Well, good afternoon, ladies and gentlemen, and welcome to the 28th Annual General Meeting of AMCIL Limited. The company secretary has advised that a quorum is present, and it gives me pleasure to open the meeting. This being a hybrid meeting, I'd like to begin by acknowledging the traditional owners and custodians of the lands on which we are all gathered today, and I pay my respects to their elders past, present, and emerging. My name's Rupert Myer, Chairman of your company. May I introduce the people on stage with me, and I begin with our Managing Director, Mark Freeman.
Good afternoon, everyone.
My fellow non-executive directors, Jodie Auster.
Hi.
Roger Brown.
Good afternoon.
Paula Dwyer.
Good afternoon.
Mike Hirst.
Hello.
And Jon Webster.
Good afternoon.
We also have our company secretary, Matthew Rowe, who's present.
Hello.
Our Chief Financial Officer, Andrew Porter.
Hello.
Our General Manager of Business Development and Investor Relations, Geoff Driver.
Good afternoon.
Right next to me. In due course, we will be hearing from Mark Freeman and Jaye Guy, investment analyst for AMCIL. We're also joined by other members of the investment team in the front row of the audience. I'm sure some of you already know a number of members of our investment team. I also 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. Shareholders would, of course, be aware that there has been adverse publicity regarding PwC in recent times.
Just prior to questions following our presentation, I will make some comments about the relationship that AMCIL has with PwC, so they are fresh in your minds at the time of questions. As I said, today's meeting is a hybrid meeting. Today's presentation has already been released to the ASX and is available on the company's website. 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, select the Q&A icon, type your question in the text box. Once you've finished typing, please hit the Send button. Please also note that your questions may be moderated, or if we receive multiple questions on a similar theme and/or topic, they may be amalgamated together.
To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button, as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. I now declare the online voting open on all items of business. I will give you a warning before I move to close voting towards the end of the meeting. Moving on to the business of the meeting, I will take the notice of meeting as read. With regards to the minutes of the 27th Annual General Meeting last year, they have 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 of June 2023.
We will do this via a presentation, after which I will 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. Before passing to Mark and his team for the presentation, I should like to make two comments. The first is that in March of this year, Siobhan McKenna retired from the Board after seven years of service. Her deep experience of the media and digital sectors, and the wide range of subsequent industries she had experience in, had been of particular value to the company. We wish her well with her busy workload, and we will, we will miss her contributions to the Board meetings. On behalf of the Board, I wish to record our thanks to Siobhan for her valued service to shareholders and wish her well in the future.
The second is that while the Board notes that there has been improved underlying performance in the company this year, I want to acknowledge that we are acutely aware that this is yet to be reflected in the share price performance in your AMCIL shares. This, in part, reflects a shift over the last 18 months from the shares having traded at a premium to NTA to now trade at a discount to NTA, and we note that this has occurred more broadly across a number of listed investment companies and is not unique to AMCIL.
Notwithstanding this, we do anticipate that over the long term, NTA performance is a key determinant of share price performance, and there will be further references to this in the presentation. I will now pass you to our Managing Director, Mark Freeman, to start the formal presentation. Would you join me in welcoming Mark? Thank you.
Okay, thanks, Rupert, and good afternoon, everyone. It's pleasing to see people at the AGM. We always get concerned these days that people don't turn up because you can watch it online, but we like people to come. It's a great opportunity to interact with directors and staff. It's your company, and I welcome you to discuss or chat anything about the company at the end of the meeting with the investment team or any of the Board of Directors. So just starting with the disclaimer to say we're here to talk about the company. We're not giving any advice as such. Just the agenda, I'll make some opening remarks about AMCIL. Then Andrew Porter, our CFO, will talk through the full year results.
Then I will be giving most of the presentation on the portfolio, but Jaye will jump in with a few of the slides on some recent acquisitions. So just on to the purpose of AMCIL. It is a focused portfolio of quality companies. We're not trying to have our positions determined by the size of the index of stocks. We feel like there's a strong alignment of interests. There is a low management cost for what is a high conviction fund. There's no performance fees, there's no external fund manager taking money, and there's very strong equity ownership by both staff and directors. We want to be tax effective, so we want to be a lower turnover fund, and we will take a long-term investment approach. So in terms of our investment strategy, what are we looking for?
We want to be in companies that have an industry leadership position or a developing one. We look for companies that have a unique set of assets that are hard to replicate. We want to be in companies that have conservative balance sheets. We don't like companies that carry too much debt. We're wary of companies that have external influences on the business. We prefer companies with more consistent earnings, and the people are critical in running the company. So we're looking for leadership teams that are effective, backable. We want the people running the companies to be passionate, and we're looking for ownership alignment. So these factors, you know, our experience shows us that this drives sustainable competitive advantage over the long term.
If you have competitive advantages, that can lead to higher return on capital, which allows greater in reinvestment opportunities to drive business growth, capture market share, further enhance their position, and ultimately deliver long-term shareholder value. So, we identify these companies. We use an assessment method to look at businesses, and then ultimately, real returns then come from buying those stocks when we see value. With those opening comments, I'll quickly pass over to Andrew to talk through the results, and then I'll continue on with the presentation.
Thank you, Mark, and good afternoon again, ladies and gentlemen, and thank you for joining us, both here in the room and online. Now, I've been through some of these figures before at the results briefing that we did back in July, but I'm also conscious that some of you may not have attended that, but I shall therefore be relatively brief. But I'm, of course, very happy to take any questions after the main presentation, or indeed, for those of you who are here, over a cup of coffee afterwards. So the profit for the year was down to AUD 7.6 million from AUD 8.1 million in the previous year. However, last year's figure includes a AUD 2 million non-cash dividend as a result of the BHP Petroleum Woodside merger. Excluding this, the profit for the year was up nearly 25%.
There were increases in dividends from companies like Transurban, Macquarie, and the banks, but we also saw an increase in the interest received on cash balances and an increased contribution from the trading and options portfolios. Dividends for the year, as you can see here, were AUD 0.05, up from AUD 0.035 in the previous year. That includes both the AUD 0.01 interim dividend and a AUD 0.015 special, and I do stress that special dividends are not part of the ordinary dividends. The company, we believe, is adequately reserved for the future. After paying the final and special dividends, we had just over AUD 0.055 worth of franked dividend in reserves to help maintain those future dividends.
The Management Expense Ratio, which is the figure in the top right-hand corner, or MER, is a measure of the cost of running the company. It is the actual expenses as a percentage of the average portfolio over the year, and therefore both elements, the expenses and the average portfolio size, have an impact. Roughly 50% of the increase in the MER comes from the increase in expenses, which were up just over AUD 240,000 for the year. This increase was foreshadowed last year and is largely due to the reallocation of costs between all of the LICs in the stable to better reflect the work effort.
I should note that during the current year, and therefore not in these figures, AMCIL has received a refund from AICS, the company that employs all the staff, due to incentives that did not vest because of the underperformance of some of the LICs against some of the hurdles, including AMCIL. This will therefore be reflected in this current year's expense figure. The other 50% is a result of the fall in the average portfolio size over the year. Now, this looks counterintuitive when you see that the portfolio went up 13.5% in the year, but that figure includes dividends and franking and needs to be set off against the fall of 14.3% the previous year, also including franking and dividends. The MER figure of 0.66% represents AUD 0.66 for every AUD 100 invested.
It is within the range of historical norms, 0.66% in 2020 and 0.72% in 2019, for instance, but I can assure you that it is a figure that the Board watches carefully. Going on to the next figure, this slide shows why there's a difference in the amount that the portfolio has changed and the amount that the share price has changed over those 10 years, and indeed, over the last year, as the chairman has outlined. At the end of September 2022, the shares were trading at a premium of 7%. In other words, the share price was more than the underlying value of the assets. At the end of September 2023, they were trading at a discount, so less than the portfolio value of the portfolio of 9%, more than a complete reversal.
I won't go into any more detail on that because I think the chairman has provided reasons behind that. But as I said, very happy to take any questions as part of the presentation or afterwards over coffee. So with that, I will finish up and hand back to Mark.
Okay, thanks, Andrew. Just onto the market conditions as we see them at the moment. Clearly, economies have held up better than expected. I think, market participants were expecting economies to get a lot tougher with the interest rates having increased globally. I would say it's been pretty resilient because the employment has been pretty strong, both here in Australia. However, there are signs that activity is slowing globally. There are signs also that inflation is easing, but CapEx inflation is still pretty strong, but supply chain pressures seem to be abating, although wage inflation is still elevated. But broadly, we think there are signs, particularly out of the U.S., that inflation is starting to come off its high levels.
What we have seen during this period, though, is companies with strong market positions, so these are typically stocks or companies that fit our frameworks, have demonstrated pricing power and have been able to push up prices to counter against some of the cost inflation they've been having. Interest rates are peaking, we think, but we think that they'll probably remain elevated for some time, but it's very hard to peak in this environment. And this had clear implications for companies that carried a lot of debt, companies that we avoid, as we've seen their interest costs increase substantially. What we have seen, though, during the recent reporting season that we've just been through, is quality companies did produce better quality results, and that's really the basis of AMCIL and our portfolio positioning.
So just onto the overall markets, just a couple of valuation charts that we look to consider where markets are traveling. From a price to sales perspective, it indicates that markets in Australia are around fair value, and from a price to book basis, we get a similar outcome. So the Australian market looks around fair value to us at this point in time. This doesn't mean we can predict where markets go, because often markets will swing quite considerably around what might deem to be fair value. Then onto the U.S. market. The valuations there are looking more elevated. As you can see, price to sales, price to book, well above the long-term averages, although some do argue that the composition of the U.S. index has changed a lot.
There are a lot more tech businesses that have make high, very high margins, very high returns, and that justifies a higher valuation. But it does make us a bit more cautious on that market. We've had this slide in the past. We just put it up there for interest's sake, to say, in the long run, being in the share market is a good thing, but you do have to ride the ups and downs along the way. And we've got a figure there to show that over the long term, the share market does a return of around 9%, but that doesn't include the benefits of franking credits. So just on to the portfolio.
As Andrew touched on earlier, it's disappointing the share price is trading where it is, but we can't control the share price, and it does create, I guess, movements. If you go from a premium to a discount, that can feel like the share price has gone down a lot, which it does. But ultimately, we think in the long term, the share price will adjust to the performance of the portfolio. So we've seen across all four of our LICs, share prices coming down, in fact, across the entire market of listed investment companies and managed funds more broadly. So we have to just stay focused on running the portfolio. So the performance numbers. So how's the actual portfolio going?
So you can see here, calendar year to date, since the first of January, it's been very strong performance, and part of that performance has been paying out a very attractive AUD 0.05 fully franked dividend. You don't see that in the share price or NTA, but you certainly see it as part of your income, and it's a big part of total returns when you're investing in the market. It's not just about share price, it's about the dividends and the franking you receive along the way, and that's been substantial over this year. We're pleased that one year we're now back in front. We've made some adjustments to the portfolio that have been quite significant in adding value. We are disappointed that the 5 and 10-year is a little behind the index.
We still have some franking credits that we haven't paid out, and so that tends to lower our performance. But still, you know, we are keen to see the 5 and 10-year returns start to exceed the market, but we're pleased about what we're seeing in the shorter term, particularly given in light of some of the adjustments we've made. So what are some of those adjustments? You can see a few stocks we've exited. You probably remember the last presentation we gave; we'd actually bought Medibank when they had their cyber event. We thought this was a stock that fitted our frameworks well. We were happy with the people running the business. We think they're good. They've effectively got no debt. They generate a high return on capital, and we think it's a well-run company.
It wasn't in AMCIL before because of the price of the stock, and it's a fairly low growth business. The COVID event gave a price dislocation event, and we went in and bought the stock. That price has now recovered that fall, and we've now exited the position and moved on. That was a very good trade. It was very consistent with the AMCIL frameworks. We also exited three stocks, PEXA, Nanosonics, and IRESS, and those frameworks that I showed you earlier, our view was that they no longer fit our frameworks, and we've been very pleased we got out of those stocks because all three of them have fallen substantially since we exited the positions. We've added some new stocks, and Jaye will cover those shortly. We've also reduced some positions.
Woolworths we trimmed a bit because we just thought the valuation was getting a little bit high. Likewise with Transurban, and Hardies has had a strong run. We've reduced FINEOS, as we see, that stock has struggled to meet the objectives we look for, so we have been reducing. Mainfreight, we had a very large position, so we've been reducing some of that. Westpac, we've also trimmed as we've built up a new position in NAB. Our view in terms of AMCIL is that NAB's got the better quality people at this point, and so we prefer to have more money in the company that has the better people running it. In terms of some of the stocks, we added more to Macquarie Technology Group. We like that business. They are building out data centers. They've already got one in Sydney.
They're expanding their business effectively in their car park, so that's going through quite a heavy capital investment stage. It is one of our, what we call, owner-driver companies. The people that run the company are the people that founded the company, and we think they've been great managers of their business, and we're happy to put some of AMCIL's money alongside those people. In terms of some of the new stocks, I've touched on NAB. We had a bit of an opportunity to buy into that. There was some weakness in the banking sector, particularly as a result of weakness out of the U.S. And again, with the attractive fully franked dividend, we thought that was good buying. And I'll get Jaye now to come up and comment on the others.
Thanks, Mark. Good afternoon, everyone. So moving on to slide 21. IDP might be a new name to many in the crowd. So they're a provider of high-stakes English language testing and student placement services to tertiary institutions like universities globally. As you can see from the chart on the right side, your left, immigration trends and increasing demand for Western education are structural growth tailwinds for IDP. And despite their current market-leading position, we see a significant opportunity for the business to capture further market share in what is a large addressable market globally. Additionally to this, they've also been investing heavily in their digital platform, which we think bolsters their competitive advantage and also creates potential for improved margins in the future. From a financial strength perspective, as Mark mentioned, IDP fits the bill there.
It has very low levels of debt and generates very attractive cash flows. We have followed this business for quite some time and admired the business model and the growth opportunity that we see. But we've been a little bit patient just around valuation. We did see an opportunity to establish a position in IDP, during the period where the Canadian government appointed a second English language testing provider to their official panel. And the share price fell quite sharply after that announcement. And while we see that IDP will likely give up some market share, when we had a look at a combination of where the share price was trading, so valuation and also the growth opportunity that we explained earlier, we thought the market reaction was excessive in that context, so we established a position in the company.
The next company is Computershare. So Computershare is a global provider of financial administration services. They do shareholder register maintenance, employee share plans, governance services, and their core businesses are very difficult to replicate given their strong market share and positions. To put some context around the business, I'm sure you're familiar with the logo on the dividend statements that you receive from AMCIL during the year. And you also would have met some of the very friendly Computershare staff when you registered for the AGM as well, just to put a bit of context around what they do.
Our investment in Computershare, we think, is a good example of where AMCIL can be opportunistic, in an investment that might potentially be a bit lower growth, but has a stalwart or asset play style profile, and where we can observe turning points in the business and buy at an attractive valuation. So we think the management team is backable and recently have had much better clarity on focusing on the core business and where they make acquisitions to be much more aligned with this core business. So business simplification efforts, along with positive leverage to higher interest rates, so they earn a margin on customer deposits that they have on their balance sheet.
We thought that would allow Computershare to generate higher cash flows than they had historically, and to rapidly pay down their debt, which we thought would create latent value within the business. We're actually pleasingly seeing this play out. Computershare did recently announce that they have divested their U.S. mortgage servicing business, which puts a nice amount of cash on the balance sheet, and we've also seen some of those higher earnings coming through on the interest balances as well. Moving on to the next slide. Not talking about a single company here, but we have established small positions in three technology companies. Some of these names may or may not be familiar. We have Altium, Xero, and WiseTech.
As Mark mentioned, these holdings effectively replace the holdings that we had in IRESS and PEXA, where our investment thesis had changed, or Nanosonics where we still like the business, but we just didn't see the valuation upside in the business. I won't go into detail on each individual holding, but there's some common characteristics across these businesses that I will highlight, where each company has a leading technology offering in the industries that they operate in. In the case of Altium, they're involved in designing PCB, which are circuit boards that go into electronic devices. Xero is involved in accounting, and WiseTech is involved in logistics.
Due to the nature of these industries, there can often be a lot of legacy paperwork-style platforms or old platforms, and we think these businesses are doing a really good job of replacing those old incumbent methods and taking share in what are large addressable markets. The management teams across all these companies are also backable. They're well aligned with shareholders, and they also have very strong track records of delivering in their respective markets. Again, talking about balance sheets, all the balance sheets are in very good shape. They generate good cash, and that means that they can reinvest back into the business to extend their competitive advantages and capture more of that addressable market share. And we can also readily observe their business success through client wins and improvements in their technology platforms.
With that, I'll hand back to Mark to talk through some of the features of the AMCIL portfolio. Thank you.
So just a few other characteristics of the AMCIL portfolio and what we're striving to do. We're trying to have a mix of small, medium, and large companies across a range of sectors. The chart on the left just shows by sector there's a fairly even spread. If you go into the general index, you obviously get a very big exposure to banks and resource companies, so we're trying to provide a more even spread. Also on the right, that's our exposure by market cap. We are trying to give a more even spread across company sizes. Once again, if you go into the index, you're heavily exposed to the very large companies, and we're trying to give a more even spread around that. So back to the recent reporting season.
What we've done here is put most of our holdings are on this page, and these are the ones that we thought produced pretty solid results, and we're very happy with the way they're performing. And I won't go through all those. This is perhaps a slide we can come back to in the end. There were some stocks down below, such as Mainfreight, Gentrack, Fisher & Paykel, et cetera. They have a different reporting period, so we'll hear from them over the next few months. But as I said, it was pleasing that quality companies generally produced better quality results, and we had good share price responses from most of those companies. On to the next slide. But we did have some companies that have been experiencing share price weakness, and I'll talk through those. We've seen quite considerable weakness out of CSL and ResMed.
Their results were, I guess, a little bit soft, but not to a large extent. The issue with those two companies and why they are falling so much is the market is globally very nervous about the impact of weight loss drugs, and there's two in particular, one produced by Novo Nordisk and the other by Eli Lilly. They are doing lots of trials to show the benefits of being on their weight loss drugs and how it can help you with a range of health conditions. But the response to other healthcare stocks has been substantial. It seems to me like the market's almost saying that weight loss drugs will cure you from various ailments. We're not sure that's the case. For example, ResMed has lost about a third of its market cap.
I think there's no doubt that losing weight will help with sleep apnea. We're not necessarily sure it will cure sleep apnea. And to get off their their products, you would really need to be cured from sleep apnea. Even if you have a reduced number of apnea events in any one night, even a few can be quite impactful on your health, and you would still need to use one of their machines. CSL, likewise, they recently made an acquisition called Vifor, one of their products. Again, there's been some results that show that losing weight could impact them. But again, we're not sure that that necessarily means you can stop using the drugs that they produce. So there's a frenzy at the moment of fear around what could happen to some of the traditional healthcare stocks. We've seen this before.
Market often operates on fear and greed, and it feels like fear is impacting those two stocks that we are comfortable to hold. We would picture those stocks as having some industry headwinds, but we still think they're very sound businesses for the long term. ASX, we've only got a small holding in. They've had some operational headwinds. The share price has fallen a lot, but I think we're starting to see some value appear there. Again, they've got net cash on the balance sheet, and it's a monopoly position, so. Domino's? Recent trading updates have been more positive. We have reduced the holding because financial strength is testing us a little bit. We felt like we wanna have a lower position in that company. As I touched on earlier, FINEOS, we have been reducing that position.
They've just won a very interesting contract recently with a very large insurer. We think that's very positive, but we'd like to see more of those wins going forward. So just onto the outlook. So I guess some of the issues we still have around is the impact of higher interest rates. How much will it actually slow the economy, and what impact will it have on valuations? Rising geopolitical tensions are a concern, and China's attempts to stabilize their growth will also impact parts of our market. I guess, the way we deal that with is, as a longer-term investor, we stick with the quality companies, and if we see significant sell-offs, look to how we can add to our positions or, in fact, buy new positions. Stay focused on management teams that we can trust.
Ultimately, those share prices will be will perform in line with the earnings and profits the companies produce. Make sure you stick with companies with strong balance sheets, particularly in these high interest rate environments. With that, I'm sure there'll be questions about lots of the stocks, and we can go back to that slide, which has our portfolio on it. So happy to take questions on those in at the end of the presentation. Rupert?
Well, look, thank you, Mark, and thanks, Jaye. As you probably sensed, we love talking about stocks, and very happy to take questions in relation to any of the stocks that we've been talking about. We'll now deal with any questions on the financial statements and reports for the year ended the 30th of June, 2023. I mentioned that, when I was introducing Kate Logan, that I'd make a couple of remarks about PwC. So, the discussions in the public arena about PwC focus foremost on the tax advisory practice and the reputation of PwC in its entirety. PwC are our auditors, they are not our tax advisors.
We gained some assurance and comfort from the comments in the recent report, by Dr. Ziggy Switkowski, that stated that PwC's assurance, i.e., their audit business, appears to substantially model best practice in assurance. We last put our audit out to tender in 2017, requesting proposals from all major accounting firms, with PwC being selected at that time. As is mandated, our audit partner at PwC changes every five years, and alongside that, there are changes in the underlying team that conducts the audit. The change in audit partner last occurred in May 2022. We believe our PwC audit team has met our requirements and expectations. However, we will continue to monitor the matters that are presently reported and in the public domain. We have discussed them internally, and we've also discussed them with PwC.
We've sought and received assurances about them, about how they're dealing with the situation, and at this stage, we are satisfied with the answers that we've received. I'd now like to invite questions from shareholders and comments. For those in the room, we have microphones available, Sue and Catherine at the back of the room. And if shareholders would please state their name when addressing the meeting and ask all questions through the chair, that would be appreciated. We also have questions online through the virtual meeting. So I might, Geoff, turn directly to you. Are there any questions online that I could take while those in the room prepare their questions?
So we have a question here from Steve Van Emmerik, from the Australian Shareholders Association. "Congratulations on your well-presented annual report. In this report, we see that AMCIL has underperformed in the relevant benchmarks over one, three, five, and ten years." I think Mark's answered part of this. "Why is this, and what, if anything, does the company plan to do in the future to ensure this performance doesn't continue?" So I'll throw this to Mark.
Well, I think the updated number is now we're sort of back ahead on one year, and those longer term, we're just a little bit behind, and as I said, we've got some franking credits we haven't paid out. I guess what we're doing about it is really just to stay focused on what AMCIL's about, which is sticking with the quality stocks, making sure we buy when we see value. We're very aware that we're a little bit behind the index, and we're working hard to improve that. We think certainly over the last six to twelve months, we're meeting our objectives, and it's just a matter of continuing that focus and discipline going forward.
Perhaps I might make a comment on that, too, from the Board's perspective. I mean, clearly, the Board has monitored this very closely, and we've watched the performance every month at our Board meetings. We've been very keen to see the portfolio repositioned and have worked closely with Mark and his colleagues in the way in which that has been done, and of course, we continue to do so. So the Board's role is oversight of the investment team. The investment team obviously has authority and carries responsibility for the investment decisions that are made with the oversight of the Board on a regular basis.
The other thing I'd add to that, Geoff, is just, you know, it's just sticking to the process, and making sure that when we buy and sell stocks, it's clearly aligned with the process and the frameworks we've outlined at the meeting.
Got another question here. With CSL at a market low, will AMCIL, AMCIL invest in more CSL shares? Does AMCIL have any portfolio weight limits, such as 10% for any single stock?
Mark, do you want to comment on that one?
Yeah, look, I think we don't have an actual rule, but I think if you're getting over 10%, that sounds like a pretty big position. Look, and CSL has been a big stock, and we've sort of worn some fair downside, and despite that, we've still produced good performance over this calendar year. So we're wearing that performance of CSL, but still being able to produce good numbers over the calendar year. If we didn't have such a large position, yeah, it looks pretty interesting to me, because if you look at the multiples, the stock trades on against its history, it's actually well below its long-term average. And that's from, I guess, I think about stocks in terms of valuation, but two perspectives. There's the arithmetic part, which is what you're seeing from a PE multiple or a price to sales.
They all look attractive, and then there's the market feel. What's actually happening in the market? And the market is concerned about multiple factors. They've done a large acquisition. They've done acquisitions in the past, and it's always taken them a couple of years to improve. So it's still very early days, but we've obviously had a change in CEO that can unsettle the market, and then the fear around these weight loss drugs has been extraordinary. And the market, well, the stock has probably been a little bit slow to get its margins back to what they were pre-COVID, but we think that's on track. And so when you have multiple factors that are all, I guess, a negative, it sort of compounds on itself, and you get a really bad reaction in terms of share price.
But what we keep testing the fundamentals of the business, and when you put that together with the multiple, it looks pretty cheap. But we have a good position already, so we won't be adding to it, but we certainly will be holding.
Maybe one more online, and then I'll come to the room.
Has the Board issued a formal support for the yes vote in the upcoming referendum?
No, the Board hasn't given any advice on the forthcoming referendum. To the extent that we ever enter the public domain, it really relates to matters of franking credits or other financial matters that directly impact on the shareholders of the company. I acknowledge that it's obviously within the hands of individual shareholders to make determinations on a whole range of other matters in the public domain. So questions in the room. Please, here comes a microphone.
My name is Phil Cannon. Just briefly, by way of background, I've been a director of two industry super funds for nearly 30 years, so I've got some experience in these matters. Now, my question is, are the following comments fair comment? They're hopefully seen as constructive because all the people here and mainly retirees, it's a very important matter that we're dealing with retiree savings. I've been a shareholder for 20 years or thereabouts, just about as long as AMCIL has been in existence. My buy-in price, and I've got this on the record, my buy-in price is AUD 0.98 overall. Today's share price is AUD 0.96. The proof of the pudding is in the eating. The performance of this fund has been, l ook, you can't really exaggerate. It's been abysmal.
Now, when we hear that the ASX has done 9% or 8.9%, I've got the dividends, so I suppose the share price, the overall performance might have been more like 4%, about half the index, over that period. Now, who, who is responsible for this? Who's responsible? Ultimately, it's the Board who is responsible for this. The Board is responsible for the performance of a company, you know, and in particular, the chairman. Now, the Board and the chairman have got to be asking the right questions. You've got to have a chairman who's continually asking about what's going on with the underlying investment team. You know, you've got to really be on it all the time, and I don't think that's happened. The inference is, the irresistible inference is they have not done that.
When the underlying investment team are buying shares like Temple & Webster during COVID at, you know, AUD 10, AUD 11, too many and at too high a price for a number of stocks, including FINEOS, and I think last year, the shareholder got up and named all these shares that caused this problem. What was the Board doing? Were they asking the questions? This is a Board which is paid nearly AUD 500,000 a year. You got the chairman on AUD 135,000. You got directors on AUD 65,000. What questions are they asking? Now, as I said, I've been doing this for 30 years. I was on the investment committee for these two funds for 30 years. Now, what was I doing?
I was mainly the chair for most of that period of time, asking the hard questions, and that's what has been missing, unfortunately. The other thing that has been a failure is to ensure that there's been sufficient resources in the, from the investment side, given to AMCIL. Now, you've got. But as I understand it, you had the people looking after Mirrabooka, trying to handle Mirrabooka and AMCIL at the same time. Now, I know that Mark, and I've spoken to Mark about this, and Geoff, and I've spoken to Roger this morning, so no, none of these questions have come as a surprise, really. But there was a failure to ensure that the resources weren't spread too thin between, Mirrabooka and AMCIL. So my question is, are these fair comments?
Thank you, Mr. Cannon.
I'll hear what you say before, Rupert, and I thank you for your remarks, and I appreciate the presentation, and I don't want to be seen as negative. We're all in this together. We're all shareholders. We want to see the performance lift.
Mm.
And the share price in particular.
Well, we agree with you. I mean, we all want that for the company. We're all shareholders at this table, so it's, we are motivated for the company, for the company shares to rise. Maybe if I could sort of make a couple of, a couple of remarks. Firstly, shareholders will recall that we changed the dividend policy only quite recently in two ways. Previously, we paid out the entirety of our franking account, and so as we made profits, we created franking credits. We, of course, received some franking credits from dividends, from franked dividends that we received, but the consequence of that is that shareholders received some of the upside in the company through annual dividend payments.
We determined that that wasn't leaving a sufficient amount of money in the company, and therefore, the results that you see in terms of some of the share price performance and arising from the NTA performance reflected the fact that the money was actually passing out to shareholders. One change that we made that we advised shareholders of about 18 months ago was that we would regularize the dividend and have a more predictable dividend, but that we would not be paying out 100% of the franking credits each year, as we had done. The second thing that we did was we introduced an interim dividend, which we did for the first time this year.
So we paid a AUD 0.01 interim and a AUD 0.04 final dividend. So, you know, that's, I think, addressed the issue as far as the leakage from the company via franked dividends, which is what had been happening previously. The second comment that I'd make is that the Board has been sort of acutely aware of a number of the matters that you've raised. And indeed, the performance that Mark has spoken to in this calendar year reflects a number of the key decisions that have been taken as a consequence of the work of the Board and the investment committee in realigning the portfolio in the way that we have.
In terms of the Board asking sort of the tough questions at each of our Board investment committee meetings, I think I could say that this Board has a reputation for asking some pretty tough questions at those meetings, and I suppose the actions arising as a consequence of some of those questions can now be seen by some of the more recent performance. Are we happy yet? Well, no, we're not. We want to see those longer-term numbers, you know, well exceeding, in due course, the relevant indices. So, I mean, I do want to give assurance that, you know, these are matters that the Board takes extremely seriously.
Perhaps, Mark, did you want to add a comment?
Yeah, I'd just like to. I'd perhaps afterward, I'd like to just perhaps come back to you about your performance calculations, because I've sort of got numbers here going back when you look at 15 years, which you've been a long-term investor. I've got, when you include dividends and franking, AMCIL is 10.35. The index is 8.95, so that's what the portfolio's had. So I just want to check when you bought, because often if you buy at a premium or discount, it can have a quite significant impact on your return.
So our numbers on the portfolio return would suggest that if you've been an investor for that sort of period, you would have had quite a very good return because, as Rupert pointed out, a lot of the return that's come back to you is actually through the dividends and franking. So the share price may not move much, but if you add in the dividends and franking, you get a very different number than just simply looking at the share price. So perhaps I'd like to, we can work through that over the next few days or whatever, to understand why my numbers would show us that over that longer term it's been fantastic, but your experience is not that. So there seems to be a disconnect, so I'd like to understand why.
Well, I'll explain that.
Yep.
Look, we appreciate the question, but very happy to keep the conversation going, offline.
Well, Mark, Mark has been very good in communicating with me as a shareholder, so I'm, I'm congratulating him for that. It's been excellent.
Yep. So my summary is, I've been a long-term shareholder, and I've, m y view is it's been really good, but we've had some issues over the last couple of years, but we feel like we've dealt with that, and we're moving forward. And so that's the sort of context that I sort of think about it in.
Thanks, Chair. Stephen Mayne. So I'd just like to pick up on the PwC issue. So at the AFIC AGM, it was mentioned that PwC had been the auditor for 95 years, and that when you had last looked at the audit, you interviewed three different PwC partners to decide which one you would appoint. So it was almost like competition within PwC, as opposed to competition with the wider market. So I hadn't heard of that practice before, of you can pick your partner. I thought the firm just sort of presented, but sounded like AFIC was going, "I'll have this partner or not that partner." So I guess what I'm interested in hearing from, from you and perhaps from Kate as well as the signing partner here is, is there some scale benefit with having PwC across multiple entities?
Like, I haven't looked at it, but do we have PwC across all four? Do the audit partners talk to each other, or are we running four entirely separate arrangements? And could Kate comment as to whether her remuneration is affected by the fact that she is the audit signing partner here? So when those three audit partners were effectively competing for the AFIC job, was their remuneration at play there, or is it all just institutionalized within to the wider audit practice?
Yeah.
I will also say that I know that the former CEO of PwC has been giving evidence in Canberra today, Mr. Sayers, and, I, my personal view is that it's been a bit of a lynch mob attitude, and a few rogue tax partners does not mean you, you sack every audit partner around. So I'm not saying we sack-
I wonder if I could just get. I wasn't particularly thrilled by an insinuation there. But, look, let me just repeat what I said earlier. The audit was put out to tender in 2017. I think, Andrew, there were four, we sought submissions from.
The four major firms.
From the four major firms. And from that process, PwC was accepted. Every five years, there's a requirement for the audit partner to retire within the firm that's been selected. The audit partner retired, and Kate was appointed in 2022. Yes, there is a discussion as to which audit partner might take on that role, but that's part of the way in which that rotation occurs. So I think that's a substantive answer to your question.
So it's been a long, a long issue with the AFIC stable, where I've asked that you disclose how you vote on our behalf, and the stable has always resisted that, even though it's standard now for industry funds and a few. So I guess I, I just wanted to probe a couple of specific issues in terms of how active you are being as stewards of our capitals in improving the governance, and transparency, and leadership of the companies you invest in. So my specific question is, there was a 25% or 24% and 23% protest votes against the two CSL remuneration resolutions yesterday. Were we part of that concern, or were we supporting the pay?
At IDP, so it's been a great stock, but the governance has been interesting because it's been controlled by the university sector, effectively, and we've had a chairman there since 2007. And my view, Peter Polson has just been there too long. It's a standard sort of governance transition thing. So as an active and enthusiastic shareholder in IDP across the stable, do you take a position with the chair and say, "Mate, it's time to go," or do you sit back and vote for him every three years and say, "16 years is fine. Keep going, mate?" I mean, how do you play those two specific situations, looking after our money, our money, as an active steward on the governance and the voting front?
So look, perhaps I should give an overview so that all shareholders are familiar with the way in which we conduct ourselves in this space. We consider it a very important part of the ESG framework under which we operate. So, AMCIL, in line with other companies within the group, votes on every resolution for every meeting that our investee companies have. There are two parts of the process that we observe. We subscribe to proxy advisors and see what they're saying, and then our investment team reviews all of those recommendations, and then makes a recommendation to the Board of AMCIL, in our case, about every single resolution.
We've not adopted the practice, although we acknowledge that others have, of reporting widely on how those proxies are made, because our experience has been that if there are matters that need to be raised on the issues that are covered by the proxy, that it's best to do that directly with the company. And in those discussions that we have with the companies, our experience has been that we get a more engaged hearing if they know that we're not immediately going to spill you know what our position is into the public domain.
In other words, you get a conversation happening, rather than a situation occurring where there's a sort of sense of everything being reported back publicly, which isn't always the best outcome around some of the issues. So we've tended not to speak publicly about this. Mark, I don't know whether you'd like to add anything?
Yeah, I'll just add that it is clearly in our strong interest that the companies we invest in perform well. And if we think there are issues that are impacting that, absolutely, our engagement with companies is very strong. Engaging with them, with companies is a very important part of our process. As Rupert, we take advice, but we form our own opinion and our own view, and if there is issues that we are very uncomfortable, we certainly deal with those with the Board, and if it means voting against, we vote against. And as Rupert said, we don't disclose that, but I think we've got the respect of the companies we invest in, and because of that, they listen, and we feel we get better outcomes by taking the approach. But once again, we want our companies to perform well.
If we, if we think there's something happening with the Board, or the quality of the people, or the way they're behaving, or the issues, absolutely, we raise it with them, and if we don't like it, we vote against. But we give clear communication back to the company as to why or what we're looking to see improve, to change the vote. And that's a very important part of our process as being an investor in a company, particularly being a long-term investor and not wanting to be a trader and being forced out of a business due to bad practice. And we openly use the example of, so you know, this is one we used before, but Rio had their issues, blowing up things that they shouldn't be blowing up. Of course, we confronted the company about it.
Now, we weren't public about it, but they respected our views, and we expected change. We didn't want to sell the stock, so this is more from an AFIC perspective and move on, because we're the shareholders, they're our assets. And rather than us changing as shareholders, we wanted to see change at the company. And our message was clear, and you ultimately saw that coming through, and so we were able to sustain our investment in what is very good quality assets. So that's just an example of what we do.
One more, Geoff.
So the stable has been incredibly stable for 20 years since AFIC, since AMCIL floated. And while there's been quite a lot of dynamism elsewhere in the sector, with Geoff Wilson launching all sorts of things and Soul Patts taking out Milton, nothing seems to change within the four here. We're the smallest. My question is, Bruce Teele, sort of the founding chair, has got about 16%, so effectively is a blocking shareholder, were there to be a change of control proposal, i.e., a merger with Mirrabooka or something like that. So can I just ask, who handles at the Board level, the relationship with our largest shareholder? Is it a correct assumption that he is opposed to any merger or scaled approach to our stable, reflecting the fact that nothing has happened for 20 years?
And given that we are now at a discount to NTA, why don't we explore, as the smallest member of the stable, a value-creating and cost-saving merger with perhaps Djerriwarrh or Mirrabooka, which might mean a few directors lose their gig, but it would be a lower cost and a MER for the shareholders, who arguably, as Mr. Cannon has said, haven't been enjoying magnificent outperformance in the last year or two as the NTA premium, and most of them has come down closer to NTA and in some cases, gone to a discount. So I guess the question is: Is Mr. Teele's influence, and what are you doing on the merger, sort of restructuring approach to create value and save cost?
Thank you, Mr. Mayne, and I acknowledge that it's a question that you have returned to over several AGMs. Look, it's not a matter that we've explored any further. It is, as you observe, a stable, stable. I think that was your expression. You know, sometimes that's not such a bad thing. We acknowledge that the four companies have quite separate mandates, and that's how they've been established. They do different things in the market, and of course, they are of different market size. There is no specific agreement or any agreement whatsoever with any of our shareholders, actually, around the sorts of matters that you raised.
I mean, the Board is focused on improving the investment performance of this company, which we fully anticipate will be reflected in share price improvements over time. So it's not a matter on our agenda. Any other? Yes, there's a question. Thanks, sir.
Thank you. My family are happy investors in all four companies, and we're investors in AMCIL, particularly because of its unique investment strategy objectives. And I just wonder whether there's an opportunity. I think, Mark, you mentioned earlier that you're effectively passionate about companies as a team and understanding how they work. Given in the light of questions asked recently, how do you, as an investment team, inform yourselves to make good decisions? It's not just reading the papers. Could you talk a little more about that, please?
Over to you, Mark.
Yeah. Well, look, there's a lot that goes on to following a company. I try to avoid reading the papers these days. I actually can't remember the last time I read the Fin Review, and I think I've been better for it. Hopefully there's no journalists here from the Fin Review. You know, it's not about that. That gives you sort of the news of the day. That's really my point around the newspapers. What we're trying to do is sort of get behind the company, and certainly there's, y ou know, the team interact with all the major brokers. They've all got teams of analysts, and we pretty much deal with them all. There might be one or two we don't.
I know the team really focus in on those analysts that they feel are the most effective, understand the companies the most. So there's a lot of interaction on that front. Obviously, we have a lot of direct interaction with the companies themselves. We tend to find the companies we invest in will come in to see us, or we'll have to go see them, but generally twice a year around the results. But then there's often opportunities in between to meet the CEOs. There's increasing more interaction with directors, and then a lot of companies do strategy days. There's a number of conferences throughout the year. There's a UBS conference coming up, Macquarie do a big one.
The team go to a range of others where they get a chance to see companies present, either in a large meeting room or to get a one-on-one presentation. We also use, I guess, what we call sort of independent research houses, where there's one in particular we subscribe to that's not a broker. They just do their own form of research, where they tend to look at the company's financials. We subscribe to them. We've also got another service, a company that will organize for you to meet sort of industry people who can give you insight into what's happening into companies or industries, as such. Look, we get great input from our directors. This is one of the value adds of being a listed company. We have directors across all four companies.
You put that together, and the pool of knowledge there, and the team tap into that as much as possible. That's invaluable. So there's a range of sources, and we try and stay in contact with people that have moved on, perhaps from business and industry, to give us other insights. There's a whole range of sources that we look to. We've also subscribed to a financial product now that's quite significant in terms of the information it gets, gives you. So there's a lot, and in fact, it's becoming larger and more significant as more and more of the companies we invest in are essentially global companies. And so you do often have to travel a bit more overseas to see a company's operations as well, so there's a lot going on.
It's more complex than what it used to be when you were mainly investing in Australian companies. There's not many companies these days that are just pure Australian. Most of the companies that have got growth are actually global businesses now.
Thanks, Mark. As you get the impression they never sleep. But thank you for a very comprehensive answer. I might call Geoff for any online questions in a moment, but I think I'd also respond to that by saying that one of the benefits of being, you know, part of a group of companies is that we do receive visits during the reporting season, as Mark alluded, you know, very often from CEOs and CFOs and others.
And having an opportunity within a relatively small environment, rather than a big sort of conference setting, to ask questions and really to get into the nuts and bolts, not only of the season that's just, or the reporting season that's being given, but also about the industry and trends in the business and strategies and so forth. And that's a very important sort of part of the way in which we gain understanding. So, yes, Geoff.
Okay. So there's a question here. It's, it's quite a long one, but I think the, the crux of it is, it's around, how do we ensure that the independence of the company is not compromised by having the same auditor and the same, I guess, managing director, and I guess, people running the company, running all four listed investment companies?
Thanks, Geoff. I think I'd begin by saying that each of the four companies has its own audit committee, audit and risk management committee. Mike Hirst is the chair of the audit committee for AMCIL. My observation of that is that it acts in a fiercely independent way and deals with the auditor as though, you know, AMCIL were the only company that was being audited. I imagine a similar approach is taken across the other companies. One point that I would make is that Andrew and his team work, you know, very closely through the audit process with Kate and her team.
You know, I'm very pleased with the speed at which they move and the fact that we are able to produce our audited accounts generally within the month of July, which is a very pleasing outcome, so that we get that information in the hands of shareholders very swiftly. To be honest, it seems a bit unusual that here we are in October, you know, having an annual general meeting about matters that, you know, were settled already sort of over two months ago. It's, I think, something of the quality of what's being done that can happen in the way that it has. Andrew, did you want to make a comment on any of that?
The, I would echo your comments. I'd also say, obviously, the auditors confirm to their own independent standards, as required both by the Ethics Standards and the Corporations Act. Mr. Mayne had asked a question about cost savings. I don't know. We quoted for each company individually. One could speculate. I would certainly say, with regard to your point about efficiency, I used to be an auditor. I'm on the Auditing Standards Board. I think auditors are great people, but I wouldn't want four sets of them from different companies in the office at the same time in July.
Thanks, Andrew. Any other.
Yeah.
Questions online?
This may be more of a comment than a question, but, in discussions about the share price NTA, could you confirm the radical impact of interest rates on shareholder liquidity? I think they may return. People now put money into bank deposits rather than shares. This will change over time, or will it change over time?
Um.
Yeah.
Mark, would you like to.
Yeah, yeah, sure. Look, I think we have to sort of appreciate that for the last, up until the last six to twelve months, you essentially had 10 years of interest rates falling. And, to get income from investing, you really, a lot of retail investors were almost forced into shares, because you couldn't get any income out of the banks. That's clearly changed. And, if you think back more than 10 years ago, the asset class, cash, term deposits, bonds, they were an essential part of, I guess, the asset allocation of an individual. That's, that part of the market is now back, and I think there's a significant readjustment going on. There's obviously a lot of concerns in the world about what inflation will do to share markets.
There's the geopolitical issues that I touched on, and if you can get sort of 4.5% in a term deposit, or in fact, almost cash on call in some places, people are comfortable with having some of their money in that. So I think it'll take a while for it to wash through. These things are always cyclical, but ultimately, there are still substantial amounts of money that flow into superannuation each year, and eventually, you'll have to get net buying back into equities and share markets. And if some of these concerns start to dissipate, for example, you know, if inflation started to come off, if we had a world that where there was less issues, I think you'd start to see money start to perhaps come back into the equity markets.
It is cyclical, and again, we've seen this through our LICs because we've got a long track record. There are periods where share prices can be at premiums. There are periods where they can be at discounts, and that's just part of the cycle. So I'd view that this is no different. But when flows come back into equities from retail investors, perhaps some of those gaps will close. Certainly, if you look through, that's what history would tell us will happen.
Thanks, Mark. Any.
No, no more online questions. I'll just check there's no phone questions.
There are no questions on the phone at this time.
Ooh!
Okay.
That's a new voice in the room. I hadn't spotted that one.
There's no questions from.
Thanks, Geoff. Are there any other questions in the room under this matter? Well, look, if not, I do want to assure all shareholders that every question that's asked actually gets discussed again around the Board table when we next meet. So, please know that these questions have a life beyond this room, and we do reflect upon the matters that shareholders raise with us. There is no resolution that attaches to this item, but I move now to the formal resolutions of the meeting. Your directors' recommendations are set out in the notice of meeting. I can confirm that where undirected proxies have been given to me as chairman, I will vote them in line with the Board's recommendation on each agenda item.
Voting today will be conducted by way of a poll on all items of business. Representatives of Computershare will oversee the conduct of the poll. Firstly, if there's any person present in the room who believes they are entitled to vote but has not yet registered to vote, would you please seek assistance from our share registry, Computershare, at the front desk? I will now go through the procedures for filling in the voting papers. In respect of any open votes a proxyholder 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 also need to mark a box beside each resolution to indicate how you wish to cast your votes. Please ensure you print your name where indicated and sign the voting paper.
When you finish filling in your voting paper, please lodge it in the ballot boxes that will be available at the end of the meeting. Exhibit A is here. Thank you. 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 2023 annual report. As administration, management, and investment services are provided by Australian Investment Company Services Limited, and the details of this relationship can be found in the annual report, the remuneration report is only concerned with the non-executive director fees. I'll now show the proxies received in respect of this resolution, which are now shown on the screen.
I remind shareholders and proxies who have yet to lodge their votes via the app to do so, as the voting is now open. There were no questions asked prior to the meeting concerning this resolution. If you have any questions on this item, please submit them now via the online portal, or raise your hand if you are in the room. Geoff, any questions online?
No questions online, Chairman.
Are there any questions in the room? Yes.
So, Chair, I'm guessing that you didn't release the proxies with the formal addresses to the ASX before the meeting?
Not on this occasion.
No. Okay. That, that's a standard request, if you could look at doing that next year. It's just a more timely way to get the data out there. Now, the ASX table, and all leaks for that matter, are quite unusual because you get a lot of shareholders who just tick the box and send it back without directing a vote. If you look at those votes, you can see there's 39 million that are open, which is the same number as is for. It's within your hands, Chair. You can cause a strike here. You've got the open proxies. You have enormous power. I don't know if Mr. Teele or his family are in the room, but they're on the annual report with 46 million.
So it looks like the Teele family are not expressing an opinion via proxy or trusting the chair. They may be in the room, I don't know. But my question on the REM with you is that turnout by retail shareholders at AGMs in voting has plummeted.
Mm.
Is now less than 5% at most companies because we feel powerless, because we just get swamped by the institutional investors and the Mr. Teeles of the world. So it doesn't matter what I do with my 10 shares, because it's just irrelevant, because the big shareholders swamp it. The way to stimulate participation is to disclose the results by shares and shareholders, like in a scheme of arrangement. Computershare has the data, so if you were to do that today, I think you would find that a majority of the shareholders who've bothered to vote have voted against. So of the 3,121 shareholders that you've got there, there's probably 400 or 500, and they're a very dedicated group of vote against every REM report shareholders out there. They've probably got to that quite large against vote.
But the dialogue and the media, whenever a REM report goes through, is 98% in favor, and retail feels powerless. If it was also reported that 60% of shareholders voted against, as I think has happened here, it would energize retail to participate because we wouldn't be swamped by the big end of town, and there'd be a, a poll of retail shareholder sentiment. Now, the likes of Altium and Medibank have.
Mr. Mayne, is there a question at the end of this?
Yes, there's a question, yes.
Yeah.
The likes of Myer and Altium and Tabcorp have agreed in the last two years, when I've requested this, to disclose the voting outcome by shares and shareholders, like in a scheme of arrangement. So my question is today, will you please do that today when you release the results to the ASX, so we can see the hundreds of shareholders who turned out, we can see how many of us were for and how many of us were against, and not just get swamped by the big investors and the chair with these 48% open votes sitting in the back pocket, ready to turn this into a 97% yes vote with no attention or discussion?
Well, look, thanks for raising the issue. I mean, we look very carefully at our obligations through both the Companies Act and the ASX requirements. There is presently no standard that requires us to do what you've requested, as you would know. However, we note what you have said. Are there any other questions on this item? Any other questions on the online portal?
I'll check for the voice. Any phone questions?
There are no phone questions at this time.
Thank you.
All right. Well, look, thank you. As the matter is going to poll, and we've got the, we had previously the voting on the Board, the matter is subject to poll. The third agenda item is the resolution to reelect Mr. Roger Brown. Roger was elected by shareholders at the 2020 AGM, and so is standing for reelection by shareholders today. In accordance with Rule 46 of the company's constitution, he retires from the Board of Directors and, being eligible, offers himself for reelection. Roger, would you care to say a few words, please?
Yes, I will. Just for you, Rupert, and the room, sorry. Look, thank you. Just a little bit about me. My business life has been devoted happily to developing ARB Corporation Limited from my father's garage in 1975 with my brother Tony, and later with my second brother, Andy. Through to listing in the ASX in 1987, a couple of months after the crash. It was a couple of months before the crash, sorry, and making it to the top 100 in 2021 for a short period. In a nutshell, that's it. The business now has revenues of about AUD 700 million and has consistently provided profit growth, and ARB now employs 2,200 people worldwide, and a lot, lot more in our customer base that rely on our products. The company is truly vertically integrated.
There's not many of us in that sense, from designing a product to building it, through to selling it. So we are truly integrated, and we have operations around the world. The ARB journey has given me great insights into many facets of company management and company growth, from product design and development, complex manufacturing. We've got factories here, in New Zealand, U.K., a big number of factories in Thailand. Establishing factories and distribution operations around the world, distributing via wholesale, exporting. We have direct retail stores and via e-commerce now. Establishing and maintaining a brand, which I think is a, you know, it's nearly a 50-year journey, but it's been a wonderful thing to do. And this list goes on, but I'll sort of leave it there for today because there's a lot in it.
At ARB, I was managing director from 1976 to 1987, executive chairman from 1987 to 2016, and chairman from 2016 to 2022. My role now as a non-executive chair, director, is to maintain the strong corporate culture that ARB has developed and provide corporate memory, which I find critical to the current senior manager, senior executive team. Fascinating, the number of customers that come and want to deal with you after 20 years, who still owe you from 20 years ago. These new people don't know that, but I won't forget it, ever. Enough about me. Let's go on to AMCIL. AMCIL has a very diverse Board. The seven members here have very different backgrounds and experience over a very broad, broad range of endeavors.
This diversity ensures that we have insight into the large number of companies that AMCIL could invest in. There's certainly companies that I wouldn't invest in that maybe some others would, but have the knowledge to do that, which is great. I certainly enjoy being a director of AMCIL. It's my only other Board position outside ARB, and happy to have that. I look forward to the interaction with Mark and his investment team in investment meetings and informally. Thanks.
Thanks, Roger.
You're welcome.
Thank you for offering yourself for a further term and for those personal remarks. I might just sort of share with everyone that having recently been up in West Arnhem, I don't think I saw a vehicle there that didn't have ARB kit on it.
There's a few places.
So you've got a good market there. So I'll now show the proxies received in respect of this resolution on the screen. There were no questions asked prior to the meeting concerning this resolution. Geoff, any questions online now?
No questions online. Just checking if there's any on the phone at this point.
There are no questions on the phone line at this time.
Right. Thank you. We can't see you, but we can hear you very clearly. Are there any questions in the room on this matter? Mr. Mayne.
Now, Chair, feel free to ditch the phone next year. It's a waste of money. No one ever uses it. My question for Roger actually does go to fair treatment of retail shareholders and AGM access. Roger's obviously a legend. ARB's been a great company, no complaints. The upcoming ARB AGM is a physical-only affair. It's discriminating against shareholders who might be up in West Arnhem Land in an ARB vehicle who would like to dial in, listen, ask questions, and vote. Best practice, I mean, all I want is transparency, good disclosure, accountability, fair treatment of retail shareholders, and good performance. The worst companies, the dodgiest billionaires, are the ones who don't go to the physical AGM at the inconvenient place because they don't want to answer questions, and they don't want to be accountable.
I suspect the decision at ARB is just that great cost-conscious culture.
Is there a question coming, Mr. Mayne?
So my question to Roger, and to you, Chair, is: Will this Board, including Roger, commit to ongoing hybrid AGMs in the future, so to maximize the access to shareholders, and most importantly, so shareholders can vote online after hearing the debate? And does that support include pressuring ASX 200 companies that don't do that, which unfortunately, this year, includes ARB? So we're gonna have to turn up at the RACV if we want to celebrate his great success, because he's not letting us participate online, whether asking questions or voting.
Well, look, thank you. This is the AMCIL Annual General Meeting, so I'm not going to make any comments at all on the ARB Annual General Meeting or any of the annual general meetings for the investee companies. We're focused on the affairs of this company. I would say that, you know, we found the hybrid model to work quite well. Quite often, I hear people say to me, particularly those in the room, that they feel that those sort of coming in online are less visible, and so there's no performative element in the manner in which they ask questions. That obviously suits some shareholders better than others.
I think so long as shareholders are comfortable in having a hybrid meeting, the technology obviously exists and it works. I don't mind this person over my right shoulder coming in from the phone when the voice enters the room. It's someone's doing the work of the company, and maybe someone will ring up one day. But again, we do an assessment of all of these AGMs and talk about what worked and what didn't work so well, and it'll be a matter of decision year by year. But it's a pretty interesting format that wouldn't have existed five, or didn't exist five years ago. Are there any other questions under this item?
Just a question.
Oh, yes.
I said before. Roger, I commented that the Board appeared to fail to monitor the performance and activities of the underlying investment team, particularly when that investment team was buying high-priced shares, overpriced shares, and too many shares in companies like Temple & Webster and FINEOS, and there was about, maybe half a dozen of them. What’s your response to my earlier point that the Board didn't ask the right questions? They didn't monitor the performance or what was happening in the underlying investment team. We're making mistakes, paying too much, buying too many shares in companies which really weren't A-grade companies, if you put it that way.
Let me hop in first, and only if you wish to, Roger, to make a comment. But, I mean, I think, Mr. Cannon, we have addressed some of those issues, and I think the Board has worked, you know, harmoniously together, each of us individually, to deal with some of those matters that you have addressed. So I think, you know, individual accountability in the manner that you propose is only if, if Roger chooses to make a comment.
Well, I think that's been said. Thank you.
Okay. Thank you. Are there any other questions? If not, I move then to the fourth item of business, which is the fourth agenda item, which is the resolution to re-elect Jon Webster. Jon was re-elected by shareholders at the 2020 AGM, and so standing for re-election by shareholders today. In accordance with Rule 46 of the company's constitution, he retires from the Board of Directors and, being eligible, offers himself for re-election. Jon, would you like to say a few words?
Yes, thank you, Chairman, and good afternoon, everyone. My background is in corporate law and governance. I was a partner in a corporate law firm for over 30 years. I'm currently serving as an independent member of ASIC's Audit and Risk Committee, and I'm also a director of a quarrying company and a trustee of the R.E. Ross Trust. The Board of AMCIL does take a very close interest. Our investment committee meets regularly. We challenge management to deal with your question on various investments. But at the end of the day, the Board has confidence in AMCIL's management team, which we think, based on the figures that we look at, has done an excellent job over the long term, with the shareholders' money.
It's a privilege for me to serve on the Board of AMCIL, and I seek your support for my re-election.
Thank you, Jon, and again, thank you for offering yourself for a further, a further term. Are there any questions online?
Again, no questions online. I'll just check on the phone once again.
There are no questions on the phone at this time.
All right. Thank you. Are there any questions in the room about Jon's re-election? Mr. Mayne.
This is not, I support Jon's re-election. This is actually not specifically a criticism of Jon, but it's just a general question.
Mm-hmm.
We've got our offices at level 21, 101 Collins, which is probably the most expensive real estate in Melbourne. The Tower of Power, along with Solly Lew and Macquarie and JP Morgan and everyone else. My question is, we probably have 20 directors across the stable. It's a very Melbourne establishment. The vast majority of them are from Melbourne. What is the entitlement, if any, for directors to occupy an office, a hot desk, or work out of the facilities at level 21, 101 Collins? Is it just, you just come in for meetings, and that's it, or is there any accommodation, workplace entitlement that comes with being a director of the AFIC stable? Could you also advise exactly how much rent we are paying, and how much space we've got?
Because it's obviously very pricey real estate, and have we ever looked at going for the lower cost model for accommodation, given that we pride ourselves on our low MER and low cost model more generally in how we manage our capital?
So Andrew may have a comment to make on this. It's obviously a matter we review every so often, but any non-executive directors who have offices on the floor, and I'm one of them, we pay market rate for that privilege. And actually, it is a privilege, I mean, to have access every day to the investment team and to be present in the office where a number of the meetings happen. A number of the NEDs that don't have offices on the floor, and I have to say, most don't. In fact, very few do. But it provides a continuing conversation, you know, daily with those who work in the team. So it's a, I think it's a very good outcome.
I'm happy to share with everyone that I pay for that privilege.
I'd also add that we actually, as an organization, get a lot of benefit from having the directors who do have offices there to be able to ask certain questions and to interact with. In answer to your question regarding office space, generally, the office space was renegotiated very well by Geoff Driver a couple of years ago, which was the right time to be renegotiating, so we were pleased with the outcome there, but I can't tell you what the terms were due to commercial and confidentiality reasons.
The other thing that I would say, Mark, I think it's probably fair to say, if we were somewhere else, we would not have the same access to the sort of directors and chairmen and CEOs, et cetera, that do come in, because they can come in whilst they're seeing everybody else up at that end of the town. So I think that's. There's a big benefit for having it there.
Just, just to clarify there, up until about two weeks ago, there was four directors who had an office and now paying for it, just four.
I should note, of course, that that wasn't. And Mr. Mayne, you made the comment, it wasn't directly related to the agenda item, but in the ecumenical experience, sense of letting everyone ask questions during the course of the meeting, that seems as good a time as any. Are there any other questions in relation to the agenda item? If not, I move. Oh, yes, the.
We've gone through those.
We've gone through those with the.
Yes.
With Jon. So if there are no further questions, I come to the fifth agenda item, which is the resolution to elect Paula Dwyer. So Paula was appointed by the Board in June of 2023, a couple of months ago, and is standing for election by shareholders for the first time. Before I ask Paula to say a few words, I'd like to say how delighted I was and how delighted the Board is that Paula accepted the invitation to join us, and in the relatively short time in which she's been a director of the company, she's made a really outstanding contribution. So we're really pleased. But, Paula, please, if you'd like to say a few words about your election today.
Thank you very much, Chairman, and good afternoon, ladies and gentlemen. I was appointed a director of AMCIL, as Rupert said, in June of this year. My qualifications and background have been summarized in today's notice of meeting. During my executive career, I worked initially as a chartered accountant, actually at Pricewaterhouse, and then as an investment banker at Ord Minnett, which is now JP Morgan. I was advising companies on mergers and acquisitions, equity capital markets, and restructuring. I was an advisor to the Commonwealth, Victorian, and South Australian governments on industry restructure and privatization in the telecommunications, financial institutions, and electricity and gas sectors, and that was during the 1990s. As detailed. Oh, sorry, I was also a founding director of a boutique wholesale investment funds manager, Calibre Asset Management.
As detailed in the notice of meeting, during the last 20 years, I have been the chairman and a director of a number of organizations in Australia. My professional experience allows me to contribute and bring relevant insights and challenge to the activities of AMCIL. I thought I'd just make a couple of comments in relation to the shareholder comments. Over the course of the last months, I've attended a number of the meetings with our investment companies and with the investment management team. I've been impressed by the questions that are detailed and direct, so I think that that's a feature of the investment team. And secondly, the process of distilling the views on resolutions that companies are putting to their AGMs to arrive at a voting position is very robust, and independent, and inclusive of all the directors.
With your support today, I hope to play a part in the ongoing improvement in the AMCIL performance, and I thank you for your support. Thank you.
Thank you, Paula. So in accordance with Rule 45 of the company's constitution, Paula retires from the Board of Directors and, being eligible, offers herself for election. I now show the proxies received in respect of this resolution, which are now on the screen. There were no questions asked prior to the meeting. Geoff, any?
No questions online. Again, just check there's no questions on the phone.
No questions on the phone at this time.
Are there any questions from the floor on this item? Mr. Mayne.
So final question for the day, and I support Paula's election to the Board. My, my question is that the, the AFIC stable for, ever since the Tabcorp float, effectively, has had an unwritten policy to not invest in gambling stocks, which I personally, as a gambling reform campaigner, think has been an admirable, noble, and responsible position to take. So my question is, when recruiting the former long-term chairman of Tabcorp to this Board, which Paula did, and I appreciate that that was only one of multiple companies that was in a portfolio over a 25-year Board career, did that come up in the discussion? And did we use an external headhunter to secure our new director, and did the Board interview multiple candidates before making the decision that we made?
Thanks, Mr. Mayne, and thank you for your stated support for Paula in her appointment. On this occasion, we didn't use an external consultant. It's a matter that was discussed around the Board, and we paid close attention to the broad portfolio of industry experience that Paula had had, recognizing the nature of the contribution we were hoping that she would make around our table. And from our experience so far, that's exactly what she's done. Are there any other questions? Any other.
No, we've gone through this.
All right. Well, look, ladies and gentlemen, that concludes our discussion on the items of business, and the poll remains open. I'll come to that, shortly, and then we'll get the outcomes. In a couple of minutes, as I say, that will be closed. Please ensure that you have cast your vote on all of the resolutions before us. For those in the room, may I now ask that you complete your voting card? Computershare staff, here and here will collect your voting card at the end of the meeting. A number of shareholders have inquired after former Chairman Bruce Teele. As many of you would know, Bruce's wife, Helen, died recently. Helen was very present at these meetings.
I've always remembered her sitting in a front row near to where Bruce was speaking, and I know that she will be remembered by many of you. Mark and I met with Bruce a fortnight ago, and his interest in our company, I can assure you, is undiminished. I'm sure that you would all want to join us in wishing him the very best. I suspect he'll be online, so I wanted to share that with you. And I'd like to thank all the shareholders present, both physically here and virtually, for your continued support and for the interest that you have shown in the affairs of the company.
It's a conversation that we are able to have a couple of times a year through other, through other devices, and of course, we welcome any direct questions or queries that any of you would have at any time. The investment team, specifically are holding shareholder meetings in Adelaide, Perth, Canberra, Brisbane and Sydney during March of 2024, if any of you are traveling, and.
And Melbourne.
And Melbourne. Yes, thank you. Why did I forget Melbourne? Maybe that's self-evident, but you're welcome to ask questions. So in a countdown to five, the online voting will be closed. One, two, three, four, five. The results of these votes will be released to the ASX later today. And I now declare the meeting closed. And am I inviting anyone for a cup of tea, or have we, Is that not happening?
Yes, yes, certainly.
Oh, great.
Refreshments outside.
Sorry, I didn't see the catering van.
No, that's definitely the.
You are very welcome to join us for a cup of tea. I'd hoped that that was going to be the case, but I didn't want to offer something that I couldn't deliver.
That's okay.
Let's all get together and continue the conversation over a cup of tea and a sandwich. Thank you for joining us.