Good morning, ladies and gentlemen. Before I go any further, could someone close the door to try to keep the noise in or out? Andy, just close the door, please. Thank you.
Ladies and gentlemen, it gives me great pleasure to welcome you to the 2026 Annual General Meeting of MFF Capital Investments Limited. My name is Annabelle Chaplain, and I will be chairing today's AGM. As a quorum of shareholders is present at this annual general meeting open.
I acknowledge that this AGM is being held on the traditional lands of the Gadigal people of the Eora Nation, and I pay my respects to their elders, past and present. To our shareholders who have joined us in person today, I also extend a warm welcome to those shareholders attending today's meeting by telephone. For those attending in person, if you haven't done so already, please turn off your mobile out courtesy to your fellow shareholders.
Before turning to the business of the meeting, allow me to introduce you to the other Directors present. Robert Fraser.
Morning.
Peter Montgomery AM.
Morning.
Gerald Stack.
Morning.
Chris Mackay.
Hi.
Andy Macken, our Chief Investment Officer at Montaka, and our Company Secretary, Muli Zhou. In the audience there, we welcome [audio distortion], a partner from the company's external auditors, Ernst & Young, and representatives of our share registry, Boardroom Proprietary Limited.
Following the formal business of the meeting, there will be an opportunity for you to join our directors for refreshments. The notice of annual general meeting has been available to all shareholders. I will now take the notice of meeting as read.
Now I will take a moment to outline this morning's agenda. We will commence today's meeting with my address, followed by comments from Gerald Stack, our Managing Director and Chief Executive Officer. He is here. An update on the portfolio from Chris Mackay, our Executive Director, Investments and Capital. We will reconvene the meeting, where we will consider the receipt of the company's financial statements and reports, the adoption of the remuneration report, Peter Montgomery's and Chris Mackay's re-election as directors, the issue of restricted share units and performance share units to Gerald Stack, and the increase to the maximum non-executive director fee pool.
At this stage, I would like to just say the formal disclaimer regarding any forward-looking statements the directors may make today. Whilst we hope shareholders value our commentary, we all recognize that there is much uncertainty and all comments are subject to the formal disclaimer shown on the screen. The minutes of the previous annual general meeting held on 20 October 2025 have been approved by the board and signed by the chairman. The original minutes are tabled and are available for inspection by any member wishing. I will now proceed to the chairman's address.
I am pleased to report to shareholders today on the 2026 financial year. At each annual general meeting, we begin by reminding shareholders of MFF's longstanding investment objectives, which are to maximize compound risk-adjusted after-tax returns and minimize the risk of permanent capital loss. Put simply, our aim is to build lasting shareholders. Our approach to achieving these objectives rests on three tenets: being unconstrained in the opportunities we consider, but disciplined in how we assess them and long-term in our thinking.
The 2026 financial year demonstrated the strength of this approach. Despite a challenging environment in which equity markets moved sharply in both directions, MFF grew shareholder capital while also paying increased dividends. Net assets after tax on unrealized gains grew to AUD 2.523 billion and the group maintained a net cash position of AUD 119 million at the end of the period. Chief Executive Officer, Gerald Stack, will take you through the financial results in more detail shortly, and our Portfolio Manager, Chris Mackay, will follow with an update on the portfolio.
We continue to favor high-quality businesses with strong market positions and longer-term growth prospects, even while momentum and speculation push parts of the market higher. The businesses we own today are, for the most part, the same businesses we owned five and 10 years ago, reflecting the portfolio manager's ongoing assessment of their durable advantages and portfolio opportunity costs. A portfolio whose core is built on outstanding businesses means we are rarely under pressure, and we believe that their compounding cash flows and returns on capital should continue to benefit MFF shareholders over the medium to long term.
Consistent with our commitment to effective capital management, the board declared a dividend of AUD 0.11 per share, up AUD 0.02 from the same period last year, bringing total dividends declared for the 2026 financial year to AUD 0.21 per share, AUD 0.17 in fiscal 2025. We have also confirmed our intention to increase the rate of the six-monthly dividend to AUD 0.12 per share, fully franked, for the period ending 31 December 2026, subject to prevailing corporate, legal, taxation, and regulatory.
The payment of dividends reflects a deliberate judgment by the board that a portion of MFF's retained profits and/or profit reserve should be returned to shareholders in a tax-effective form. However, our focus remains the long-term compounding of shareholder capital and decisions regarding future dividends will be assessed against that objective, as has been the case in the past.
Prudent capital management has served shareholders, and we are firmly committed to applying that same discipline going forward. We expect dividends to remain fully franked, supported by retained profits and a profits reserve of AUD 1.769 billion in total, and for AUD 272 million, approximately AUD 0.454 per ordinary share as at the end of the reporting period.
At last year's meeting, I spoke about the importance of evolving abilities, both for prudent risk management and to support long-term growth. Our ambitions for MFF ultimately depend on having exceptional talent across our team. During financial year 2026, we made progress. We welcomed a number of talented and experienced people across the business, including Gerald Stack as Chief Executive Officer, who now leads the development of the group's culture and capabilities. Since joining the board in January, Gerald has driven this effort with insightful leadership and energy, and I greatly appreciate his immediate impact.
The board continues to believe that MFF's position would be further strengthened with at least one competitively advantaged, strong, cash-generative business alongside the portfolio. The highly capable team we have assembled means we are better placed to act on that ambition when the right opportunity presents. We have several of our wonderful team members here today, and I would encourage shareholders to introduce themselves to the team after that meeting.
Our focus on these priorities does not represent a change in what MFF believes. It reflects the board's considered view that success in future markets will require an openness to new opportunities and the capability to act on them. Our investment approach is unchanged, and we stay true to the processes that have built our success to date.
On behalf of the board, I thank Gerald , Chris, and the whole MFF team for their work this year, and I thank you, our shareholders, for the trust you continue to place in us. That trust is not something we regard as owed to us or that we take lightly. We are conscious of this every time we make a decision on your behalf.
Finally, to my fellow directors, thank you for your wise counsel and strong support during the year. I will now hand the floor to Gerald to provide a more detailed discussion of our performance over the year. Thank you.
Thank you, Annabelle. For those of you who do not know me, my name is Gerald Stack. I am the CEO of MFF. This is my first AGM as the CEO, and I would like to say it is an honor to be here speaking to you shareholders. We are going to go through a short presentation today that deals with a few different things. Firstly, a summary of our financial results for the financial year ended 30 June 2026. A review of our long-term shareholder returns, a review of dividends, a discussion of the evolution of MFF over the last 20 years, and finally, the outlook as we see it.
Let us start with the overview of the financial year 2026. Profit for the year. Pre-tax profit was AUD 30 billion. Profit after tax, AUD 159.6 million. There was cash tax paid during the year of roughly AUD 120 million, and dividends received from our investee companies of roughly AUD 38 million. The value of our investment portfolio at the end of the year was AUD 2,968.5 million. Our net assets, AUD 2,523 million. And the difference between the net assets and that investment portfolio is essentially deferred tax liability. So that is the tax that would be payable if we realized the portfolio as at that date. So net deferred tax liabilities of AUD 431.8 million. At the end of the year, we held AUD 119.2 million in cash.
Let us talk a little bit about shareholder returns. The essence of what MFF is about is about delivering compounded returns to shareholders over the long term. We focus very much on long-term returns. While dividends are always going to be important, it is those long-term returns that we are particularly focused on. So what we are showing you here is three different measures of long-term returns measured over three different periods: three, five, and 10 years. The three different measures are pre-tax returns. So we take the value of that investment portfolio over time and the growth and value of that. We add back dividends, and we add back cash taxes paid. We add back cash taxes paid to get to a measure that is a statistic, similar to what you would see out of a typical trust. So we are trying to compare like with like with other trusts, if you like, that are out there, or investment trusts.
So that is pre-tax paid. Post-tax paid, we take the post-tax NTA, the AUD 2,523 million that I just mentioned. Again, we add back cash tax paid, and we add back franked dividends here because we're adding the tax paid, and we add back the franked dividends. We allow for the dividends to be compounded over time. We assume those.
The final measure is TSR, total shareholder return. On total shareholder return, we're taking the share price over time plus the dividends, assuming that the dividends are repaid along the way. We're again showing you three-year, 10-year returns. The biggest anomaly perhaps to discuss is the three-year return. The total shareholder return of 30%, much higher than the pre and post-tax returns, which are roughly similar at around about 20% per annum. This reflects the fact that MFF over that period has gone from trading at a discount to NTA to trading at a small premium to NTA, so that the returns in that period are outsized relative to the underlying economic performance of the portfolio.
Over the long term, if we look at the 10-year risk, the returns are very similar, no matter which measure you choose. So over the long term, the underlying economic performance of the portfolio is ultimately what drives shareholder returns, as you would expect, irrespective of which measure. Now, we're showing three different measures because investors look to different measures, and we're agnostic about the measure that we choose. But I think the more important thing is to understand that over the long run, it's the economic performance of the portfolio that ultimately drives shareholder returns, as you would expect. Those returns are credible, and they reflect a long history of disciplined, insightful capital management from Chris over time.
All right, let's talk a bit about dividends. We've noted an intention to pay a AUD 0.12 dividend for the first half in FY 2027, all things being equal, as it were, subject to events. But the dividend for the full year last year was AUD 0.11, and the dividend for the full year, AUD 0.21. If we look over that period, we start with a dividend for the financial year 2021 of AUD 0.065. So from AUD 0.065 to AUD 0.21, we've seen compounding of roughly 26% over that period. So a strong growth in dividends.
Our dividends over that period have been 100% franked. Last time we weren't 100% franked was back in 2017 where there was an 85% franking dividend. Today, we have confidence that we'll continue to pay a fully franked rate, given that we have AUD 272 million of available franking credits, roughly AUD 0.45 a share. As Annabelle has said, AUD 1,769 million in retained earnings and reserves. So a healthy position. We see dividends as a tax-effective measure of providing returns to shareholders, and there's an intention to continue to do so.
All right. Let's talk a little bit about the evolution of MFF. MFF came to fruition, joined at the hip with Magellan back in late 2006. From 2006 through to 2013, MFF was managed by Magellan attached to IMA, general investment management agreement. Back office, finance, and so on, operations were outsourced, as was research. There was an underlying MER of roughly 1.3% through that period. At roughly 30 June 2013, that changed. Chris, who had managed the portfolio from day dot, became an employee of MFF. He transferred from Magellan to MFF, and became the sole employee of MFF with outsourced research capability to the Magellan investment team and outsourced back office capability, but with an internalized investment management capability. Two different periods through there in terms of MER. In the early period, roughly 1.46%, and then over time, that reduced to roughly 45 basis points over that period.
The third and final period is essentially the last 12 months. Magellan and MFF have gone their different ways. They are not related firms anymore. That has meant that we have brought internal, we have internalized all the functions that MFF used to get from Magellan. So we now have an internalized investment team. We have an internalized operations team and a finance team. This puts us in a position to manage our risks appropriately and provides us a platform for growth. We calculate or we estimate our MER for the last 12 months at roughly 75 basis points.
Finally, on outlook. We see MFF is positioned to withstand volatility and to continue to build compound investor returns over time. The portfolio remains concentrated in advantage businesses. Essentially, MFF has always been about compounding returns through investment in advantage businesses. It is an unconstrained mandate, which means that we have flexibility to address events as they occur and the ability to adapt to opportunities as they present. We have a capital structure that enables patience and selectivity, and that has been incredibly useful over a long period of time to roughly AUD 200 million in available liquidity plus significant debt capacity if we so choose to use it.
We have put in place people and capabilities to drive long-term growth. We continue to be about growing shareholder value. That is the essence of what we are about. We have 19 full-time employees across corporate, across operations and investments. We have a global equities research capability. Just as in the early days we had access to the Magellan investment team, so now we have access to the Montaka investment team. Finally, we have a long-term incentive plan that is aiming to align employees with shareholders' outcomes. With that, [audio distortion] .
I was told that if we want progress, we push to the right, but if we want to go backwards, we push left. I am not sure. Those of you from Victoria may not fully appreciate the comment, but someone explained it to me after the meeting. I want to embarrass someone. I am not sure who at this stage. There is obviously a group of people here, including myself, that I can start embarrassing. But after the meeting to go up to one particular person.
Gerald has just given the long and turgid history of MFF. What we forgot to mention is that the board that we started with was simply lucky to have a number of the doyens of Australian capitalism and Australian industry when it was great and when it was broader than it is now. Amongst those are Andy Hogan, who was finance director of many companies, including Commonwealth Bank. And as an aside, we helped him at one stage buy back 100 million CBA shares at AUD 9.20, but we discounted to AUD 9.18 because he's a bloke. You always need someone like him.
Dick Warburton, one of the greats of the Australian industry. DuPont was his primary career around the world. Another to join this startup business with no employees, with no track record, was John Ballard. John Ballard is one of the lions of Australian capitalism. He was the Chief Executive of many of the main consumer companies in Australia. He helped push wine into China. He helped make Amatil into the huge business that it was. John and his wife, Glenn, are here. People, please come up.
You'll hear me talk about something called compounding soon. John was a key person in asking us and forcing us and constantly, "Let's go for quality. Are you sure that this business, which has so many sales in Japan, which is in a hole for decades, is really going to compound the way you think it is?" As we push forward to the right, after the meeting, please pop along and say hello to John. John, I'm forever grateful. So thank you, and thank you for being here.
To start, I just want to emphasize how delighted I am, we all are, with the excellent quality of the team members who have joined us, massively lifting up my average. I know there's people like Brett Cairns with his multiple PhDs who can do that. There's a saying, if you add someone who's good to someone who's average, you improve the average. As we move from one employee, we've bumped up the average dramatically.
MFF's future success will be built upon diverse input, quality ideas, and application. To illustrate, for years, the Magellan teams in operations and finance gave MFF amazing service, as John and others will remember, as though we were their only client. As I said, why did we stick with Magellan? The quality of Magellan and the service was just first class. The superb operations team included Ruben, Calvin, Chris J, and Ricky. We have to support them, and some of you will know why. With their leader, Anthony, and the returning Niall, who's an Irishman, having joined MFF together with Kirsten and the finance team, we are again in amazing hands. You can have great ideas, but unless the detail is worked through, it doesn't happen.
We have wonderful team members who have joined via Montaka directly and in the future with Claremont, when that completes. We can talk about Claremont later. Picture grizzled experience alongside Gerald, but alongside a bountiful, youthful curiosity. I love the contrast effect. Who wrote this? The research of the Montaka team is incisive and differentiated. The recent research on Amazon AWS, so that's the largest cloud provider in the world, is clear and valuable, and it looks like it wasn't just that Amazon went up 5% overnight shortly after the research went out.
Similarly, a few months ago, they put out research that saw, when many did not, how underpriced both Visa and MasterCard were with their highly probable growth as their flywheels accelerated. So they got the inside of Visa and MasterCard as well. It was insightful, unique, and the finance community have now mirrored Montaka's comments have since risen to record highs. Just two examples. I encourage everyone on the call and in the room, if you can, read the Montaka research, which should be available. There will be people here who can direct you if you are as incompetent with some of the modern technology as I am.
Let us move forward. Emblazoned as headings on this page are two messages. The first one, "No excuses," and the second one, "Opportunities." Our portfolio is focused upon equity interests in outstanding businesses with scale effects. Unsurprisingly, given the favorable markets in recent years, MFF is in an excellent financial position. We have over AUD 200 million net cash, as Gerald noted right at the moment, almost total liquidity, and opportunities within our flexible investment universe. We have scale to make a difference for our shareholders and partners. As an early example of partnership, you will see we are the largest outside shareholder in L1 Group, which is one of Australia's leading investment managers, who have also bought Platinum, who was a leader when we set up. Who would have thought, John, all those years ago?
We have scale to make a difference for our shareholders and partners, but are not burdened in a $50 trillion GDP world. No excuses. We predominantly have investment assets in a portfolio that does not require much, thank goodness. We are an excellent partner. Our original goals were to seek to compound as though we were investing for a 25-year-old, building assets. Now that I have turned 26, I can understand why. With decades ahead. At the same time, we wanted to compound and also protect capital for a 70-year-old shareholder. As some will remember, that was, in our mind, Meredith's father. Where drawdown risks were more immediate.
Although patience and disciplines will continue to be tested, these dual goals continue. MFF is extremely well-placed to focus on each of these tasks, and continue prudently to pay our fully franked dividends. Just as an aside, it is now more widely accepted that compounding is important for older groups, but still, much of the finance industry chases a shorter and fails to invest in compounding assets or compounding success.
If we look now, interest rates are normalizing after they broadly fell for 40 years, and that tailwind has gone- mediocrity in low returning but leveraged assets that benefit fee takers but blow up every decade or so. We can come back to that as well. Our AGM a few years ago, I was reminded earlier, compared the then era of the private credit frenzy to the misleading graph of the subprime mortgage, which bankrupted many and led to a bailout of Victoria and its state bank. Sadly, history is repeating. Benefits from a concentration on advantage businesses, extremely high returns on invested capital. So I am sounding like you now, John.
Current profitability and flywheel advantage is developing new profitable growth businesses, customers, and billions in some cases. Those are today's winners, which are also highly probable to be tomorrow's winners. We require margins of safety and extremely attractive probabilities for success. Of course, that includes market prices that are at discounts to reasonable assessments of value. We also want businesses that are resilient, not reliant on narrow verticals, a small number of decision-making customers that can survive even in the face of terrible governments. Oh, my goodness, it came out. Out of control spending and inflation, bad judicial decisions. My goodness, there was one two weeks ago. Geopolitics, competition, changes in technology, bad boards and management. Ideally, we have great managements and sensible government, but we need portfolio construction, risk controls, and margins of safety to get us through.
We want to achieve compounding growth and seek to avoid permanent losses of capital. We also want to pay out the fully franked dividends. Given as shown on this page, we pay huge amounts of tax on the profits. On top of the AUD 513 million, and there's a pointer up there, AUD 513 million of tax paid in the last 10 years, we are making a monthly tax payment shortly of AUD 25 million, and that takes the total for the 10 years plus the financial year to date to about AUD 550 million. I guess the only good news is if you divide it by 0.3, that tells you the realized profits that we've achieved over that period.
We intend for MFF to continue to be managed for medium-term outcomes, including the payment of fully franked dividends to shareholders, as your board has shown a commitment in this regard. Confident that the tax will be spent wisely or even not looking at this room, we can't be confident the dividends will be spent wisely. But fortunately, as shown here, the dividends yield the cash tax paid.
Some worry about performance figures and turn themselves in knots for calculations. Sometimes they forget the basics, to move a nest egg from modest to AUD 1 million and for like-for-like comparisons. As an obvious example, the commitments to tax and fully franked dividends make it harder for the portfolio compared with a company with huge business revenues coming in or fund the tax or other commitments. In other words, we're likely to continue to pay high dividends and continue to pay tax, and that therefore derogates from having a portfolio that doesn't pay that or better still, where cash comes in.
Gerald, did you note that that's part of why we've changed management? Nevertheless, and it comes again, no excuses. We're in an advantage position, [audio distortion] MFF is and will continue to be an investor in businesses. That's crucial. We're not investing in little squiggles on a page or market prices or something like that. We're invested in businesses, the type of businesses that the Ballards and the Warburtons of the world built up in the years gone past. Microeconomic factors such as scale and pricing power underpin competitive advantages, whilst governments and macroeconomic factors provide background, constraints, and often are distractions. So it's microeconomic factors.
Extreme example, if you have 3.5 billion customers, 3.5 billion with a B or 4 billion plus cards as Visa, it's then easier to then add on value-added services. This is the essence of the Montaka paper on the flywheel that they got with Visa and MasterCard than it is if you are a start-up business with no customers and others that are trying hard in the Australian market, but the competitive situation is very different.
Focused research, processes, and analytics are at the core. The advantage is that we are not famed or constrained by short-term performance or other factors. We have duration advantages and can buy whatever is best on a price, quality, risk, reward basis. If it ain't a favor, it is at the time. This also requires assessment of technology changes and other major risks, and that comes to one of the expertises of Montaka. Our first off prioritizes situations where probabilities are assessed to be favorable. We say no to opportunity after opportunity assessed as riskier, meaning with lower returns on capital, competitive pressure, financial risk, lacking pricing power, or to disruption. If we start with the concept of what wouldn't you want to own for an extended period of time, that narrows things a lot.
For MFF, price matters and business quality matters. We seek attractive value when we. Above average, sustainable, profitable growth when we own, and disciplined assessments of values, including opportunity costs when we sell. We make very few major decisions with flexibility to look across into geographies. We periodically act in size, possibly contrary to prevailing opinions and with duration. We have benefited from companies adding profitable adjacencies and strengthening customer satisfaction and profits. Network effects. Artificial intelligence actually benefits the big people first. We will come back to that.
Investment discipline and risk controls have allowed us to take advantage of market downturns. Volatility has been to the great advantage long term MFF shareholders. We continue to be in a net cash position as we have been for a decent period. We may have been too risk averse, but that is what it is. We continue to assess opportunities and compare where we own with alternatives and have regard to possible future opportunities in our thinking and consideration. Over the years, we have acted upon opportunities from market cycles and from negative events such as Brexit. That was one of the negative events that threw up opportunities for us. For many years, MFF has published every holding that we have held at any time in any year. Hence, success and failures are completely visible.
What did I cover? I covered liquidity within our portfolio and transparency. Those are important characteristics for any of you in locked up, unlisted situations or assets that you thought realized this is a very different situation. Compounding quality has been key to results to date, but we also have two other broad categories of businesses we invest in, which have worked well for us and will continue to do so. Category two is very decent quality businesses, but more mature and/or more cyclical than the category one advantage compounders.
Okay, that is Allianz, which we have reduced recently, Bank of America as an example, the Singapore banks, DBS, Oversea-Chinese Banking Corporation, and UOB. Banks by definition are leveraged and have cyclicality. They have very significant customer and technological advantages at the moment, which are favorable and clearly have performed in a market sense in the recent past. There is more to go. They are inexpensive, out of favor. They fit with maybe at some stage, JP Morgan, a long-term holding for us, you could argue, was even in category one with its compounding attributes.
One of the things about the categorization is not to mislead yourself. If something becomes a lower growth business than it was in its heyday, we have to acknowledge that it is a lower growth business. That is where we perceive a huge margin of safety between the market price and underlying value of the business, and no particular assumptions are required about future growth.
Coming out of the last recession we had to have, that's another repeat of the recession we had to have. Those of you who remember the early 1990s will well remember the recession that we had to have. That was the early 1990s, and out of the aftermath of the tech wreck and the GFC, there were such bargains everywhere. MFF has actually used them sparingly because we've found so many compounders. An example, of course, was during Trump one, in the oil industry, we found arguably the best major, largest priced oil company. Then, of course, Trump took out the commander of the IRGC, and oil prices spiked.
So that fits in category three, and we're able to sell quickly. That's not what we normally do, but occasionally, look, I'm in a begonia. As here I try regularly in the morning to pick AUD 0.05 up off the ground as I come into the office. That's the equivalent of picking money off the ground if it's there. But we've used it very sparingly. Businesses and markets are our primary focus. Markets are not fully efficient, and we periodically pick up perceived value differences in each of the three broad categories.
Portfolio. On the screen, we're showing the larger holdings in the portfolio as of 30 September. Previous extensive comments about the competitive advantages of the portfolio companies will not be repeated. We continue to favor businesses with sustainable advantages, low stay in business capital expenditure and low working capital, but high return on capital models. We can come back to the spending by the hyperscalers in Q&A because that's a clear shift.
In addition, [audio distortion] focus and expertise have helped develop vital and profitable adjacencies, including in data and in security. In the latest decade, markets have rewarded profitable growth, and during the latest 12 months, there has been huge enthusiasm for rapid technological advances. Again, we can talk further about that in Q&A if people wish.
Portfolio changes over the last year were modest but more elevated than usual. Hence the AUD 120 million of tax that Gerald mentioned earlier. I've aged as I stand here, haven't I? You must stop saying that, Gerald. Obviously, many of the portfolio companies are at the forefront of digital technologies, but there are significant technology and data by many non-technology portfolio businesses. AI is ubiquitous in boardroom and financial discussions, less so on the plains and the prairies.
Trillions are being spent. We can have agents read our personal data and do whatever for better or worse. Of course, some of you have experienced travel for the broader family, where the mother-in-law was sent to Egypt and the rest of the family went to Egypt because the agent had been reading all the emails and other information and knew the true thoughts and had independence. The consumer AI will evolve over time.
In corporations, many initial benefits are appearing in cost reductions and for some customer service benefits, both of which have been called out in Q3 results from leading mega financial companies, the ones that have reported so far. Bank of America, as an example, U.S. Bancorp, of ours that have reported already. There is far more they are seeing in cost reductions and improved customer service.
Outside of tech natives, early corporate beneficiaries are scaled with budgets and willingness. Such fast-moving technologies mean marginal cost of delivery, competitive offerings, and applications for use. Thus, they are a threat as well as an opportunity for all companies and have to be judged as such.
Given the nature of activities, governments at all level are working to improve service delivery at lower cost via sensible use of AI. Interestingly, not all governments around the world have as their finance minister, the center of bureaucracy being Canberra. So it is an unusual impediment to governments in Australia adopting AI, which clearly will benefit many.
Funding markets have leveled of late from levels of seeking only 5%-8% per annum nominal returns for debt risk back to 15% or so, and that has happened very quickly in the last couple of weeks. At the same time, official rates have reached over 10-year bonds back to more normal levels, but at scary velocity and with many spreads being blown out and mark-to-market losses. This is a return to normalcy rather than something bigger, but let us see where it goes. It is giving great concern at the moment.
Competition has increased in many industries, as well as ongoing inflationary pressures upon margins. Production massively exceeds consumption in the unique mercantilist economic leader. I am allowed to use the initials CCP. So in 2001, as they are joining the World Trade Organization, one of the many promises that were made was that Visa and MasterCard would get licenses within two years in China for the 1.4 billion and the spending, the development. Visa last week announced that they have actually a preliminary license. How long is this since 2001? Hmm, okay. So the delivery has not met the promises at the time.
This surplus production has caused domestic deflation around the world. It has been important. So the sales, we just have to look in Australia at the cars that are Australia, but Europe has an issue. They are just seeking to negotiate to reduce the amount of Chinese hybrid cars that are coming in. That has been deflationary to the cost of those sorts of goods. It is shipped to market, which make a complete mockery of the West's optimism year- after- year since it leased the World Trade Organization favoritism.
In addition, wars, U.S. tariffs, other actions in part reflect such imbalances and geopolitical distortions. So it is not just, can I say, trumped up focus on the U.S. that is the problem with the world at the moment. There are imbalance, the imbalance and then any change you need to think which the various governments do not do particularly well. You make a change and then what? What are the implications of the change?
Earnings strength has underpinned the large capitalization market strength in which expectations are high for more strong double-digit near-term earnings growth. Therefore, in the short term, a miss is very risky for prices. Earnings growth in some cases, the figures are expecting 25% earnings growth in aggregate for the current earnings that come in Q3, Q4. There is risk to the downside if the growth doesn't achieve that. It is also a recurrent factor to consider.
Over-earning is where a business is earning more than it should through cycle that its base business allows. Chip shortages allowed increased prices of 50% more, 90% in some cases, 100% in others. That's before production starts to catch up and useful lives of the chips are extended. In some cases, there are earning practices that cause over-earning. For those, maybe we'll do it after the meeting. We can talk about the accounting issues. Data center debt is hidden in future leases. If you're borrowing to build a data center, if instead you make it a lease, the lease doesn't happen until the thing is built, and then year by year. The accounting still captures it, but not then. There's a material understating of the amount of debt relevant.
Wealthier groups continue to spend public dough in stocks. There's a very material wealth effect that's happening as well that contributes to the over-earning of some businesses. At the same time, another year of double-digit growth in allocations to financial risk assets, which can fund some early private credit disasters around the world and in Australia. Mixed results continue for speculators buying physical assets, earning low returns on capital maintenance costs with maximum financial leverage, historically having benefited from benign cycles. It can get worse in aggregate, absent hopeful, favorable cycles and exit via price momentum.
Possible implications for our portfolio businesses arising from these and other issues can be covered during the Q&A part. Of course, our focus and our scope to say no assists somewhat, but such factors cannot be ignored in aggregate. We're moderately inefficient since fiscal year-end, as mentioned, primarily in response to risk management and opportunity costs arising from differential price movements, with only a few notable changes in underlying businesses. Of course, for MFF, our completely liquid portfolio has an optionality as cash, and it may allow a higher percentage to be invested than for an illiquid portfolio. If you owned completely property, for example, you'd want to have cash buffers or gates to prevent cash requirements.
Outlook. We continue to expect lower overall returns from the higher starting point of today's markets, possibly much lower. That's correct. A few years ago, in the context of discussing our Amazon purchases, we noted lower general market return expectations of 6% or so, compared with historical returns of about 8% or above across most periods. The subsequent market in 2022, and out of favor sectors, enabled our higher minimum return thresholds to be met and a few satisfactory opportunities have continued.
In public markets investing, sustained success usually improves probabilities through systems and processes, guided by core principles such as market prices being there for opportunities, not as primary guides about business values over the medium term. In other words, the market prices are there as opportunities for us, not to guide us. That's an important factor to keep in our mind. We continue to believe that sustainable secular growth will be far more unusual and more valuable as competition continues to ramp up, funding becomes widely available in a range of interest rate conditions influenced by factors including fiscal profligacy, AI build-outs, and monetary actions. Although disciplines apply and patience is sensible, we continue to hunt for opportunities and compare them with existing holdings, and we found some even in the last month or so.
Currencies, I will be brief. We have previously outlined our approach to currency exposures, which remains unchanged. Our income is in international equities, and we do not hedge overall currency exposures, though we typically borrow in foreign currencies and hold Australian dollars to pay dividends, tax, and business expenses. Currency movements were a headwind in fiscal 2026 of approximately 5%, but otherwise, there was little to report on currencies in the year. Longer-term concerns have increased in the last year for the currencies of most countries, including for the Euro, the British pound, US dollars, and Australian dollars. We will update shareholders, obviously, if there are material changes to our currency positions.
In closing, we have intentionally sought to structure MFF with interests aligned, patiently focused on a number of very advantaged opportunities while seeking to minimize agency risks, short-termism, unrealistic expectations, and repeated process failures of omission and commission. All is not rosy in the world, and we are ahead of ourselves with elevated expectations, particularly as markets have been buoyant with momentum and beyond in many asset classes over recent years. Importantly, MFF's financial and institutional resilience and preparation have again become very valuable, given numerous growing risks within outside markets, which go well beyond many elevated price risks.
However, this is positive, disaster is not inevitable, and it will not be caused externally. If we fail, it will be because of our own doing. We have a number of our wonderful team members here today, and Gerald, Annabelle, and I encourage shareholders to introduce themselves. In the meantime, we will go on to questions and to business of the meeting. Thank you. Annabelle.
We have received questions in advance of the meeting, which we have not fully addressed in prepared remarks, so we will address those questions first. We will then follow with questions from the floor, and finally, questions from the telephone. To ask a question on the phone, please press the star key followed by the number one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please hang up your question. Once it is your turn to ask your question, the moderator will announce your name and, where appropriate, state who you are representing.
If you are attending in person and wish to ask a question, please raise your blue or yellow voting pad questions from the floor. One of our attendants will bring you a microphone. Would you please mention your name and where appropriate, state who you are representing before asking your question or making any comments. Could you please leave questions raised and to which the relevant agenda items.
Moving to questions received in advance of the meeting. To assist in addressing these, we have invited Andy Macken, Chief Investment Officer at Montaka, to really stay to the front. Our first pre-submitted question is: how do the recent cracks starting to emerge in private credit impact your view on Blackstone and KKR?
I will come back to private credit in a second. Let me just start by underscoring what we are, sort of drawing distinction between the asset class of private credit and the management companies of KKR and Blackstone, which is what we own. We actually own both those management companies. Those management companies lease on a very diversified portfolio or set of portfolios across private equity, infrastructure, real estate, as well as credit, of course. But that is quite different from being a partner in a credit fund, for example.
When we look at the capital base that is being provided by institutional clients, private wealth clients, insurance clients to KKR, that capital is not going anywhere. It is really that capital base that drives the bulk of the fees for these businesses. When you look at KKR, for example, in the most recent quarter, fee earnings actually grew 37% versus one year ago. By the way, there was no capital investment required to generate that fee growth. That is still quite interesting.
Now, of course, we are watching private credit quite closely. Clearly, credit quality has softened as yields have climbed a lot recently, as Chris mentioned. We have had some specific frauds and defaults, which have been very well covered. But the fact is, at least for the businesses that we own, those two that I have just mentioned, we are not seeing any evidence of that pessimism translating into any impairment of financial flows continuing to be astounding. Blackstone, for instance, last quarter raised like $100 million of fresh capital in a single quarter. That is amidst all of these negative headlines. As KKR CEO, Scott Nuttall said some time ago, "The news is bad, the facts are good." That is kind of what we are seeing today. We still remain comfortable with our positions in KKR and Blackstone.
Thanks, Andy. KKR are holdings common to both MFF and Montaka. Chris, do you want to say a few words?
I cannot add to what Andy said, to be frank, Annabelle. I found out that they are extremely well positioned. They have gone on in the high [audio distortion]
All right. Thank you. Our next and finally submitted question is: what opportunities are Chris and the broader MFF team seeing across markets today? Andy, once again, I will direct this to you first and then see whether Chris has something to say later.
Yeah, sure. I will second what Chris said earlier. We continue to see significant opportunity in Visa and MasterCard. One of the reasons for this has to do with this thing called tokenization, which I will come back to, but the proportion of MasterCard payments which are tokenized over the last decade has gone from zero to about 15% today. That will just continue to grow. All this really means is that for each payment that is made, a much richer data comes back to Visa and MasterCard that is attached to each payment.
They are building up this extraordinary data set over a long period of time, which will continue to grow. As you might imagine, with AI and what not, we are in a world where you can really extract and have privileged data sets in a way that was not possible in prior times. And so that's really enabling them to continue to craft and build out new services, which they can then sell to their competitive customers. And that's really the new source of very long-term durable growth. So that's why we like them.
So, let me jump to what we call physical marketplaces. So here we're talking about things like Uber, and delivery with both Uber and also DoorDash. The interesting thing about these markets are these are winner-takes-most markets given the flywheel involved between consumers, merchants, and the drivers themselves. So it is very likely that today's winners will also be tomorrow's winners, and that's our starting point.
In addition to that, it's quite extraordinary to look at the long runway that lies ahead. So it's remarkable to think that with more than a decade of growth with Uber, there's a total miles traveled in the U.S. that belong to rideshare, still only 1% or 2%. So it's a tiny, tiny penetration of total number of miles traveled, but still very, very long runway ahead. In the case of food delivery, it's 20% in the U.S., food delivery as a percentage of total food spent. So very interesting to us.
Exchanges are also quite interesting to us. They also have these winner-takes-most dynamics, the exchanges. We see a world, a bit like what Chris was alluding to, we see a world in which volatility persists quite some time. And here we're talking about volatility in energy markets, which comes as no surprise. That also translates into interest rate markets as well, which we've been seeing lately. So that volatility actually benefits these sorts of businesses like the exchanges.
And then last one from me is, and Chris alluded to it before, but we do have very high convictions that over the short and medium term, the existing owners of compute will do very well in terms of revenue growth and earnings growth. And we think that's not meaningfully discounted. And the truth is, we are just very short compute right now, and that is going to persist for some time ahead. And as it becomes harder and harder to build these large data centers, which is becoming the case for legal reasons and other reasons, that will only exacerbate this shortage.
So for those who already own the compute, so think of your Amazons, your Microsoft, Meta, Alphabet as well, they're in a very privileged position. So we see unappreciated upside in their revenues and earnings in the not too distant future coming from capacity increases, pricing increases, as well as new distribution themes as well out of Anthropic and OpenAI to access their customers. Over to you.
Perfect. Chris, want to add?
Wow. [audio distortion] but first and see [audio distortion] Brett will remind me afterwards that I wasn't joking when I said that the average quality had gone up. You put me and Andy in the room and it goes terrible, did you say? Yes. So unsurprisingly, the MFF portfolio has exposure to various of the groupings and individual companies, and individual companies matter a lot in this space. It's not just groupings. People who are doing factor investing or them investing or even most of the ETF investing, you lose a lot.
To show, let's be political here, a business called Formless might be intelligence, but it is very different to Amazon AWS with millions and millions of entrenched corporate customers all around the world, and the growth profile bar that will take it to a trillion dollars revenue and more, relatively shortly. So people who say you should just invest in the theme, just be a bit cautious on that. In order to be slightly useful, the MFF portfolio, which we all collectively own, has a number of the services that Andy referred to, but two others that I'll just call out. There's one which is a retailer.
Retailers doing build-outs is usually quite difficult. I was asked before by someone at a previous meeting whether I knew anything about LVMH, or I'm assuming they didn't see how I dress. I know nothing about luxury. I still know nothing about luxury. But what I can get is that people like bargains all around the world and very successful companies like Costco. We might have found a mini Costco hidden under some detritus, which is growing around the world. But the exciting bit is not that they're 40% cheaper on household goods, this particular company, but that they have less than a one-year payback, and they're increasing more than a new store a day.
Facts, and John will remember this, when we were taking the leap with Yum Brands into other places, China, what was so exciting was it's just a little box, and there's a very quick payback. Other issues, potentially, with the fast food and with China. But by and large, what you want. Munger said it best when he was asked what's the best investment. He said, "Well, it's obvious. You wanted to be with the McDonald brothers when Ray Kroc came." So you had that rollout for a period of time. We might have that in a small way with one particular company we're working our way through. We sent one of our, I think they're called slaves or minions, from the Montaka team to do due diligence looking through the stores in a jurisdiction which is rioting at the moment. That'll be a bit of a clue.
Second one, we've actually, and it relates to the first question, KKR, Blackstone. There are many aspects of the management of the private equity groups that is beneficial. There's, from other times, that are bad and they're too short term. But the best of them, and we'd include KKR and Blackstone, do well. Those who have been shareholders for a while have known that we have had a large holding in HCA Healthcare, the largest private hospital company in the U.S. and globally, actually, of that. They came out of KKR as the predominant private equity group, and they are managed extremely well. It is a very difficult industry if you are running hospitals and now nursing clinics, and now they are the largest educator of nurses and other healthcare professionals in the world. That is the things on.
That is not the one that I want to talk about. There is another one that has come out of private equity. In this case, Blackstone is a family company for over a very long period of time. What they do are they are the global leader for using all the equipment that is required in hospitals and similar medical facilities. They have just put a little toe into the dental market, but they have got massive growth over an extended period of time. They are private capital. They got sold off. We were talking earlier about short-termism. They got sold off because their earnings result and forecast did not quite meet the expectations of the market because they also sell direct to individual groups because they manufacture their own products in addition to distributing others and there is a contract shift.
The thing was, there was a fire at a warehouse. You would think that that was something that people would adjust for. Got sold off 15% or so, and they came right into our buying zone. We got a little position in what is largely U.S.-based, but Canada and moving into other markets as well, distribution of medical equipment. Looking at your board with the exception of Andy, I think I say, we probably over the years will be requiring medical equipment to be distributed to us, as will the demographics generally.
Thanks very much for your comments, Chris.
I wasn't saying. So that's a perspective there .
Question.
Well, what are we investing in?
On that note, I think we might move on.
Fair enough. Yeah.
Yeah. Thank you. Remind me from the floor, please.
Thanks for the very interesting. Chris, quite enjoyed your September 30 letter referring to clowns and jokers, which I think was very appropriate. Just on the Visa MasterCard story, which obviously has a lot of comments, but if you had to identify where you think the risks could be, the longer term risks, where might they be? Could they be alternative rails? Would it be some sort of direct payments networks, or what do you think?
The risks have been present, and given the way in which Visa and MasterCard have been managed in recent years, the risks are actually less now than previously on the moment. Maybe 15 years ago, when businesses such as PayPal were capturing consumers off eBay and elsewhere, Visa and MasterCard had decisions to make, which was you pay the merchants directly or you partner with them. And then time and again, they've decided to partner. They're doing the crypto coins. Stable coins are something which is important. We come back to that, we want to know the detail of it. Alternative payments networks. It's only in Victoria again, I'm going to criticize Victoria again, that you can't get your discount by using your Visa or MasterCard. You've got to use your Myki card, which is particular. They'll catch up to the rest of Australia eventually.
They're partnering all around the world, and that's reinforced the stickiness and the strength of their rails. They're also at the lowest cost as well, which is important. You want to have the lowest cost providers on something that is ubiquitous as that. The challenges that will potentially come from technology and blockchain has been talked about for 20 years as being a potential. The difficulty with that is getting the end users. You might get it from Stripe or one of the other, Adyen, or one of the other groups going broadly enough to get enough users to do it. So far, they're partnering with Visa and MasterCard because they take their clip off the top, which is bigger than Visa and MasterCard, and Visa and MasterCard give the customer fraud protection and security and the various other requirements. So far okay, but that still remains a possibility.
The bigger issue is stupid regulation. Australia had the Bankcard for a long period of time, clearly eventually. But there's a project in the Reserve Bank, at the moment in between putting up Peter's interest rates, to decide whether they want to have a direct payment network. It'll go, why would people move to another Australian direct payment network? There are two that are, or three actually, that are of real relevance.
I mentioned China in there. China, when it digitized, went from fully cash to, if you went into the tokenization is done by, we've got an indirect holding in Tencent and Montaka has a direct holding in Tencent. So you have Tencent Pay and other pays that you can do all the way around with WeChat. That hasn't penetrated outside of China virtually at all. They were going into Southeast Asia there for a while, and there was thought to be a possibility.
In India wanted to digitize, so they moved to, I think it's called Paytm. A billion people on it was free. They're now going to start charging. It's not a challenger outside of India, but it took a lot of the debit card volume to them. Challenge goes to the growth rate. But will it go further? They've now just put charges on that. We'll see where that one goes too.
And the last one is Brazil. Brazil, again, for digitalization, they set up their own network, which meant they've done a great job, free or free-ish, generally ubiquitous, safe, sponsored by the government. So it meant that the growth rates in three of the most populous countries on Earth were not available to Visa or MasterCard. Still, and Andy will tell me, payment services, they're growing well and truly double digits, 25% random. Their underlying card spend or non-card, in many cases, digital, is close to 10. It's inflation plus. So they're still going okay. Coming back to managing expectations.
When Andy and his team did the review, the market's implied expectation was a 4% growth rate going forward. Reality was going to be circa 8%, and the difference on such duration is just extraordinary in terms of valuation. That's what you're looking at. The challenges can come and that 8% might come back to 6%. So there are those risks, but it'll come to growth rate.
And other one, yes, please.
Good morning. EY are our auditors. I am wondering how long they have been the auditors and is it worth looking at another company at this stage? AI, the impact of AI, do you think that is going to be more and more affected at the moment? Finally, do you see any rises from other companies taking over MFF?
Why don't I start with the- Thank you. Okay, I will start with the auditor question. Firstly, let me say up front, we are very satisfied with the service and the quality that we get from EY as our auditor. There was a 10-year anniversary of their being our auditor in 2018, and at that time we went out to tender and the results were that EY overwhelmingly, on every aspect, was the superior offer for MFF. We also have an annual review process, a very detailed annual review that we do through the audit and risk committee, and we do not actually have a contract with EY. We could at any time decide to go out to tender again. But at this point, given that right in the marketplace, we do see the other auditors, we are very satisfied with what we have with EY. But I might throw the AI question to somebody else.
I will start. Yep. AI is absolutely important in everything and virtually every situation and every business industry or future that we examine. Although there are arguments that the impact on consumer might be exaggerated. I mentioned up there, slightly facetiously, about the agent that can do the travel for you, but you can do the travel yourself and it is already there. So it is still to be proven, just how ubiquitous the AI agents are in consumer. Clearly, in companies, and eventually in government, AI is hugely important and that research is very clear that the beneficiaries include the cloud companies or hyperscalers.
Montaka in particular, they are just right on top of it, have been. You are about able to first talking about different forms. AI has been in Visa, MasterCard, for example. They did not call it, I think, generative AI at that stage, but they had other names for it for more than a decade. Most of our companies are either AI native, massive AI beneficiaries. So it is the Moneyball. Your question is absolutely correct. So, the opportunities, risks, et cetera.
But on top of that, it intersects with the financial markets. So what I said in the opening, the risks of the financial markets are really crucially important. There will be people who will go bankrupt, there will be misleading, there will be suits, those sorts of things. But there will be great progress. The unwinding of the dot-com bubble, which too, it was the technology infrastructure plus the dot-com, gave us great growth going forward, and therefore products out of that became Google and the other things. What we will both be looking for is which of the companies that are the 100x power law companies that will be able to use the technology. So it will go beyond the scale of the aged companies that are there at the moment. Do you want to?
Yeah, I could talk for a little while on this, but I will not. My colleagues will attest to this.
Sorry, I'll do that.
No. Look, I just want to make one point. There's a range of safety and human alignment and what recent events have shown, those who follow this closely, like the Hugging Face attack or the Medicare attack, obviously unintended, but happened anyway. What we found at the frontier of AI today is currently not safe and not aligned. They only spend a tiny, single-digit percentage of their budgets on safety and alignment, and the rest is spent on models and powers and capabilities.
I won't go into it too much, but I think the thing that is so alarming and poses such a significant risk for governments and corporates all around the world, it's not so much that the unintended hack of Hugging Face, but when you go through it really carefully, it's the behaviors and capabilities that were exhibited by the agents that conducted the hack. These were unintended. These were not behaviors that were deliberately created into the frontier model. That's super concerning. Because now we're right on the cusp of frontier AI exceeding human intelligence in specific ways, and yet it's very clear that we can't necessarily control it, and it's not safe and it's not aligned. That's not where you want to be today.
There are a range of implications for this. One is that the risk of cyber attacks, intended or unintended, that probability has gone up significantly. Governments need to care about that, and need to care about even consumers to some extent. I just want to underscore that. I also suspect that we'll be seeing in the not-too-distant future, new laws and whatnot to try to address this. But this is a really big issue that is going to have consequences for lots and lots of people all around the world.
There's a third element.
There's two questions on takeover.
Takeover, yeah.
I might have to start.
Yeah.
Recently, I was trying to help an ultra-high-net-worth family in terms of their controlling businesses in Australia to go offshore, and I recommended a couple of families with similar minds elsewhere. You've seen time and again, Australian companies go overseas, not do well because they want control. They want a whole lot of things. We have a little bit of that. I instruct that we have going to partner with these really good businesses, including family businesses around the world. That's attractive. That should, provided we're consistent with dividends and things like that, continue to command a premium in terms of valuation. We were incredibly vulnerable in 2014. John Ballard will remember we were first independent, as Gerald s aid, but we're less so now. We're of a decent scale. The board is obviously a board, but if there was a sensible merger partner or whatever, we'd of course have to consider that.
Thank you. Yes, please. Wait for sentiments. The microphone's coming to you.
Thank you. You've obviously got enormous investment opportunities available to you globally. I just wonder if you could provide some insights around the fact that L1 Group is one of our top 10 holdings now. It's operating in an industry that's very challenged. It's an active fund manager. It incorporates the long-suffering Platinum business. Legacy products, in my opinion, are overpriced, and it probably will continue to be subject to pricing pressure. If you could just explain why you're so enthusiastic on this.
We invested in L1 when they did a placement to, in effect, capitalize the acquisition of Platinum. We were confident that they would turn around some of the issues that were with Platinum that had caused decline over a period of time. We knew that they would be extremely good on costs. We thought that they would develop other products. We also expected that they would increase their funds because of the track record and their manner of approach over a period of time. Those sorts of things are playing through the placement price. We were the lead into the placement.
On top of that, we built a very decent relationship with them. We regard them highly. They are ethical and high-quality people. They think about things in a very good lateral way. As MFF moves from one employee team to Montaka and Claremont hopefully coming shortly, there are opportunities to do things. We can learn from them, to be frank. Gerald?
[audio distortion]
It is a decent position, but it is sized appropriately as well. Part of that is the appreciation since we bought. They have demonstrated some pricing power, and let us see where that lands. I am not disagreeing with you in terms of the basic stuff. We have got to watch those factors.
All right. Thank you very much. We might now move to questions from those participating by phone. A reminder to please press star one on your telephone if you would like to ask a question.
Thank you. Your first question comes from Dr. John Howard Sharp. Please go ahead. Dr. Sharp, your line is open.
I am sorry, my thumb accidentally pressed. I do not have a question. Thank you for the presentation.
Okay, moderator, is there another question?
Your next question comes from Amit Nath with Montaka Global Investments. Amit Nath, your line is open.
Oh, okay. I'm sorry. I missed that. While we work that technology out, why don't we go back to the floor? Thank you.
Board and Chris, thank you for the results, and thank you for the continued stewardship of our capital. Can I ask a question around Claremont, please, and the recent acquisition? A bit more color and detail on that if you get a moment. Thank you.
Thanks, Jason. Claremont runs a very similar strategy to Montaka. It's about quality and value. There's a high degree of complementarity with the two teams. We're getting access to an additional fund. There'll be something like AUD 100 million or so it'll add to our trust. It'll give us some more mass in terms of the Montaka operation. We're adding a good portfolio manager, Adam Chandler, to the team, which will give us four people within our Montaka investment team with more than 20 years experience. So a highly experienced, highly capable team, as I think you've seen from Andy today, with additional scale in what is a very similar strategy that you don't find the opportunity to add some through additional strategies like this that is as complementary to what we already have very often. It's a somewhat rare opportunity.
We think there is a lot of good reasons to do that, and the additional scale is going to be helpful. It is an unusual move. There is a lot of good reasons to believe that this is a great path forward for Montaka and for Claremont for that matter. In addition to which, we will end here with an improving relationship with, in terms of being on the APL at Evans and Partners, and that is helpful as well.
Okay, terrific. No more questions from the floor then. Oh, yes.
We have a very capable Chairman. I am just wondering why there are not any more women on the board. Do we have some more women and get some more diverse opinions?
Yes. Andy has three daughters. They will be eligible shortly.
The point is very well taken.
Thank you.
With that, we'll now turn to the formal business of the meeting. If there are no further questions from anywhere? No? Great. Okay.
So I'm advised by the Company Secretary that the holders of approximately 155.3 million of the company's shares have sent in proxies. In my capacity as Chairman of the company, I've been appointed as proxy by the holders of between approximately 22 million and 27 million of the company's ordinary shares for each of the resolutions being voted on today. Some of these proxies are open, and where those proxies are open, votes will be cast in favor of the resolutions to be put to the meeting.
There will be opportunities for shareholders to ask questions concerning the resolutions before the motion is put to them. We'll now show the proxy voting results before the vote is taken for each resolution. The proxy voting figures are taken as at the closing time for receipt of proxies, which was 10:30 A.M. Australian Eastern Daylight Saving Time on Sunday, 18th of October, 2026, and these figures may change if a shareholder who has submitted a proxy has attended the meeting today and revokes it.
The constitution of the company, together with the Corporations Act, provide that an ordinary resolution put to the vote at a meeting shall be decided on a show of hands unless a poll is demanded. A poll can be demanded by the Chairman, and I'm requiring each of today's resolutions to be decided by poll. Shareholders and proxy holders would have received on registration a blue voting card that provides for the holding of a poll on the resolution put to shareholders. You'll need to complete this in order for your vote to be counted. Shareholders who wish to vote for the resolution, please mark the "for" box. Shareholders who wish to vote against the resolution mark the "against" box, and shareholders who wish to abstain from voting on this should mark the "abstain" box. Abstentions will not be counted in computing the required majority for the poll.
If you are a proxyholder, you must comply with the direction of the shareholder if you wish to lodge a valid vote. Following the completion of this, the meeting will be closed and the votes tallied. I appoint David Parkinson from Boardroom Proprietary Limited as Returning Officer. The Returning Officer will arrange for the counting of the votes in accordance with the voting exclusions as set out. Results of all the polls will be released to the ASX later today. They will also be posted on the MFF website.
I now propose to proceed with the items of business of the meeting which were set out in the item one, receipt of financial statements and reports. The first item of business on the agenda deals with the financial statements and reports for the financial year ended 30th of June 2026. I table those financial statements, which include the directors' report, financial statements, and the independent auditor's report. No resolution is required in relation to this agenda item. However, I now ask if anyone has any questions or comments relating to the financial statements of the company or the report for the directors and auditors. Please raise your voting card now if you have a question regarding the company's financial statements and report.
We will now move to questions from those participating by phone. Please press dial one on your telephone if you would like to ask a question. There are no questions, so thank you.
I will now turn to the resolutions that require adoption. Item two, adoption of remuneration report. This resolution concerns the adoption of the company's remuneration report. This report forms part of the directors' report, which is contained in the company's annual report. The resolution now appears on the screen. Unless I hear to the contrary, I will take the resolution as read. I now move to consider item two, adoption of the remuneration report, as contained in the notice of meeting in the screen. The Corporations Act requires that a resolution that the remuneration report be adopted must be put to the vote at the company's annual general meeting. I point out that the vote on this resolution is advisory only and does not.
Before putting the motion to a vote, I would like to invite any questions or comments on the remuneration report. If you wish to speak, please raise your voting card. I move to questions from those participating by phone, and there are no questions by phone, so we will now proceed to voting.
The proxy voting results for this resolution can be seen on, and as chairman, I exercise my power to direct that the vote on item two is to be taken by way of a poll. As set out in the notice of meeting and subject to voting exclusions, I will vote all undirected proxies in favor of this resolution. Has anyone voted? No? I will continue on then. Thank you.
Item three is the re-election of Peter Montgomery. This resolution concerns the re-election of Peter to the board. By now, you will have had the opportunity to read the explanatory notes that accompany the notice of meeting. They provide a brief biography of Peter. Peter was originally appointed to the board in May 2019 and was re-elected as a Director of the company at the company's Annual General Meeting in September 2023. He retires in accordance with the constitution and ASX listing rule 14.4, and being eligible, offers himself for re-election. We refer shareholders to the notice of meeting for a summary of Peter's experience and qualifications. The Board of Directors, excluding us, unanimously recommends you vote in favor of the re-election of Peter Montgomery.
The resolution you will be voting on now appears on the screen. Unless I hear to the contrary, I will also take the resolution as being read. Item three, the re-election of Peter Montgomery, as contained in the notice of meeting and as it appears on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution? If you wish to speak, please raise your vote.
There are no questions on the phone, so we will now proceed to voting. The proxy voting results for this resolution can be seen on the screen. I exercise my power to direct that the vote on item three is to be taken by way of a poll. As set out in the notice of meeting, I will be voting all undirected proxies in favor of this resolution. Please submit your vote in relation to item three. I assume everyone has voted. Thank you. Congratulations, Peter.
Thank you very much, ladies and gentlemen. [audio distortion]
Item four is Chris Mackay. This resolution concerns the re-election of Chris Mackay to the board. By now, you will have had an opportunity to read the explanatory notes that accompany the notice of meeting. The explanatory notes provide a brief biography of Chris. He was originally appointed to the board in September 2006, served as Managing Director and Portfolio Manager from 1 October 2013 until 31 December 2025, and since 1 January 2026, Executive Director of Investments and Capital and Portfolio Manager. He retires in accordance with the company's constitution and ASX listing ruling 14.4, and being eligible, offers himself for re-election. We refer shareholders to the notice of meeting for a summary of Chris's experience and qualifications. The Board of Directors, excluding Chris, unanimously recommends you vote in favor of the re-election of Chris Mackay.
The resolution you will be voting on appears on the screen . Unless I hear to the contrary, I'll also take the resolution as being read. I now move to consider item four, the re-election of Chris Mackay, as contained in the notice of meeting and as it appears on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution? If you wish to speak, please raise your voting card. That's a relief.
We'll now move to questions from the phone. We'll now proceed to voting. The proxy voting results for this resolution can be seen on the screen. As Chairman, I exercise my power to direct that the vote on item four is to be taken by way of a poll. As outlined in the notice of meeting, I'll vote all undirected proxies in favor of this resolution. Please submit your vote in relation to item four. I assume everyone has voted once again. Thank you.
Item five. Item five is the approval of grant of restricted share units and performance share units to Mr. Gerald Stack. This resolution concerns the approval of a grant of restricted share units and performance share units to Gerald. By now, you will have had an opportunity to read the explanatory notes that accompany the notice of meeting. As the details of each grant are set out in the notice of meeting, I do not propose to run through them again today. I would, however, like to say a few words today, the board is putting this resolution to you.
With Gerald stepping into the role of Managing Director and Chief Executive this year, the board felt it important that a meaningful part of his remuneration should be tied directly to MFF's clear and strong alignment with shareholder outcomes. The performance share units, in particular, reward Gerald only if MFF meets or outperforms the broader market over the medium to long term. In the board's view, this structure aligns closely with yours and supports his retention as a key executive. The board of directors, excluding Gerald, unanimously recommends you vote in favor of the approval of grant of restricted share units and performance share units to Gerald.
The resolution you'll be voting on now appears on the screen. Unless I hear to the contrary, I'll also take the resolution as being read. I now move to consider item five, the approval of grant of restricted share units and performance share units to Mr. Gerald Stack, as contained in the notice of meeting and as it appears on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution? If you wish to speak, please raise your vote.
There are no questions from the floor or over the phone. So we'll now proceed to voting. The item voting results for this resolution can be seen on the screen. As Chairman, I exercise my power to direct that the vote on item five is to be taken by way of a poll. As set out in the notice of meeting and subject to voting exclusions, I will vote all directed proxies in favor of this resolution. Please submit your vote in relation to item five. Everyone's very quick here, so thank you.
We now move to item six, the non-executive director fee pool. This resolution concerns the increase to maximum non-executive director fee pool. By now you'll have had an opportunity to read the explanatory notes that accompany the notice of meeting. The fee pool has remained at since MFF listed in 2026. 2006, to see whether you're awake. In 2006. While the size and complexity of the business and the responsibility asked of its board have grown significantly. The increase is intended to give the board flexibility to keep fees at a level that allows MFF to attract and retain directors of the right caliber and to support board renewal, including the ability to appoint an additional non-executive director should the board consider that appropriate in the future.
I would stress that this is a ceiling, not a target. Any future change to it will be considered carefully and fully disclosed in the remuneration report. Noting the non-executive director's interest in this resolution, the board recommends you vote in favor of the increase to maximum non-executive director fee pool.
You will be voting on now appears on the screen. Unless I hear to the contrary, I will also take the resolution as being read. I now move to consider item six, the increase to maximum non-executive director fee pool, as contained in the notice as it appears on the screen. Before I put the motion to a vote, does anyone have any comments about this resolution? If you wish to speak, please raise your voting card.
No questions. We will now proceed to voting. The proxy voting results for this resolution can be seen on the screen. As chairman, I exercise my power to direct that vote on item six is to be taken by vote. As set out in the notice of meeting and subject to voting exclusions, I will vote all undirected proxies in favor of this resolution. Please submit your vote in relation to item six. Speedy voting again. Thank you.
Everyone should now have had the opportunity to vote on the resolution. I now ask that you ensure that you've completed and signed your voting cards. Please hand them to a representative who will collect them from the floor. I declare the polls closed for the vote on each of the resolutions, and that concludes the voting on the resolutions of the meeting. The votes cast will now be tallied. Received and the number of votes from today's attendees, each of the resolutions is expected to be passed. However, the formal result of the voting will be released to the ASX later today and posted on the MFF website.
There being no further business, I declare this annual general meeting of MFF Capital Investments Limited closed. I wish to thank you all for your attendance today and for your support of MFF Capital Investments Limited, and you're free to enjoy some refreshments outside. Thank you.