People of the Kulin Nation, and pay my respects to Aboriginal and Torres Strait Islander people and their cultures to Elders past and present. We have a quorum, so I'm pleased to declare the meeting open. Welcome to those shareholders that are attending in person here today. I'm delighted also to extend a warm welcome to our shareholders who are participating through the webcast. The minutes of the 2024 Annual General Meeting are available for inspection by any shareholder by contacting the Company Secretary. The notice of meeting was distributed to all shareholders, and copies are available on the Company's website. I will take the notice of meeting as read. Let me outline the proceedings for today's meeting. I'll start off by presenting an overview of the year and a review of our performance. Our Chief Executive Officer will then follow with his address.
The Chair and CEO speeches we will be delivering shortly were released to the market at the start of the meeting and have been published on the Insignia Financial website. Following the overview, I'll table the financial reports and invite questions or comments. We'll then move to the re-election and election of Directors, followed by a resolution to adopt the REM report for the year ended 30th of June 2025, the grant of performance rights to the CEO, and finally, the appointment of the Auditor. At the conclusion of the meeting, please join us outside for refreshments. I'll now explain the question and voting procedures for today's AGM. Shareholders and proxy holders as a whole will have a reasonable opportunity to ask questions during today's meeting.
There will be time to ask questions on each formal item of business, and there'll also be time to ask general questions relating to the management of the Company when we consider the financial report for the 2025 financial year. I ask that questions be directed to me in the first instance. Please note that only shareholders holding a Lumi handset or a blue non-voting shareholder card are entitled to ask questions at today's meeting. There are members of staff standing at the back of the aisles holding roaming microphones. Please raise your hand, and an attendant will bring a microphone to you.
Where undirected proxies have been given to me as Chair of the meeting, I confirm that, as set out in the notice of meeting, I will vote the undirected proxy in favor of resolutions as part of items 2A and 2B, three, four, and five, and against item 2C. I confirm that I'll vote all directed proxies given to me as Chair of the meeting in accordance with the directions provided. Following discussion on each item of business, I will display details of the proxies received on the screen behind me. The final results of voting will be released to the market as soon as they are available. Let me begin by introducing the other directors. They are Scott Hartley, our Chief Executive Officer; Andrew Bloore; John Selak; Michelle Somerville; Jodie Hampshire; and Gai, unfortunately, she's been held up getting flights from the airport.
She is on her way, and she'll join the meeting. Here she is, just in time to introduce Gai. A very timely entry, Gai. I'd also like to introduce Dean Waters at the end here, who is representing the Company's auditors, KPMG. Also from our share registry, BoardRoom Pty Limited, we have Steve Hodkin and his team. Steve will act as the returning officer for the poll to be held later at the meeting. Also present today is our Chief Financial Officer, David Chalmers; our Group Company Secretary, Adrianna Bisogni; and our Chief People Officer, Mel Walls, and other members of the Executive team are also here today. I'll now move to my address. Welcome to the Insignia Financial 2025 Annual General Meeting.
Before I take you through the highlights of the year, I want to start by addressing the proposed acquisition of Insignia Financial by CC Capital Partners and its affiliates, which I'll hereafter simply refer to as CC Capital. I would like to refer shareholders to the Company's announcement on the 22nd of July 2025 that Insignia Financial has entered into a scheme implementation deed with CC Capital, which provides for CC Capital's Bid Company to acquire all the issued shares in the Company at a price of AUD 4.80 cash per share by way of a scheme of arrangement.
The all-cash consideration provides Insignia Financial shareholders with certain and immediate value, with the scheme consideration implying an equity value of approximately AUD 3.3 billion and representing a significant premium to the closing share price of AUD 3.06 on the 11th of December 2024, the day prior to the announcement of the receipt of an indicative proposal from one party. The Board unanimously recommends that shareholders vote in favor of the scheme, subject to the independent expert concluding and continuing to conclude that the scheme is in the best interest of Insignia Financial shareholders and in the absence of a superior proposal. In arriving at the conclusion, the Board, with the support of our advisors and management, undertook a detailed analysis of the Company's value and made assessments about the risks that we may face as a Company as we continue to execute our 2030 vision and strategy.
The analysis, along with the Board's reasons for recommending that shareholders approve the scheme, will be detailed in the scheme booklet to be distributed to shareholders prior to the meeting. The scheme booklet will also include the conclusion of an independent expert that has been appointed to assess the fairness of the value being offered by CC Capital. At the scheme meeting, shareholders will be asked to vote on the scheme. The scheme can only proceed if, among other conditions, it is approved by a requisite majority of Insignia Financial stakeholders, being more than 50% of Insignia Financial shareholders who are present and voting in person or by proxy, and at least 75% of the total number of votes cast on the resolution at the meeting.
The scheme also requires court approval with the implementation conditional on CC Capital obtaining Foreign Investment Review Board and Australian Prudential Regulation Authority approval and the satisfaction or waiver of certain conditions precedent. I note that approval has already been granted from the Australian Competition and Consumer Commission and the Financial Conduct Authority. Unfortunately, we're not in a position at this point to be more specific on the timeline of when the scheme booklet will be dispatched or the meeting held, as there are a number of regulatory processes that need to be completed, but you can rest assured that we are working closely alongside CC Capital and the regulators to progress the approvals as quickly as possible. We do remain confident that the scheme meeting will be held in the first half of 2026.
As a Board, we remain firmly committed to ensuring we have the right governance and leadership in place to guide our Company into the future. We regularly review our Board composition to confirm alignment with strategic priorities, making sure we bring the right mix of skills, experience, and perspectives to effectively support management in delivering long-term value. In terms of Board renewal, both Michelle Somerville and Andrew Bloore are standing for re-election today, and the Board recommends voting in favor of both Directors. I would also like to take the opportunity to bid farewell to John Selak. As foreshadowed at our last AGM, John will step down from the Insignia Financial Board at the conclusion of today's meetings. Having reached his nine-year anniversary, I'd like to thank John for his outstanding contribution and commitment to Insignia Financial over the last nine years.
Over the last year, both government and regulators have continued their focus on our industry. We welcome the opportunities provided to us through consultations and roundtables to work constructively with them to improve outcomes for Australians. We take our governance responsibilities seriously, and one of the Board's key priorities this year has been to strengthen the foundations of risk and governance across Insignia Financial. This work is essential to ensuring we remain a trusted and resilient organization for our customers, regulators, and you, our shareholders. Good governance means taking accountability, and throughout the year, we have maintained a strong focus on meeting our obligations under the Court Enforceable Undertaking and advancing our Rectification Action Plan. We've also implemented a significantly enhanced risk management framework supported by clearer accountabilities, stronger governance structures, and a modernized risk management system.
Importantly, as I signaled in my address last year, we welcome Danielle Press as Chair and Non-Executive Director of our Registrable Superannuation Entity Boards. Danielle's sharp regulatory insight and extensive industry experience has further strengthened our governance, positioning us for long-term success. This year, our staff also partnered with the Insignia Community Foundation to fulfill over 1,000 volunteer roles. This included Insignia Financial staff acting as mentors through the Arise Foundation on topics covering career mapping, goal setting, character strengths, and elevator pitch designed to strengthen employment prospects. We are grateful to the Insignia Community Foundation for its ongoing support and leadership in creating meaningful opportunities for our people to give back. Their work enables us to connect with communities in impactful ways and ensures our efforts are aligned with the real needs across the country. I'm proud of the contribution our people make, whether through volunteering or giving.
Our employees support and engage with organizations that provide food relief, clothing, and educational support. Their willingness to share their time, skills, and energy amplifies the impact of the Insignia Community Foundation's work across the country. We also launched My Community, a digital platform that gives employees access to over 700 charities for donations and facilitates all volunteering, with permanent employees and maximum term contractors receiving 15 hours of community leave each financial year to volunteer. Our financial results demonstrate a turnaround, and Insignia Financial's CEO, Scott Hartley, will speak to this during his address. The 2025 financial year marked a pivotal chapter in Insignia Financial's journey.
It was a year defined by transformation and the execution of key strategic milestones, including the transition of a range of administration and technology functions to global technology leader, SS&C Technologies, following the signing of a master services agreement in February to simplify and transform our Master Trust business. This, along with other strategic milestones that Scott will address, has positioned us well for sustainable growth. Under Scott's leadership, the disciplined execution of our strategy has not only strengthened Insignia Financial's position but also attracted international acquisition interests. As I mentioned earlier, the proposal from CC Capital offers immediate and certain value for shareholders, and the Board's recommendation takes into account external and execution risks.
However, as the proposal from CC Capital remains subject to shareholder and regulatory approval, the Board must be and is focused on delivering our 2030 vision to become Australia's leading and most efficient diversified wealth management company. We'll do this by leveraging our scale, heritage, and deep commitment to creating lasting value for shareholders, members, and the communities we serve. Before I conclude, I'd like to take a moment to express my sincere appreciation to the Insignia Financial Board of Directors, as well as the Boards of our responsible and registrable superannuation entities. Your guidance and stewardship have been invaluable. To our employees, advisors, and customers, on behalf of the Board, I thank you also for your unwavering support throughout the past year. Your commitment continues to be the foundation of our success. Thank you once again for your continued trust and support.
I'd now like to hand over to Scott to share an update from the business. Thanks, Scott.
Thank you, Allan, and thank you all for attending our 2025 Annual General Meeting. With the Chair having outlined the scheme and the next steps, I will now turn our attention to Insignia Financial's performance throughout the 2025 financial year. We are pleased to report that Insignia Financial delivered an underlying net profit after tax of AUD 255 million for the year, ended 30 June 2025, an increase of over 18% on the prior year. FY 2025 also brought a net profit after tax of AUD 16 million, which is a significant improvement from the net loss of last year. We're continuing to see momentum in our underlying business. This growth is underpinned by strong markets, rising revenues, and a steady increase in our average funds under management and administration, what we refer to as FUMA.
We closed the financial year with FUMA at AUD 330 billion, a 6% increase from FY 2024. In our RAP segment, net revenue rose, driven by higher funds under administration. While we did see some margin pressure from the migration of MLC RAP to Expand and some minor fee reductions, the overall impact was positive. Similarly, in our Master Trust business, net revenue increased thanks to higher average funds under administration. Turning to asset management, we've made significant strides in expanding MLC's separately managed accounts capability. Funds under management grew to AUD 3.3 billion in FY 2025. We also saw strong momentum in our multi-asset retail managed funds, with net inflows of over AUD 1 billion over the year. Finally, the employed advice businesses, Shadforth and Bridges, have shown solid growth.
This has been driven by improved advisor efficiency and a strategic focus on higher value clients, which has led to an increase in revenue per advisor. I am pleased with these results and with the progress Insignia Financial has made in laying the foundations for sustainable growth. At our Investor Day just over a year ago, we shared an ambitious roadmap: our 2030 vision to become Australia's leading and most efficient diversified wealth management company. This vision is grounded in our belief in the power of financial advice, in the enduring strength of our brands, and the breadth of our capabilities across the entire wealth management value chain. FY 2025 was a foundational year. We completed a range of transformation and separation initiatives that have set the stage for long-term sustainable growth. Over the last financial year, we separated from Rhombus Advisory.
We bettered down the MLC RAP to Expand migration and finalized our separation from NAB, one of the largest and most complex wealth management separations in Australian financial services history. These achievements are more than milestones. They are the building blocks of our future. With the groundwork now in place, we've begun executing our 2030 vision and strategy and are seeing early momentum. As the Chair mentioned in his address, a significant milestone in this journey is to simplify and transform our Master Trust business, which we are doing through our strategic partnership with SS&C Technologies, one of the world's largest fund administrators and a leading provider of financial technology. As part of the agreement announced in December, we transitioned key administration and technology functions to SS&C, including nearly 1,300 of our people. The transition was smooth, with no disruption to customer service.
This partnership unlocked scale, efficiency, and service excellence for our members and shareholders. By leveraging SS&C's global technology, we're converting our size into meaningful benefits: lower cost to serve, more competitive fees, and industry-leading outcomes. It's an innovative model, unprecedented in scale, within the Australian financial services. Our relationship with SS&C is off to a strong start, with both parties committed to delivering long-term value. Over the next three years, we'll work closely together to fully transform our Master Trust business. Another landmark step in our transformation is the relaunching of MLC, a brand that dates back to 1886, as our forward-looking customer brand. Recognizing its untapped potential, we are repositioning MLC to meet the evolving needs of today's investors. Our new campaign featuring Matt Berry is focused on the fact that a glorious retirement is a lifetime in the making.
It isn't built in the future; it's built in the present, day by day and decision by decision. It might be counterintuitive for a super fund to claim that they don't care about the future, but MLC is reframing how Australians think about superannuation and retirement, shifting the focus from distant outcomes to present-day action, because from the moment you start working, you're preparing for retirement. Alongside the launch, we have rolled out a range of new member engagement activities, an uplifted member experience, and a new website with industry-leading tools and calculators. It's all part of our commitment to helping Australians make confident financial decisions in every major life moment. Today, Australians are working longer, transitioning careers, traveling more, and engaging with retirement in deeply personal ways. The traditional model of stopping work entirely and withdrawing super as a lump sum no longer reflects reality.
More than 2.5 million Australians are expected to retire over the next decade. That's roughly one Australian every two minutes. Our new innovative retirement solution, MLC Retirement Boost, is designed to meet this shift. It offers greater personalization and flexibility, enhances the potential of superannuation from the very first contribution, and aims to deliver higher retirement income for more Australians. We also announced an important partnership with TAL and Challenger to launch a center of excellence for MLC Retirement Boost. This center of excellence brings together distribution specialists, digital advice journeys, and advanced modeling tools, including the new Retirement Boost Optimiser. This tool will help advisors and clients visualize their total retirement income across superannuation, retirement savings, and the age pension, offering a clearer picture of their financial future.
We know everyone's retirement looks different based on their individual circumstances, and we recognise the critical role that financial advisors play in retirement planning and delivering high-quality retirement advice. The achievements of the past year would not have been possible without the hard work of our people. I want to express my appreciation to my Executive team, our dedicated employees, and the wider Insignia Financial community for the commitment to delivering for our customers and shareholders. A high-performance culture is the most critical capability for any successful organization. Strategies may evolve, but without a strong cultural foundation, execution will fall short. This culture is reflected not only in results but in the energy, collaboration, and the mindset of our people. Building it starts with being purpose-led and guided by clear values. In wealth management, our purpose is inherently meaningful, and our impact is clear.
Over the past year, we've laid strong foundations for sustained performance. We've established a clear operating model, defined accountabilities, and articulated our leadership expectations through the development of our leadership promise. For the 2026 financial year, our focus remains on working towards and executing against our 2030 vision and strategy to become Australia's leading and most efficient diversified wealth management company. Thank you to our Board, and thank you to you, our shareholders, for your continued trust and support. Thank you.
Before I move to the first item of business, let me cover some procedural matters. Once voting opens, in-room attendees will be presented with the list of today's resolutions on their voting keypad. Use the trackball to highlight the resolution you wish to vote on and press the green square to confirm. The resolution text will appear. Bring up the voting options by pressing the green square.
Press one to vote for the item and two against, or three to abstain from voting. To move on to the next item, press the green square or return to the full list of items and press the red triangle. I now declare voting open on all items of business. I will give you a warning before I move to close voting. Please feel free to vote at any point during the Q&A session. I'll also report on the number of proxies received by 9:30 A.M. on the 18th of November at the conclusion of the discussion on each item. We'll now proceed to the first item on the agenda. The first item of business is the tabling of the financial reports and the Directors' and Auditors' reports. The financial statements for the year ended 30th June 2025.
The Directors' report and the Auditors' report were included in the 2025 annual report. They're also available on the Insignia Financial website. There is no vote required on this item of business. Shareholders will have the opportunity to raise questions on these reports or any aspect of the Company's operations. Shareholders may also ask questions of the Company's Auditor. Such questions only need to be relevant to the conduct of the audit, the preparation and the content of the audit report, the accounting policies adopted by the Company, and the independence of the Auditor. I've been advised that there were no questions for the Auditor received ahead of today's meeting. There is a separate agenda item dealing with the REM report. I'll also address questions about the REM matters when we consider that item of business. I ask that you save any questions about REM matters until then, please.
There will be no vote on the first agenda item. It is a discussion-only item. I may refer questions on operational or accounting details to management here today. Thank you to those shareholders who submitted questions in advance of this meeting. Answers to questions received in advance from shareholders will now be answered. I've only had one question in advance, and that question is: Do you invest in entity listed in a report of the UNHRC's special rapporteur on the situation of human rights in the Palestinian territories occupied since 1967, entitled "From Economy of Occupation to Economy of Genocide"? Like many globally diversified investment managers and Australian superannuation funds, Insignia Financial has a small amount of indirect exposure to some of the entities listed in that report. The exposure is generally very small and includes companies headquartered in Israel and Israeli government-issued and Israeli corporate-issued bonds.
Our investment managers generally do not apply sector exclusions or screens to particular industries or countries other than those sanctioned regimes currently implemented under Australian sanctioned law. I now open the matter, item one, receipt of financial statements for discussion. I ask that you please state your name and then name of anyone you are representing today, and then ask your question. If you wish to ask a question, please raise your hand, and someone will hand you a microphone. If you have a question on the REM report, please hold on to that question until we reach item three. Please note that only shareholders holding a Lumi handset or a blue non-voting shareholder card are entitled to ask questions at today's meeting. In the interest of time, I'd ask that you please ask no more than one or two questions. Please, I open up to questions from any shareholders.
Thank you. Thank you, Chair. Good morning, David Kingston from K Capital. Look, firstly, I'd like to congratulate the Board on enhancing shareholder value by negotiating with three parties on potential bids. So well done. I think that's a good step to enhance shareholder value. Just a couple of issues. The market cap at the bid level is AUD 3.3 billion. Scott mentioned before that the underlying NPAT is AUD 255 million. Now, that's a multiple of 13x , which is not huge for a substantial company. Secondly, I note that the operating cash flow for FY 2025, when you exclude the one-offs of remediation and transformation and separation, is around about AUD 400 million. This Company generates a lot of cash flow. Thirdly, I think Scott mentioned the FUMA is around about AUD 330 billion. That's a lot of FUMA.
Finally, I'd say that one of the peers, HUB, has a market cap of AUD 8.3 billion, which is actually up 25% since 1 July 2025. The other peer, they're not identical, but an approximate peer, NWL, actually hasn't gone up because it's caught up in some regulatory problems. Having regard to those four aspects, could someone just give us a bit of guidance as to whether this is a knockout bid? It's certainly a terrific premium over the price at which the stock fell to after the dividend was cancelled. On the parameters I just read out, it looks like a modest bid without being a knockout bid. Thank you. Appreciate the response.
Thank you, David. I think generally from the comment you made, I think those figures are generally broadly correct, what you're stating.
You will recall, I think the first bid came in on the 11th of December, from memory, last year. We had three initial bids starting at AUD 4. We eventually finished it, which we rejected, until we eventually got to the bid of AUD 4.80. The challenge for the Board, of course, is unlike being a financial services organization, it does take time for the regulatory approvals to happen. The Board had to think at least one year out when this could possibly settle. The reality is none of us have any idea what markets could look like in another 12 months. We've been through a generally strong market period, although we have seen volatile issues recognized this week. We don't really know where markets will be.
From $3.06 in December last year to now $4.80, as a Board and a responsible Board, we felt we had to put that to shareholders to make a decision on. That will be in the hands of shareholders to make that decision when the scheme deed is actually put to them. Everyone will have their opinion, and you have your opinion, which I respect, but it will come down to what the shareholders think.
Thank you. Can you comment on the issue raised by Scott that the underlying NPAT is $255 million, which is substantial? Primar Facy, as you rightly say, Chair, everyone can have a different opinion and the vote will not be for a while. Primar Facy, an NPAT of 13x underlying NPAT, sorry, 13x multiple underlying NPAT, is not particularly huge.
I just appreciate some thoughts on that as to why the Board thinks it's a compelling offer given the NPAT multiple. Thank you.
If I may just chime in. 13x is about 5x higher than we were trading this time last year, right? We are a different business to HUB, and HUB is a RAP business, and about 20% of our business is a RAP business. MLC Expand represents about 20% of our revenue and our earnings. That RAP business is building momentum, but it's nowhere near HUB's growth. HUB gets the multiple it gets because of the growth that it has had over a sustained period of time. It's impressive growth, and therefore it gets a multiple that's sort of in the 35x range, I think, when you look at the latest financials.
I don't think you can compare our business, which is a broad-based wealth management business, which has an asset management business, a RAP business, some advice businesses, to HUB. It's simply not the same. Our growth isn't anywhere near where HUB is at this point. When you look at the biggest part of our business, Master Trust, it's instilling net outflow, and stubbornly so. That is half the revenue and half the profitability of our business, and that's going to take some work to turn that around. The market's not going to rate us anywhere near 35x anytime soon. We certainly think, as a Board, that 13x , a bit over 13x , I think, is very good value as we stand here today.
Totally respect HUB's not a direct peer, but I do think 13x for a major company, which is still recovering, as you say, a diversified financial group, is a modest multiple. It's not a, in my humble opinion, not a knockout blow. Anyway, everyone's got a different opinion. Thank you.
Thanks, David. Any other questions from the floor?
Thank you, Mr. Griffiths. I note in this year's annual report there are 16 pages on climate action compared with, from what I could find, two sentences related to shareholders, one sentence related to your employees, and zero related to your shareholders. I wonder about where the focus is for this Board. Another thing I'd also like to mention related to that, related to customers, is the remediation costs. The company has paid out over AUD 700 million in the last four years in remediation costs.
The remediation expense going through the profit and loss, which is AUD 370 million over the last five years, exceeds the net loss of the company over those five years, AUD 316 million. In other words, if there was no remediation, we would actually be a profitable Company over that time. Let me also add that excludes AUD 80 million in legal costs, legal settlements. I know you talked about remedial action plans and meeting legal undertakings. What I did not hear was anything around training of staff, discipline of staff, improving customer outcomes. Surely that has got to be more important than just meeting your legal undertakings and setting up another committee. My question is, and I have a second question after this, but my question is, what practically is actually happening to address this? Because this seems to be an underlying cultural issue that the Board has not addressed. Thank you.
Yep. Okay. There are two parts to that, which I'll answer, and Scott will also chime in with some comments as well, too. First bit regarding the ESG reporting, et cetera. A lot of that is mandatory reporting. It's also required by a lot of our institutional investors to actually invest in this C ompany. They want to see that we actually are doing those types of things. I can assure you the Board does focus heavily on culture of the organization, and likewise the executive team are rewarded on getting the culture right. I can't deny those things that have happened since the Royal Commission. The Royal Commission back in 2018 was a huge turning point for not only this Company, but a lot of the traditional players. There was a high cost that was paid through remediation.
We've largely, through the worst of all that remediation, there'll always be small product remediations that will happen in a Company this size ongoing. There'll always be some form of remediation, but not the big numbers that we've seen historically that largely a lot of that applied to advice remediation. This Board continually focuses on the culture of the business, the staffing of the business. That's measured through plenty of surveys that the Board receive. I test the culture personally by catching up with a lot of people. I have a lot of coffees with a lot of the staff. If I ever get what I call disconnects in the messages that I have informally, then we ask further questions of management. Scott, do you want to enhance on some of that?
Yeah, definitely. On the remediation, it's historical.
A lot of it relates to the acquisitions that were made of MLC and in particular ANZ. When I joined the company in February last year, it was clear to me that there had been a lot of every half, we were basically upgrading remediations, and we went through a process of getting all of the remediations out on the table, valuing those, and providing for those remediations. As we sit here today, that was done in June last year. As we sit here today, there is no further legacy remediations that are going to be required in this Company. As Alan said, day to day, make goods are done for customers. What we've been talking about and what's been below the line that you're talking about is legacy remediation, and we think we have that behind us.
There is no sign that that isn't behind us at this point. In terms of culture, a really good question and a really important question. I know reading the annual report might not give you the full color and extent of what we have done in the Company. Since joining, we were putting that in. Oh, yeah. Sure. Let me explain what we have done. When I joined the company, we were organized very differently. We were organized as a functional organization. Based on my experience, having run these businesses before, I know that doesn't deliver the best outcomes for shareholders and certainly doesn't deliver the best outcomes from a risk perspective. We have organized the Company now into four essential different business units. We have Asset Management, RAP, Master Trust, and Advice. Each of those businesses has a CEO.
The CEOs have 100% accountability and 80% of the responsibility. When I say that, there are some shared services that they do not have total control of to deliver the performance of their business and to deliver that in compliance with the law and with a strong risk culture. The safety element is just as strong as the business performance element for each of those CEOs. That accountability drives straight down the line through everybody in that organization. Everyone is crystal clear on their accountabilities, including their accountabilities to running a safe organization and a highly compliant organization. We have had many catch-ups with the regulators in the last 12 months. I think they would say to you, compared to where we were 18 months ago, it is night and day. We have completely transformed the culture of this organization. Our risk culture surveys we do ourselves.
The regulators also do risk culture surveys, have improved remarkably over that timeframe. I can assure you that everyone in the organization is very focused on their accountability for risk. The key to risk maturity in any organization such as this is line one risk. Not line two, not the risk team or the audit team or even the Board being accountable for risk. It's line one. The people who run the business have to be accountable for it. That's crystal clear in our organization. I hope that helps.
Thank you. I also have a second question directed to the Board. I've been a shareholder of this Company for in excess of 20 years, as I imagine some people here have. Throughout the period 2023-2024, the share price was below the issue price way back in 2002.
What we saw was essentially a destruction of shareholder value over a couple of decades. The Board has been bailed out, for want of a better word, by an approach from a foreign body. We have an 180-year-old Australian institution here, which was well run, well respected. I understand that the Financial Commission created some problems. It is a Company, and what Mr. Hartley is saying is correct, on the verge of a turnaround and doing well. My question is, why then, if that's true and you believe in what you're saying, why would you be wanting to sell out to a foreign corporate raider who can see, it appears, far more value than this Board can in this Company? Thank you.
I thought I'd go back to the answers. I'll probably go over to David. I hear the point you're making.
At the end of the day, we are simply trustees on behalf of the shareholders. When the share price, when this first offer was put to us at AUD 3.06 and now we are at AUD 4.80, it would be remiss of us, of a Board, not to put that to a shareholder vote. We sounded out, obviously, shareholders as we were going through. You cannot sound out every shareholder, but we took soundings from a lot of shareholders. The overwhelming feedback we received was, "You should accept the AUD 4.80." At the same time, we also did due diligence on the three bidders. We have also arrived at the conclusion that the owners, if they were successful, the future owners, would be suitable owners of this business going forward. I take all your points that you have made. They are all valuable points.
As I said, we are simply the trustees, and we need to put this to shareholders for shareholders to make a choice on it.
Sorry, I'll just add to that while you're grabbing the microphone. Look, CC Capital are along too. They're different to typical private equity. They are what they call permanent capital. They own businesses for long periods of time. They want to build sustainable businesses. I wouldn't describe them as corporate raiders. We're very comfortable they'll be good owners of this business and support this business going forward. I would just add to that comment.
Just one final comment. Thank you, Mr. Griffiths.
There is another option, which would be for I understand that there are two new Board members over the last year, would be for the remainder of the Board to resign and actually hand it over to people who do believe we'll be able to extract shareholder value for the owners of the Company. Thank you.
I think in the first instance, we need to put it to the shareholder vote based on the feedback that we've received already from shareholders that it would appear that the feedback we've had, the majority of shareholders want this to proceed.
Mr. Chair, my name is Meena Wahi. I'm a voluntary company monitor with the Australian Shareholder Association.
I was going to reserve my question for later, but in context of what's been discussed just now, I'd like to make a comment and ask you a question, which is that with the scheme, after the scheme is approved by shareholders, IFL would no longer be listed on the state and stock market. Whilst you have worked hard to deliver value for shareholders, the shareholders would no longer have the opportunity to invest in the future growth of the Company. An Australian icon would no longer be a publicly listed company. How do you explain that? In a way, I feel happy for shareholders that they're getting a great return on investment, but it somehow feels like there's a missed opportunity there for the future.
Okay. Both of us, Scott and I, will both answer that. Yes.
If the deal does proceed, the Company will no longer be listed after what? The company has been around 170+ years and will continue to be around in the future. It's only been listed since the 1990s. Once again, as I said to you, the Board had to stand back from those sort of emotional things and actually deal with the logic. The logic is this was a compelling offer that we had to put to shareholders based on where the share price had been, quite frankly, stuck for a couple of years and to give immediate value because we can't predict where markets are going to be in the future. There's always execution risks with execution in 2030. Whilst we have confidence as a Board, there's a lot of things in the global environment that are beyond our control going forward.
It would be, once again, irresponsible of us not to actually put it to a shareholder vote.
I'll just add that the Company does not disappear. It is still an Australian icon. It might be owned by foreign investors, but it is still an Australian icon. It will continue to exist. It'll be a strong player in the Australian business, in the Australian market. The MLC brand, as our go-forward brand, will be very prominent and very proudly prominent across the industry. I don't think ownership changes the legacy of the Company.
I mean, just in terms of, for example, our Superannuation members, it's still regulated by the Australian regulators. Australian law, as Scott said, nothing in relation to that changes other than the actual physical owner of the Company is different. I think you had another question too, didn't you, Meena?
Did you say you had another?
Oh, not that. That's it.
Okay. David?
Thank you. I totally respect you putting it to shareholders, and that's 100% legitimate. Just a couple of follow-ups, though. We've all seen the American corporate Cosette bidding for Mayne Pharma and seeking to renege on the SIA. If you could perhaps clarify and update on a couple of the preconditions, FIRB and APRA. I'm certainly well aware because I deal in the bonds market that CC are currently syndicating a loan. I think their debt funding, which is probably around about half of the consideration, and I think they're putting in a fair bit of equity, but that seems to be coming along. An update on FIRB and APRA, please. I have one other follow-up, please.
No update on the Foreign Investment Review Board at this stage, but we are progressing very well with APRA. We had a lot of questions that were sent in the last month. So far, no red flags. We're just working through all those issues with the regulator. At this stage, it's on the timeline, which we're hoping early in the new year.
I just add, I don't think we can or should preempt what the regulator's outcome might be. That said, there's a process. It's a thorough process. We aren't specifically, but the CC Capital Consortium are responding to those questions. We're providing some support in that, but essentially, it's on them to get that approval, not us. I think typically, FIRB would follow APRA in these processes. We won't see a FIRB approval before an APRA approval, is what I understand.
They take time. APRA always said from the get-go that they felt they needed at least six months. If that's true, that's probably around February, March next year.
Thank you. Look, as you know, FIRB is the stumbling block on the bid for Mayne Pharma. My second follow-up is that I respect, as I said earlier on, I think the Board did a great job in negotiating with three parties. 100% respect. You need to put it to shareholders, and shareholders can decide. I totally respect and commend you on the job you've done. At the end of the day, one thing I have is that effectively, CC are receiving the asset at a certain price but not paying for it for around about probably a year.
Now, we don't know whether the consideration's going to be paid in May, June, July, but I don't think it'll be paid before May. From the date of the announcement of the deal to the date of shareholders actually receiving the money is a long time, much longer than in a conventional bid. There's no dividend coming through. Effectively, the offer of AUD 4.80 is probably more like AUD 4.50 if you discount it back because there's no return for whether it's 10 months or whatever. I'm not sure. We don't know. Depends on the approvals. Effectively, the bid is getting an interest-free loan, a fixed-price, an interest-free loan for 10 months, call it, and no dividends to shareholders. Perhaps you could comment on that, please.
Yeah. The AUD 4.80 bid included taking into account a dividend that would have or could have been paid this year if, under the conditions precedent, it were to drag on into, let's say, July next year. Part of the deal is we will look to look for a dividend, a special dividend, in July next year.
Yeah. That's part of the conditions. If it drags on more than 15 months, then I think it's or 12 months, I think a dividend is payable.
That's good because even 12 months, if it's 12 months, Scotty, is dramatically longer than a normal corporate deal.
I get that because of the regulatory approvals. We have no it's the nature of our industry. We can't do anything about that.
Yes. Good morning. I come in a little bit late, and I think I missed out on quite a bit.
Secondly, I'm half deaf, and I find that it may be a laughing matter for you down there, sir. That's you, yes. Anyway, I'd like to know whether we'll continue on with the Insignia or we lost it.
No, no. Not at all. Insignia Financial is the holding Company, and that will be the holding Company name going forward. MLC is simply a trading brand that we use out there as consumers. If I can use another example that exists out there in the industry, you've heard of, obviously, the Wesfarmers group, is the holding company that one of their most important trading brands out there is Bunnings. Insignia will be the holding company. That's the company that all our employees are employed by, Insignia Financial Limited. MLC is the trading brand that we use out there with consumers for marketing, superannuation, et cetera.
We're not selling, in other words?
Yes. We sold the holding Company. That is the Company you'll be voting on, Insignia.
Where do we stand at the moment, then?
You are a shareholder of Insignia Financial Limited, and your shareholding, if you vote on it, will be acquired by CC Capital. Your shares will be acquired at AUD 4.80 by CC Capital. Thank you. Any further questions? If there are no further questions, I declare that the financial statements and reports have been tabled at the meeting and have been duly received and considered. The remaining items in the agenda require resolutions from the meeting. Following discussion on each item of business, I'll display details of the proxies received on the screen behind me. First is the re-election of Michelle Somerville. Michelle has been a director of the company since 2019.
Michelle is Chair of the Group Audit Committee and a member of the Group Risk and Compliance Committee, Group People, Rem Committee, and Group Nominations Committee. Michelle is also a member of the Due Diligence Committee for the proposed scheme of arrangement. In accordance with the Company's constitution, Michelle holds office until this meeting. Being eligible, she offers herself for re-election. Michelle is an experienced non-Executive Director bringing deep and relevant finance, risk, and governance experience to the Board, having worked in the financial services industry in both her Executive and Non-Executive roles. Previously, she was an audit partner with KPMG Australia for nearly 14 years with a focus on financial services industry in both Australia and overseas. Michelle is also an independent Non-Executive Director on the boards of the following: Insignia Financial subsidiaries, OnePath Investment Holdings, IFL Internal Audit, and OnePath Funds Management Limited.
Michelle has brought a highly valuable set of financial skills and expertise to our Board. Your Board endorses and recommends the re-election of Michelle as a Director. I will ask our Company Secretary to advise whether any comments or questions have been received in relation to Michelle's appointment. Joseph, any questions received? Sorry. No. Thank you. Are there any questions or discussion in relation to the re-election of Michelle Somerville? David?
Just a quick follow-up, and I totally respect what Scott said. If we look at the Board endorsing a multiple of impact multiple of around about 13x impact, that compares with the average financial sector multiple of around about 19x .
I'd just be interested, given your experience, which is very good, be interested in what gave you confidence that around about 13x underlying NPAT is fair when the CBA, the banks are far higher than that. I accept what Scott says, that HUB's an exception. To me, 13 is a pretty modest multiple. I think I'd be grateful for your insights as to why you've made this recommendation.
I guess what I would say first is that both Scott and Allan have walked through the process that we went through. The Board, with management and advisors, have looked at a whole range of inputs into that valuation process, taking into account many different methodologies. What we felt is that the outcome is a fair outcome based on those valuation methodologies.
As Scott and Allan have said, we feel comfortable then in putting that value to the shareholders for them to consider. We're also going through the independent experts' valuation process at the moment. That will be one of the inputs into the scheme booklet that will be finalized in the next little while.
Is there any major Australian listed financial services company that trades at 13x NPAT? I've seen a lot of deals. I don't think the independent expert is going to do anything other than endorse this. I've never seen an independent expert who has rejected a recommended deal. I don't think that's going to provide any great clarity. I totally accept what Scott said, respect the consideration of the Board. Could you just give us an example of something that is trading at a similar multiple to what you're recommending?
I'm interested in the 19x that you quote. I suspect that's skewed pretty heavily by CBA.
It's the official.
Yeah.
It's the official one.
It'd be weighted by CBA.
I've got your answer. Yes.
Look, we don't have that data at hand, but there are certainly numerous financial services organizations that trade at 13 or below.
Don't think there's any major ones, though.
Major ones? I think the banks are pretty toppy right now, sure. I think AMP is about 13x last time I checked. Pretty major. There aren't any other major ones. Yeah, please.
David Chalmers, CFO. You said I kind of made the assumption you referred to net profit after tax, but it's important as you also noted it's underlying net profit after tax.
One of the bits of feedback we receive from shareholders is around those adjustments between unpaid and impact. There is a little bit of subjectivity in terms of those numbers. If you look at it as a multiple of the impact, which we would not say is necessarily representative of the long-term business, the multiple is a lot higher than that. I would certainly endorse the comments that the way the valuation was derived was to look at DCFs, to look at multiples, precedent transactions, in addition to looking at multiples of impact. When we put all of those together, we then take a view that sits across each of those. The last comment I would make, and again, as you noted, is there has been the opportunity for three bidders to consider whether that price was appropriate.
Given the way the private equity guys tend to sort of behave, were there a chance where one of them thought that there was a price that was where the other one was getting away with a price that was too low, I think we could have confidence that the market would have corrected itself and the two others would have taken a different view. It is certainly a complex issue around valuation, but I guess I'd just add that NPAT is just one metric we look at. It's not the only one, but certainly note your comments around that metric in particular.
Just very briefly, as I mentioned, HUB, and it's a different company. It's up 25% since July. A number of the banks are up. CBA's coming off a ridiculous high.
Yeah, things change, and the view might be a little bit different by the time of May next year. Markets might move, and CC might try and pull out. Who knows?
Yeah. Help me out, David. Is earnings in the PE multiple that you're referring to, is that underlying NPAT, or is that NPAT?
It's underlying. It's exactly what you read out in the CEO's address, AUD 255 million underlying NPAT. The comments from the Finance Director are correct. There is a difference between NPAT and underlying. I also do look at the cash flow, which when you eliminate the one-offs, is around about AUD 400 million of cash flow for the FY25 year.
Thank you.
Yeah. Perpetual, my colleague here, as fellow director, has just pointed out Perpetual's trading at 10. There is another major institution below that. There's others. Yeah. We had some problems.
Are there any other questions or discussion in relation to the re-election of Michelle Somerville? The companies receive the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies in favor of the resolution. Next, item 2B, the election of Andrew Bloore. Andrew is an experienced Non-Executive Director, entrepreneur, and farmer. He has designed, built, and sold a number of businesses focused on the development of key disruptive technologies and distribution services in traditional markets to create business efficiencies, both as an executive and/or as a director for companies including Smart Super, Super IQ, and Class Super. Andrew's worked on a range of Senate and Treasury committees with the Australian Taxation Office Regulations Committee on regulation for the superannuation industry.
In 2016, Andrew sold his Superannuation Administration business to AMP, stepped down from the Senate and Treasury committees, and is now focused on contributing to organizations as a Non-Executive Director. Andrew is currently Chairman of Guild Group Holdings Limited and a Non-executive Director of Guild Insurance Limited, Steadfast Group, and Simons Group Limited. Andrew is currently Chair of the Group Nominations Committee, a member of the Group People and Rem Committee, Group Audit Committee, and the Group Risk and Compliance Committee. He also is Chair of the Due Diligence Committee for the proposed scheme of arrangement. Andrew is a Director of the Company's subsidiary Registrable Superannuation Entity, Licensee Boards, IFL Investment Management Limited, Oasis Funds Management Limited, OnePath Custodians Limited, and New List Nominees until the 9th of December 2022. Your Board endorses and recommends the re-election of Andrew as a Director.
I will ask our Company Secretary to advise whether any comments or questions have been received in relation to Andrew's appointment. Thank you, Joseph. Are there any questions or discussion in relation to the re-election of Andrew Bloore? The Company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution. The next item, 2C, is the election of Stephen Maine as Director. In accordance with Rule 57B of the Company's constitution, Mr. Maine, an external Non-Board endorsed candidate, offers himself for election. On the day Director nominations closed, in fact, 15 minutes before the deadline, the Board received a nomination from Mr. Maine seeking election as an Independent Non-Executive Director.
The Board, supported by the Nomination Committee, reviews the size and composition of the Board, having regard to the Board's skills matrix, and the objective of the Board comprised the mix of skills, expertise, experience, and diversity required for the Board to discharge its obligations effectively. The Board is satisfied that the current composition of the Board aligns with the ASX strategic objectives. The Board has carefully considered Mr. Maine's nomination, and we do not believe Mr. Maine's appointment would add to the overall skills, expertise, and experience of the Board. Further information about Mr. Maine's skills experience can be found in the notice of the meeting. In his nomination letter, Mr. Maine stated that he would withdraw his nomination if IFL were to undertake to hold hybrid meetings until the proposed scheme of arrangement was concluded.
IFL has previously considered the relative merits of holding a hybrid AGM, and on balance, determined to hold a physical meeting instead. In response to Mr. Maine's assertion that IFL has disenfranchised tens of thousands of retail shareholders who do not live in Melbourne by requiring them to travel to Melbourne to participate in physical shareholder meetings, the historical attendance rate for the IFL AGM is extremely low. The data provided by our registry shows that the numbers of shareholders, corporate representatives, proxies, and non-voting shareholders that have attended the AGM over the last five years has been less than 40 shareholders. Of particular note is that in both 2020 and 2021, meetings were virtual meetings, and there was no greater attendance by shareholders, notwithstanding they could participate interactively at those meetings.
On this basis, we do not consider that it is in the interest of shareholders for the Company to incur further financial costs to hold a hybrid meeting. As set out in the notice of meeting, I intend to vote all open proxies against this item. I don't know if Mr. Maine is in attendance, but if he is, I would invite him if he wishes to speak to his nomination. As I mentioned, as set out in the notice of meeting, your Board recommends against the re-election of Mr. Maine as a Director. I'll ask the Company Secretary to advise whether any comments or questions have been received in relation to Mr. Maine's appointment. Are there any questions in relation to the election of Mr. Maine or discussion on the motion? The Company has received the proxies displayed on this resolution.
I intend to vote any open proxies I hold against this resolution. The next item of business is the adoption of the REM report. The Corporations Act provides that the vote on the REM report is advisory only and does not bind the Company. The REM report format includes a snapshot of our policies and practices and aims to effectively communicate our REM arrangements to shareholders. The Company's REM report for the period ended 30th June 2025 is included in pages 35- 58 of the annual report. Are there any questions in relation to the REM report? I'll also advise our Company Secretary whether any comments or questions have been received, Joseph. There are no further questions. The Company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution.
The next item of business is the proposed grant of performance rights to the Chief Executive Officer for the 2026 financial year. Details regarding the proposed grant are set out in the notice of meeting. Proposed terms for the performance rights are explained in the REM report. An explanation of the rationale and the nature of the Executive incentive plan is set out in the REM report. The framework supports Insignia Financial's cultural and remuneration principles, and the measures underpinning the framework are aligned with key strategic value drivers of the business, both short and long term, to enable enduring performance. The performance rights upon which you are now asked to vote will be assessed against two hurdles: total shareholder return and reputational performance. Joseph, any comments been received in relation to this? Is there any discussion on the motion?
The Company has received the proxies displayed on the slide in relation to this resolution. I intend to vote any open proxies that I hold in favor of the resolution. The next item of business is the appointment of the Auditor. The Corporations Act provides that shareholders must approve the appointment of a new Auditor. As disclosed in the notice of meeting, following a competitive tender process, the Board resolved to approve EY as the new Auditor for Insignia Financial from the conclusion of today's AGM. I can confirm that, subject to receiving shareholder approval, ASIC has consented to the resignation of KPMG as the Auditor of Insignia Financial. I'll now take questions from the floor on this item of business. Joseph, any comments been received for earlier questions? The Company has received the proxies displayed on the slide in relation to this resolution.
I intend to vote open proxies that I hold in favor of the resolution. I'd also like just also to take the opportunity to thank KPMG and in particular, Dean Waters. Dean's gone, has he? He's going to miss out in his thing. If you could pass on the Board's thank you for Dean for professionally leading the team over the last 16 years at KPMG, have been our Auditor. That concludes our discussion on the items of business. In a couple of minutes, I'll close the voting system. Please ensure that you've cast on all resolutions. I'll now just pause for a minute to allow you time to finalize any votes. Anyone need any assistance with voting? All okay. Thank you. Steve Hodkin from BoardRoom is appointed to act as the returning officer for the purpose of the poll.
The results of the poll will be announced on the ASX announcements platform and placed in the Insignia Financial website later today. I can advise that based on proxies received and at the votes available on the floor, that it is likely that each of the resolutions recommended by the Board will be carried. Ladies and gentlemen, the business of the meeting is now concluded. I thank you for your attendance and declare the meeting closed. The Directors, Senior Management, and I would be pleased to invite you out for refreshments. Thank you.