload.
Chairman, having spent five years at HESTA, which is active and transparent when it comes to voting against board-endorsed resolutions of public company AGMs, is new CEO Alison Gibson planning any changes to AFIC's secretive and conservative don't rock the boat approach, which is to keep secret its voting positions and to rarely upset a company by voting against? It's early days, but does Alison Gibson think AFIC will vote against more resolutions this AGM season than what the AFIC stable did in 2025? Does Alison Gibson personally support non-disclosure?
I'll ask Alison Gibson to comment in a moment, but can I say that historically what AFIC has chosen to do is where we like the investment merits of a company and the quality of a company, but we have some differences of opinions on a couple of matters, we would prefer to stay invested and work with the company management and board to make those relevant changes. That's the approach we've taken historically. We do, however, we do vote against elements of resolutions. We don't vote 100% in accordance, but we meet with company boards, company executives, our investment team do, and make their point relevant. But Alison Gibson , I might pass to you for your view on this.
Thanks, Craig Drummond. Yes, I worked with this business for 10 years, so it's probably no surprise that I'm going to concur with Craig's approach there and his comments. We do actively engage with the companies and the boards. One of the privileges that we have in this business is we get to engage with these management teams and the boards around all the issues, and we take that very seriously, our role as stewards of your capital. So we' re very mindful in the voting that we do. The transparency element, it's something I'll take on board that feedback, but we do focus very much on doing the right thing for our shareholders in voting their shares.
Thank you.
Thanks, Alison Gibson. AFIC's international portfolio seems not to include Apple but does include NVIDIA and Microsoft. Current AI competition is between cloud AI with NVIDIA and Microsoft, and on-device AI, which Apple seems most likely to capture. On-device AI will be much more successful than cloud AI, just as past computing has been more successful with smartphones, et cetera, than big computers, even though both are needed.
This is way beyond my capability, so I am going to ask Andrew Sutherland, who heads our international portfolio, to respond.
Yeah, thank you very much for the question. That is an excellent question, I must say. We really took a decision to try to concentrate our portfolio around six months ago in the companies that we think have the best balance of valuation and long-term growth prospects. In the case of Apple, it's interesting. There is no doubt it is a fabulous business long term. I'm sure a lot of people here have got Apple devices in their pockets, which they would really reluctantly step away from. A lot of this comes down to valuation. Apple is trading at the highest multiple it's traded at effectively in its history at the moment, and a lot of this reflects the positivity that the question was discussing, I guess, about on-device AI.
The companies that we're exposed to do have a really strong growth outlook with respect to AI, but they're trading at the lowest valuations that they've traded at historically. We try to balance our valuation with the growth prospects of the companies.
Thanks, Andrew Sutherland.
Thanks, Andrew Sutherland. Chairman, I have two questions from a shareholder. I will ask them separately. First one being call option writing. Given the portfolio manager's track record in option writing in Djerriwarrh, is it likely that AFIC call option writing activities will increase over time?
Brett McNeill?
Sure. Thanks, Claire Aitchison. Only marginally. Compared to that, Djerriwarrh has a primary objective of delivering enhanced yield versus the market, and a big part of that is the option income from the option-writing strategies. AFIC has obviously got stable to growing dividends, but with attractive total returns alongside that.
We think we can do a little bit more on the option side, and you saw that in the financial year 2026 result, where the profit from option income was up to AUD 8 million. But that's small in the context of AFIC's overall revenue and profit, and so I would not expect it to increase meaningfully from there over time, noting that it will be dependent on market conditions, obviously, and will be a little bit variable. But yeah, it is not going to increase in a meaningful way.
Thanks, Brett McNeill. Will AFIC increase investment in major global AI companies?
I think the answer to that is it will be dependent on valuation and price at the time. I think it's fair to say we believe that artificial intelligence is here to stay. It is going to be a value-accretive strategy, but it comes down to valuation. Andrew Sutherland or Brock, is there anything you would like to say?
Yeah, thanks. We assess all these companies on their merits. I think a really interesting one coming up will be the Anthropic IPO. We have not seen the financials around that business. But at the moment, we are really invested or concentrated in the AI infrastructure companies. So this is Microsoft and Amazon and also NVIDIA, which really provides the leading-edge AI hardware, has a dominant position. It is really hard to see that position being disrupted. So yeah, we'll assess these companies on their merits. It's always a bottom-up process. Thank you.
Thanks, Andrew Sutherland, and that is all the online questions.
Really? Now we're going to go into the room, so if I can ask you, there is roving mics. Sir, yes. There's a mic coming right up behind you now.
Thanks. Mario Natoli, investor for 30 years, very happy, and us baldies are doing very well, thank you. The question I was going to ask was, how do you think the valuation of shares at 30th June next year is going to affect AFIC?
Affect?
AFIC.
AFIC.
They're going to all be valued, aren't they?
Yes. They do. Fortunately for AFIC itself, of course, our investments are based on market prices, so our investments, like other LICs, will simply be the market price at the end of June. As for other industries I'm telling my children to go out and train to be valuers because I think they're going to be in great demand come the end of June. There will be a time period allowed, I think, for people to do valuations. But in the unlisted space and in property, you're right, it's going to be very difficult. But the larger companies that we invest in that may have that issue internally are already looking towards it and have the skills and capacity, we believe, to meet that requirement.
Thank you, Mr. Chairman. My name's Stephen van Emmerik. I'm the company monitor for the Australian Shareholders' Association for the AFIC-listed companies. Thanks to those that have given their proxy votes to the ASA. Basically, we're voting for, but we're not particularly happy with the portfolio performance or obviously the share price. Welcome the quarterly dividend. Welcome the special dividend.
I note the market's down a way of 1% and the AFI share price is up today, so we live in hope. We value our constructive relationship with AFIC. We get together for a pre-AGM meeting, and these guys are always very, I guess, open and candid, which is great. I think it's a valuable two-way discussion. There have been a heap of questions. I had a heap of questions. I am down to two. I think they have all been asked.
The first question is, AFI's reported shareholder numbers declined materially during FY 2026, continuing a trend since 2022. What factors have contributed to this change? Does the board regard attracting the next generation of long-term retail shareholders as a strategic priority? What can be done differently to achieve this?
Thank you for the question, Stephen van Emmerik. Currently, we have about 144,000 retail shareholders, ostensibly retail shareholders, which is broadly where we were in 2019. What you would possibly understand is through COVID, we saw a significant increase in numbers. The decrease that we have seen over the last couple of years is partly reflected by a whole series of smaller shareholders unwinding positions that they accumulated in the COVID period. Perhaps that is related in part to some cost of living increases.
I think more particularly what we have seen is quite a significant increase in the number of shares that are owned by custodians and nominee accounts, which does disguise the real number of shareholders. We continue to see very healthy participation in the DRP and DSSP, which remains very much steady on where it was right through the last four or five years.
I think it's partly a structural change, where platforms are now becoming a bigger part of the market, and these platforms, through custodians, are accumulating a whole series of what were previously retail shareholdings owned in individual names. I think this is very much a trend around the market.
Yep. Thank you. Good answer. You've got a highly credentialed board, and I note that some of the low-cost LICs like Argo Investments and Australian United Investment Company Limited do not even have a separate portfolio management team, and the board just makes the portfolio decisions. These other LICs have been outperforming AFIC over more recent periods. Given the relatively poor performance of the portfolio, how is the board's expertise used in the portfolio selection process, and could the board add more value?
Well, as I said earlier, Stephen van Emmerik, the board does not make stock selections. The stock selections are made, the research and the selections are made by the investment team, and there is, as Alison Gibson referred to today, there has been some enhancement, and Alison Gibson has brought some fresh perspective. And with Brett McNeill taking over the portfolio at the end of last year, we've got a new portfolio manager and team looking at that process.
But I think it's, from our perspective, I cannot talk about others, but from our perspective, having part-timers, which we are as non-executive directors, making stock calls is not a place I would think would make any sense whatsoever for us. As I said, others may choose to do it differently, but we' ll not be doing that. What the board does is it governs the organization.
It hires, in sense, and sometimes fires CEO, which is the most important thing in many respects a board does. Secondly, it makes sure that we are operating as we say we are operating to the policies and procedures that we have implemented. Thirdly, the board does give flavor through its connections in the marketplace. We know a lot of people. We have all worked in a whole range of businesses over the years, and so we do give that feedback to our investment team. But how stocks are ultimately selected is very much not the board's decision. It is the investment team's decision.
Understand. Thank you.
Any other questions in the room?
There's one down there.
We have one there. Thank you.
My name's Joanna Richardson. Thanks for the presentation from everyone. This may be a relatively uninformed question. Given the potential for what's called artificial intelligence to be quite disruptive How are members of the team learning, and especially what lessons have come from trying to use it for the investment team? Could someone talk, or more than someone to a couple of someones, talk to that, please?
That is very far from an uninformed question. That's an excellent question. Thank you. Brett McNeill, I might pass to you.
Yeah, I'm going to do a double handball. I think it'd be good to hear from the team, like you talked about. The leader in our team in this space has been great so far, has been Brock, who works on the international portfolio with Andrew Porter. I think it'd be really helpful given, yeah, it was a great question to hear from Brock a bit about that.
Yeah, no, great question. Yeah, it's been a pet project of mine for a long time, and the whole team has actually been wrapping their arms around understanding the potential for AI to add value to different industries as well as which industries are being disrupted. There's the investment lens, obviously, but also from the tool perspective, we've been really trying to advance our use of the tools. We've got a few really advanced operators of AI tools around here. I think it's more been a team effort generally, and the approach to learning about AI, everyone's been very supportive of it. So, yeah, it's been really great. Yeah. Come afterward, and we'll talk about it more, but yeah. Thank you.
Yeah, we saw it during the most recent profit reporting season. Some of the stuff that the team worked on was able to generate insights from reports and results that were put out by companies within 10 minutes of that, give us a full report analyzing financials, what has changed versus last time. The scope of it is incredible. We' ve already done, I think, a fair bit, but always lots more to do. We will see where it goes, but it has been very good so far.
I think at a board level is all of boards around Australia, everyone is continuing, as I said earlier in my remarks, to learn how to use and how to govern. We need to be in a position where we understand it, and we can ask the right questions of management because there are also a lot of risks. There are a lot of risks, and AI is not, whether it's Claude, Copilot, Gemini, whatever it' s you are using, it's not always 100% right. We have seen that with some professional services firms that have put reports out to clients, and they have not had a human in the loop. I think having humans always involved in reviewing the AI output is really critical. Yes, sir.
Yeah. Ian McCallister. I have been a shareholder for over 30 years and seen a few annual reports come and go. Regarding transparency and the net tangible asset backing with the pre and post that was and had been for a number of years published, and the changes to the capital gains tax, do we think for transparency reasons that should be now published again? I have heard the answer where you say that that is the common practice now just to do that.
No, sorry. I misspoke if that was the impression that I gave. We'll continue to always publish the pre-tax and the post-tax NTA. Yes.
Okay. Thank you.
Yeah, no change. Yes, sir.
Lincoln D. Bradbury.
Alistair Milham, could you please clarify the distinction between the final and an ordinary dividend and a special dividend?
Sure.
In other words, if had a final dividend of AUD 0.14 and a special of AUD 0.03, what's the difference?
Sure. An ordinary dividend normally is paid from the ordinary operations, the operating cash flows, the earnings per share. You pay an ordinary dividend out of that year's ordinary earnings. A special dividend is, by its very nature, special. It could be, in our case, in AFIC's case, we' re looking to pay out years of accumulated, and particularly in the last two or three years, of accumulated franking credits that we can pay out to shareholders over and above what the annual ordinary earnings would normally sustain.
It is special, and that's why we talk about variability. We're not making a forecast post FY 2027. We're just making a forecast for FY 2027. There'll be a AUD 0.10 special dividend on top of your ordinary dividend. And the ordinary dividend will continue to grow with the ordinary earnings per share in the company.
The special dividend will have more variability around it, depending on how much capital gain that we generate in any particular year or the amount of additional franking that we might generate or may not generate in any particular year. So you should look at and rely specifically on the ordinary dividend as one that will hopefully be stable and continue to grow, and the special will be highly variable depending on, some years it may be zero, some years, like this year, it is AUD 0.10. It'll be dependent on the franking credit balance and whether we have surplus. Any other questions in the room? Yes, sir.
Thank you. Greg Miles. With the excitement of AI, what is the investment team or the board doing to protect against rogue AI? And in your discussions with companies you deal with, are you pushing for them to ensure that their sensitive information is protected against rogue AI?
Good question. I'm going to pass to Andrew Porter in a moment, but we have spent a lot of time and resourcing making sure, to the extent that one can ever make sure of this, that we have our cyber defenses in as good a shape as we possibly can. The one thing I would say, though, is, as we saw with the recent Medibank hack and with pending quantum computing advances, that it's going to be very hard to protect 100% of the time any organization. But we are spending the funding and the time on cyber resilience, and that has been a big focus of the board in the past 12 months. But Andrew Porter, is there anything you would add to that?
Two things only, and I echo all of those sentiments. Firstly, we do use external experts in this area extensively, including 24 by seven monitoring externally of our systems to ensure that nothing is coming in or going out that shouldn't be, or attempting to ensure. Secondly, and we've had internal audits on this, we do not hold ourselves any personal or personally identifiable data on our system. So all of your shareholder data is held by MUFG, and the board asks them to come in every year to look at that in detail. What are they doing to protect your data? What steps are they taking against cybersecurity? So never say never, but it' s something we take very seriously.
Thank you. Yes, sir.
Yeah. Sorry, one additional question. The company did a very large on-market buyback of shares. Did the board look at maybe a shareholder buyback of shares?
As in an off-market buyback?
An off-market buyback with a larger dividend with a smaller-
We've looked at all scenarios, and management continue to bring forward proposition of additional dividends, additional on-market buyback, additional off-market buyback. Doing an off-market buyback does result in a large AUD dollar amount of liquidity leaving the organization at one time, whereas an on-market buyback, we can more readily manage our liquidity and our portfolio in a sensible way. I think that's part of the issue.
I would also note that they changed the tax rules, so we can no longer do an off-market share buyback with those great dividends that companies used to do in the past.
Sure.
That avenue has been closed off by the government.
Thank you. There being no other questions, we' ll now move to the formal resolutions of the meeting. Your directors' recommendations are set out in notice to the meeting, and I can confirm where undirected proxies have been given to me as chairman, I'll vote them in line with the board's recommendations on each agenda item.
Voting today will be conducted by way of a poll on all items of business. Representatives of MUFG Corporate Markets will oversee the conduct of the poll. For those in the room, the reverse of your yellow admission card is your voting paper and instructions. I'll now go through the procedures for filling in the voting papers. In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside each resolution to indicate how you wish to cast your open votes.
Shareholders will need to mark a box beside each resolution to indicate how you wish to cast your votes. When you have finished filling in your voting paper, please lodge it in the ballot boxes that will be available at the end of the meeting. The second agenda item is the resolution to adopt the remuneration report. This is required by the Corporations Act to be considered by shareholders annually and is an advisory resolution only.
The remuneration report can be found in the company's 2028 annual report. Sorry, 2026 annual report. That's Freudian. It's a very detailed report covering the remuneration of directors, the executives, and the investment team. If you have any questions on this item, please submit them now if you have not already done so. We going to do the proxies first? Show the proxies first, or we go to the questions first?
Maybe questions.
Maybe questions.
Questions?
Questions. Thanks, Claire Porter. The online and pre-submitted questions.
Start with the pre-submitted questions. Chairman, we have had a number of questions on the rem report, including the payment of incentives when the AFIC portfolio performance measures are unfavorable, and the use of MER as a performance measure that was impacted by staff changes and the non-vesting of incentives in the prior year.
Thanks, Claire Aitchison. None of the amount that vested for executives came from AFIC's investment performance. A portion did vest because of achieving the earnings and dividend growth metrics and cost management. The annual report has to include the amounts of incentive that invest due to the performance of other LICs, and those LICs actually pay for that percentage, not AFIC. AFIC pays for about 60% of the total incentive that was paid.
For instance, Djerriwarrh outperformed its yield metric, and Mirrabooka outperformed on longer-term investment fundamentals. In addition, there was a personal element, and there is a personal element to incentive payments assessed by the remuneration committee, which are detailed in the rem report, and it is about 20%. The personal component is about 20%, which is covering such measures as management of staff, risk management, personal behaviors, et cetera.
Management expense ratio, or MER, is considered by many shareholders to be an important metric and is a proxy for cost control. The committee retains discretion over the award and any incentive under this measure and considers how cost control is maintained across the year when deciding whether to award any portion of the incentive. The comment about the non-vesting of prior years' incentives was actually, and as Andrew Porter indicated, was a very minor over the reduction in costs in 2026.
It is also important that we consider in a competitive marketplace reasonable incentives, as long as some of those measures, as I indicated, not all measures did not vest. We had measures, as I said, around cost performance, and some of the other LICs on yield and performance justified some incentives. Incentives came in, as you can see from the KMP and are reported about 37% of target. Well down on target, but there was some incentive paid in the year just gone.
Okay, and we've had two questions from a shareholder on the remuneration report. Firstly, why does AFIC deliberately target remuneration above the market median? And why is the former managing director receiving payments after retirement?
So in relation to targeting remuneration at or above the median, the company competes, as I said, for experienced investment professionals in the funds management industry, and remuneration is shared across all LICs, not just AFIC. The MER, and this remuneration gets reflected clearly in the costs of managing the portfolio. As Andrew Porter said, the cost at 14 basis points or AUD 0.14 in every AUD 100 of the portfolio, we believe, continue to remain very reasonable. Why is the former managing director receiving payments after his retirement? Mark Freeman retired on June 30, 2026, after 31 years at the company. As set out in the rem report, the payments he is receiving reflect purely his contractual and statutory obligations on retirement.
Thank you. Why is there a need for nine directors, and are directors being paid by other listed entities?
Following Mark Freeman's retirement, the board now has, as you can see from the folks sitting in front of you, eight directors, seven non-executive directors, and our managing director. Nine were reported in the year, because both Mark Freeman and Alison Gibson served as managing director during that period. The board size reflects the mix of skills and experience that we need. Non-executive fees remain within the cap of AUD 1.25 million in aggregate. In financial year 2026, non-executive fees were unchanged on the financial year 2025.
The managing director is also managing director of Djerriwarrh, Mirrabooka, and AMCIL, and her remuneration is shared across the four companies rather than paid separately. In relation to directors, non-executive directors, for those non-executive directors that do sit on other public company boards, of course, they are paid for their time commitment in other part-time non-executive director roles.
Thank you, Chairman. We have no online questions.
Thank you. Any questions on the remuneration report before I show the voting that we have received so far in the room? No? Okay. I' ll now show the proxies received in respect of this resolution, which are now shown on the screen. Okay. The third agenda item is the resolution to elect Mr. Richard Murray. Richard Murray was elected to the board in January 2024 and is standing for re-election by shareholders today. In accordance with rule 46 of the company's constitution, Richard Murray retires from the board of directors and, being eligible, offers himself for re-election. Richard Murray , would you care to say a few words before I put the motion?
Yeah, I'll just stay here. Well, it is nearly good afternoon, but we are just hanging in for good morning. It' s a real privilege to be on the AFIC board, as Craig mentioned, since January 2024. I do feel like I'm getting my performance review slightly early. Obviously, I have been in retail and professional services for the last 30 years. I am currently the CFO of Sigma Healthcare or Chemist Warehouse, if you are more familiar with that brand, and I have previously been CFO and CEO at JB Hi-Fi, involved with Premier Investments, leading the retail business, and Total Tools. For my sins, I'm a chartered accountant, so that brings obviously a lot of insights around keeping Andrew Porter a bit accountable. No, on financial discipline, business performance, and long-term value creation.
Being involved in retail, we obviously get a lot of insights into consumer behavior, the changing digital world, and the broader economy, which I bring to bear. As Craig Drummond mentioned, it has been a challenging market for investors and our investment style, and our performance has been challenging, so I wanted to acknowledge that.
Looking ahead, like the rest of the board, I'm super excited that Alison Gibson is back with AFIC, and as our new CEO, I can already say that it is a really positive dynamic, both with the investment team and in the boardroom. I really think that is going to be a great recruit for us in the years ahead. I look forward to working with her and our team as we seek to deliver stable, long-term returns and dividends for our shareholders. Thanks for your support today. Thanks.
Thank you, Richard Murray. We have had no questions prior to the meeting concerning this resolution, but I will ask are there any questions in the room? Any online?
None online.
Okay. I'll now show the proxies received in respect to this resolution. Richard Murray, congratulations, you have been reelected.
Thank you.
Ladies and gentlemen, that concludes our discussions on the items of business. In a couple of minutes, I will close the meeting. For those participating online, please ensure that you have cast your vote on all resolutions and clicked on Submit Votes at the bottom of your voting card. You will have five minutes from the close of meeting to finalize and submit your voting card.
For those in the room, may I now ask that you complete your voting card, and staff from the share registry will collect your voting card at the end of the meeting. I would like to thank shareholders for your continued support and for interest you have shown in the state of affairs of the company by your attendance in person or virtually. In closing, I did want to again recognize that performance has been below expectations, and that is why we have made substantial change.
We all look forward to better performance in the year ahead. Shareholders are reminded that the team will be holding a webinar following the release of the half-yearly results in January, and also holding shareholder meetings in March of 2027. The results of shareholders voting at this meeting will be released to the ASX later today. I'll now declare the meeting closed, and I hope you will join us for refreshments. Thank you.