AMCIL Limited (AMH) Earnings Call Transcript & Summary

Hello, and welcome to AMCIL Half Year Financial Results Briefing. [Operator Instructions] I would now like to hand the presentation over to Mark Freeman, Managing Director of AMCIL. Thank you. Please go ahead.

Well, good afternoon, everyone. I'm Mark Freeman, the CEO and Managing Director of AMCIL Limited. I'm also the Portfolio Manager for AMCIL. So welcome to this half year result briefing. I'd like to begin by acknowledging the Traditional Owners and Custodians from all the lands that we are gathered on today and pay my respect to their Elders, both past, present and emerging. I have joining me today on the webinar Jaye Guy from the investment team; Andrew Porter, our CFO; Matthew Rowe, our Company Secretary; and Geoff Driver, our General Manager of Business Development. Before we start the presentation, a bit of housekeeping on the webinar. This briefing is based on the material available on the company's website. If you are using your computer to access the presentation via the webcast, the slides will change automatically. Finally, please note following the presentation, there will be time for questions and answers. You can ask a question via the webcast using the tab at the bottom of the screen. I'll now move to Slide 2 of the presentation, which is the disclaimer. Just to say we're here to talk about the company. We're not giving any advice as such. Then we'll move on to the results for the half year, and I'll pass over to Andrew Porter, our CFO, to talk through Slide 4.

Thank you, Mark, and good afternoon, ladies and gentlemen. So the profit for the half year, which is the first box on the top left, $4.1 million, in line with last year. The revenue we actually received was down. We did anticipate that and talked about it last year at the AGM and various shareholder presentations. We strongly expected that the major resource companies like BHP would be reducing their dividends. That proved to be the case. In this time last year, BHP paid AMCIL $1.1 million in dividends. And this year, it was $540,000. So there's a big difference there. And the main reason, though, why the profit is fairly consistent, 2 things, first of all, other companies did increase their dividend. And secondly, there was a one-off reduction in expenses, and I'll come to that in a minute. The interim dividend at, one, was maintained at $0.01, same as last year. And the portfolio return of 11.7%. That was above the market of 8.3%. We'll come into that in more detail later on. Moving over to the next column, 8.5% was the share price return. Again, that's an accumulation return, so it includes the dividends reinvested plus franking. And as you can see, that was below the portfolio return, slightly above in line with the ASX 200, and that difference has produced an increase in the discount. And again, I'll come on to that later. The management expense ratio, which is the expression of the costs of running the company as a percentage of the average portfolio value down to 0.46%, so $0.46 for every $100 invested. Now this was discussed at the AGM last year when the MER was much higher. The performance, as I'm sure many shareholders will remember, was below the market at the end of the previous financial year, not the portfolio movement over 5 and 10 years. That's the one that excludes tax and costs, but the others were below. So what happens there is the portion of incentives for staff that are based on the AMCIL performance was not paid out, and that was refunded this year. So that's led to that reduction in costs and the reduction in the MER. The major driver of the MER, of course, will be what the portfolio does between now and the end of the year. But with other costs currently being in line, if the portfolio stays the same as it is in December, which won't happen, we would expect the MER to be about 0.59%. They're more in line with historical norms. Portfolio at the end of the year, just under $370 million, so up from $324 million last year. If we move to the next slide, which is the premium discount slide. And you'll see that the discount grew slightly to 13.1% from 9.9% at the end of June. And that's that difference that I talked about earlier between the portfolio return and the shareholder return. Many LICs at the moment have moved to a discount or increased their discount. We can't control the market, but we do think it's important to let shareholders and potential shareholders have the information that they can see whether they are buying or selling shares at a premium or a discount to their underlying value. And with that, I'll hand back to Mark.

Okay. Thanks, Andrew. So moving into the presentation on Slide 7, we've got the portfolio performance returns, as Andrew touched on, for 6 months, the portfolio was up 11.7% against the index 8.3%. These will include franking, both in the performance of AMCIL and the index so it's a like-for-like. And then 1 year, you can see up 21.2% against the index up 14%. Other portfolios ahead of the benchmark over 5 years. And also noting that our performance numbers are after all costs and tax. We're just behind the index on 10 years, but obviously, the index doesn't have tax and fees taken out of that. And just to note, this is including franking to the extent we've actually paid it out but noting that we still have franking credits that haven't yet paid out. And so they are yet to come into our performance numbers. So again, reiterating, Andrew, just the franking credits that we haven't paid out again.

So at the end of June, after we paid out the final special dividend, it was equivalent to about $0.055 worth of franked dividend that we could pay out. And earnings per share over the 6 months have been roughly just over 1%. So you'd expect that the current level to be fairly consistent once we paid out the interim account with that figure of about $0.055.

Okay. Thanks, Andrew. So then moving on to Slide 8. Just to remind investors what we're about in AMCIL. So it's a focused portfolio. We target quality companies. We're not making the positions in line exactly with the index. We do look at the index weightings, but the AMCIL intent is to be high conviction around the stocks that we invest in. There's alignment of interest. So for our high conviction managed fund like this, what we see as a fairly low-cost vehicle. There are no performance fees and the strong equity ownership by directors and staff, so there is alignment with shareholders. We also aim to be low turnover and therefore, tax effective. I think the turnover in the half was around 7%. And again, when you look across the industry, that would be seen as pretty low turnover. And we are taking a long-term investment approach. So moving to Slide 9, a bit more about that investment approach. We like to reiterate what we're looking for in the stocks we invest in. We said we target high-quality companies. So what do we mean by that? We prefer companies that have unique assets that are very hard to replicate or another way we talk about that is businesses that have a leadership position or a developing one. We want companies that have an enduring sustainable competitive advantage. We're wary of companies that have external factors beyond the company's control that can disrupt the business. Conservative balance sheets are important and we keep seeing this time and time again when companies take on too much debt, it can really get the business into trouble and certainly, the share prices as well. We prefer companies with more consistent earnings streams. The people are critically important. So we want businesses that are run by effective passionate management teams with ownership alignment. And we prefer our businesses to be what we call have a positive business operating trends. We're wary of companies that have significant headwinds on their businesses, whether they be industry or operating issues. So why this matters? Our experience tells us that these factors drive competitive advantage over the long term, which leads to higher return on capital. High-returning businesses have the ability to reinvest in their business to drive growth, capture market share and further enhance their leadership position and ultimately producing good profit growth, which drives shareholder value creation. When we identify these companies, we want to buy them when we see long-term value. So we talk a lot about finding dislocations in share prices to add to our holdings or introduce new stocks. And if businesses start failing on these criteria, we look to reduce or exit as this often leads to poor performance. So on to Slide 10. We just wanted to highlight that AMCIL is diversified across sectors. Obviously, when you look at the index weight, if you look at the ASX 200 is dominated by banks and resources. We try and have a more balanced approach to our sector exposure. And also by market capitalization, you can see there's a sort of reasonably even spread when you look at splitting the businesses by market cap, less than $5 billion, $5 billion to $15 billion, $15 billion to $50 billion and above $50 billion. I would say that our exposure to what you classically call mid- and small-cap stocks, is probably close to 40%. The index would be around 20%. So we've got a much higher exposure to mid- and small-caps. And our large-caps would be around 60% compared to the index of more like 78%. Probably in the past, we've had periods where we've had higher exposure to mid- and small-caps. However, we look to where we see the best opportunities and the best investment criteria. If we see those in more of the larger mid- and larger-cap stocks, we're happy to bias the portfolio there. I think what we've tried to note is that we give a bit more of balance across those sectors compared to the index. Then moving on to Slide 7 (sic) [ Slide 11 ]. Just some of the recent activity and it's good to talk through this, so investors understand our investment approach. We did exit 2 stocks. And we talked a lot about our buying of Medibank when they had a cyber event, we saw that as a significant dislocation in share price. We didn't think it would be an event that would damage the business long-term. The stock passed our process in terms of backhaul people, strong balance sheet, high return on capital, sustainable business model. Where we're a little bit wary on it was long-term growth. The dislocation in share price gave us an opportunity. And when the share price recovered, we exited that position. We still like the company. We're keen watcher of it, but we did achieve what we wanted to achieve, so we exited. And we're just seeing some better opportunities, so we exited our holding in FINEOS, hasn't quite hit what we'd want in terms of profitability. It still has some mentioning characteristics being an owner-driver, establishing a leadership position in what they do and annuity-type revenue streams, but the lack of profitability, means the financial strength is not there for us. And as I said, we've had other opportunities, so we exited that position. We also took a bit off the top. James Hardie has been very strong and a very large position, probably should have held what we trimmed for a bit longer. However, it is still a large position in the portfolio. Woolworths is looking very expensive to us. Auckland Airport, as you remember, we added a lot to that during COVID when the stock had a sell-off, it's now recovered that in terms of the share price. And there are a few issues around the regulator and the like, so which we would say is an external factor on the business. So we took a little bit out of there. We did reduce our Domino's. We took about 1/4 of our position. Again, going back to the factors I talked about at the start. The balance sheet is not in the shape we want it to be. Also, we see the businesses having significant operational headwinds. Therefore, it is worrying us on a couple of our factors that indicated us that we should reduce. We did that. In hindsight, we probably should have sold a bit more, but we're pleased we took some out of that stock. Westpac, we touched on before that we probably had in terms of quality of bias towards NAB. We added that to -- added NAB to the portfolio, built our position and that gave us an opportunity to reduce Westpac. We're still holding on to some Westpac. We see some value there. We think management lease looking more stable, produces very strong franked dividends. And so with the valuation where it is, we're comfortable at this point to keep holding some. And Transurban, again, a very large position, and we took the opportunity just to trim the holding. Just in terms of additions, we'll come back to some of those shortly in terms of -- most of those acquisitions are covered on the next few slides, so we'll perhaps come back to those. But just back to the trimming again, if you think back to what we've done over the last 12 months or so, reminding everyone, we did exit our positions in Iris, PEXA and Nanosonics as well as reducing Domino's. The basis for that was failings against our process. And all of those stocks have fallen away a fair bit since we've sold it. And it probably just again highlights to us looking to fund future acquisitions. The best-selling is always stocks that are not quite hitting our frameworks. In the case of some of those were on high multiples. I think trimming we've done in the good quality stocks, where they didn't have an issue perhaps hasn't been the bestselling for us. So to keep moving up, the quality is always the best way to run the portfolio. So if you move to Slide 12, just picking up on some of those acquisitions, I'll get Jaye to talk through 3 of the stocks that are in the portfolio now.

Thank you, Mark. So on Slide 12, we've provided some detail on 3 new positions that we added to the portfolio during the half year. We recognized that these might not necessarily be household names, so we thought it might be helpful to provide a bit of background in our thinking behind these companies. With Altium, Mineral Resources and Objective, we've followed and admired each of these businesses for some time as they demonstrate many of the characteristics Mark has outlined earlier in the presentation. In the case of Altium, they play an important role in the electronics industry globally as the market-leading software provider for the design of printed circuit boards. Printed circuit boards are a fundamental component in most electronic devices. The trend towards an increasingly smart and connected world via electronic devices is a positive tailwind for Altium, and we can observe the company winning customers and taking share in what is a growing market. Importantly, Altium is profitable while fully expensing their substantial research and development spend. The management team is closely aligned with shareholders, and the balance sheet is well positioned with net cash of $200 million at the last result, which, in our mind, creates significant optionality to reinvest back in the business at a high return on equity or inorganically. The Mineral Resources is a diversified resources company with operations in mining services, iron ore and lithium. Their model is somewhat unique to other resource companies in that their core mining services business is integrated and provide services to their own mining operations rather than outsourcing and also provides this offering to external customers as well. The company is led by founding CEO and substantial shareholder, Chris Ellison. Chris has a strong track record of creating value through a number of commodity cycles. While we do expect volatility in the share price due to the nature of the underlying commodity markets that Mineral Resources is exposed to, in the medium to long-term, we are attracted to the quality of their Australian-based asset base, combined with our agile management team and their sharp focus on returning invested capital in what can be a capital-intensive industry. And moving on to Objective. Objective provides best-in-class software that enables local councils, governments and regulated industries in Australia, New Zealand and the United Kingdom to digitize and operate more efficiently, transparently and securely. Objective is led by founder and significant shareholder, Tony Walls, who hasn't sold a single share since listing the business on the ASX over 20 years ago. The company has a demonstrated track record of profitable growth. We can observe significant investment in product-led research development and expect this to support future growth for the business. From a financial strength perspective, Objective has a strong balance sheet with over $72 million of net cash. The business boasts very high customer retention rates and a recurring subscription revenue at attractive margins, which leads to a high degree of earnings consistency. I'll now pass back to Mark to talk through further examples of our investment approach in practice.

Thanks, Jaye. So moving to Slide 13, just continuing our trend of showing shareholders where we've acquired stocks and some of the logic for it. So, here we talked about looking for price dislocations in established companies. IDP, we touched on this at the last update we did to shareholders talking about the opportunity we're seeing in that company. I guess the key risk of this stock, which has a leadership position in English language testing globally, but more importantly, the student placement market into universities. They've got a strong position globally, and we've been attracted to the potential for them to grow market share. The global business is very fragmented, but they have a leadership position with less than 10% market share. So we think there's strong opportunity for growth over the long-term. The issues that have been hitting the share price really come under the bracket of the category outside influence. So that is the key risk with the stock. There are issues out of their control, government decisions that can impact the business. And so this is the time when you actually look at a stock like this when that factor is playing out. It is continuing to call bad news as it were. But we think over the long term, this business has been around for some time. We think it's a real established company. And as they reinvest in technology ahead of their competition, we think they can gain share. And so we have a position now in this portfolio. But because of the risks of outside influences, it's never going to be a position that will be too large. ASX has certainly been out of favor. There's been a lot of operational headwinds, but we saw the deal they did to replace their [indiscernible]. So they've basically chosen an alternate system. We think it's a very clean approach. And for us, it's the first time you start to see some good news out of the company, and we will see more attractive valuations. So very much a stock that was out of favor, but a business that characteristics suit us in terms of its monopolistic nature. Then on to the next slide, we added a bit more to NAB. We were seeing value there, some strong franked dividends, good management, attractive return on equity. So it was hitting our criteria. So we added to that. And then more recently, we topped up our Woodside holding. We see Woodside being very much out of favor. If you look through the market presently and say, what sectors are out of favor, certainly, the lithium stocks have been copying it, but also Woodside. The market has been very nervous about approval processes in Australia. The oil price has been weak and then perhaps people were thinking all this negative news and the other factor too, is that's being talked about is Woodside potentially merging or taking over Santos depending on how you view it. So all these factors have meant that there's negative news on the stock. We're actually starting to see some value there, again, producing nice franked dividends, which we're attracted to, so we've added slightly to our holding. So just moving on to Slide 15. Just to sum up some of the buying we've been doing. We added to Macquarie Technology Group. It's another owner-driver business. The Tudehope brothers run this business. Just to remind everyone, they are expanding their data center business in Sydney. They've actually been now getting their approvals and the stock is moving up quite nicely. So we've been attracted to that company. They've kept a very strong balance sheet and we think that project is going to be a very good one for them. We've touched on Objective and Min Resources. Gentrack, we added to that again. Again, very passionate management. They have a software or a range of software products. They sell into utilities globally. So it's a global business. They expense all their R&D. They've got a very strong balance sheet. So again, the characteristics we like, they had a good result. So we added to that. And IPD, we participated in a capital raising. This is a small position. They're an electrical distributor here in Australia. They've done very well since listing management and Board members have very strong equity exposures. So it's got that alignment that we look for again. We think that company is in a bit of a sweet spot at the moment. So we took a position there and that's been very good for us. We just wanted to talk about what happened with health care stocks during the year. Again, a significant dislocation in share price. Health care stocks globally got sold off. There is concerns around the weight loss drugs that seemed to impact every health care stock, it didn't matter whether they were going to be impacted by weight loss or not. We saw this play out in CSL and ResMed. We already had a very significant position in CSL. We talked about adding more, but we felt like we had enough, but we certainly identified as an opportunity. And ResMed, we did net add a small amount into that share price weakness. Both those share prices now have pretty much recovered. And so it just shows you the process in action of finding temporary pieces of bad news in good quality companies because we don't think CSL and ResMed, we don't think the long-term story has really changed for those 2 companies. And then we talked about trimming stocks when valuation becomes less appealing. But as I said, the best trimming you can do is in stocks, where valuations are high, but where they have issues. As I said, the heart is in net wealth. They really don't have any issues with their businesses. They have become bigger positions, but in fact, it probably would be better to hang on to those stocks because they've got plenty of long-term growth ahead of them, but we don't get them all right. So moving on to Slide 16. It just sums up the portfolio. We think about stocks in terms of growth companies. We're very happy to hold stalwart businesses. These are large, established companies that we still think can steadily grow and have very strong market positions. We're happy to have stocks that provide us with great franked dividends when we can buy them at good prices, and I touched on Woodside and NAB. And then we have asset play companies, so these are businesses that we think are just fundamentally undervalued and Santos has been positioned within that. We tend to have more in the growth company sector because some of these will be smaller companies. So you have your exposure and growth spread across a broader range of businesses and the stalwart companies tend to be larger companies, so a smaller number of those. So moving on to outlook and then we can get into questions, so slide 18. The big movement over the year has been people's expectations of inflation to a point now where markets are expecting inflation to decline and ultimately, interest rates to fall. This has driven a strong response from growth stocks or quality stocks where we're exposed. So you could have a view that, in fact, it's that view the interest rates might fall has driven strong performance from quality companies. I think that is a contributing factor. But I think the other key factor as we saw throughout the half was the operating results that most of our companies produced that we saw around August for the full year results and then we had updates through the AGM period. Generally, the good quality stocks to produce good quality results. There's always going to be an exception. And obviously, the Domino's update we had the other day was disappointing, but most of our other companies continue to produce strong results and that also has been a key driver of share prices. As a result, though, we're seeing the market pretty fully valued at this point. We're finding it harder to see value. We go into the reporting season now in February, keen to hear updates, but happy with the portfolio settings as they stand. Potentially, we're still thinking that the rise in interest rates that we've had will impact the consumer at some point and therefore, potentially earnings and it's another reason why we have a bit of caution. However, we still think that our investment approach, which is to focus on quality companies, be patient and look to execute and add to positions when we see value and we test ourselves on that. Backing aligned management teams is important. Ultimately, share prices are driven by earnings growth in the long term. And as always, balance sheet strength creates resilience and protects against rising interest rates. So with that, I hope you're hearing a consistent approach to the way we're running AMCIL and developing a good understanding of what we're doing with the portfolio, and we're happy to open up to questions.

All right. Thanks, Mark. So I'll coordinate the question-and-answer session. Just to remind shareholders, participants, I should say that you can ask a question by using the tab at the bottom of the screen. So the first question here is, was there a capital gain now I see attached to the dividend, Andrew?

It's a good question. There wasn't this year. No, but that does make me think that in future, we should probably point that out when we do that release. So thank you for that, but there was none this year.

Has the recent Domino's earnings downgrade impacted AMCIL?

Well, it was a smaller position of portfolio, but clearly, when the stock falls 30%, it has an impact. And I think you'll see the position was just over 1%. And we're pleased that we took a quarter out, but I think you can do the sums and work out the impact from that. And it probably more than anything, it just confirms the process we go through is weak balance sheets is really a recipe for a pretty volatile performance and more than not underperformance.

So there's a couple of related questions to you. What are the options available to try and reduce the discount to NTA, is this a liquidity issue? And I guess the other part of the question is what are we doing to reduce the share price discount to NTA? Are we seeing that buying shares back on the market, the DRP?

Yes, sure. So I think the best way to reduce discount is consistent good performance and for the market to understand what you're doing. So we've sort of been on that journey. We do have a buyback in process, but we're reluctant to do that. We're trying to grow the company. So in that regard, having a larger company, and we were a couple of years ago, where we were starting to do some more consistent share purchase plans. It's something like we'd like to do more. We talked about that we could have a bigger company still be able to invest in the positions that we like, that would certainly help us well. If we saw the discount blow out, that's something we could look at. But generally, what we see is buying back shares doesn't usually fix the problem. I think just more consistent performance and educating the market on what we're doing is probably the best thing.

I think that's right, Mark, we've seen across the industry really, particularly for smaller companies buying back shares hasn't really been the panacea for reducing the discounts. It's really about performance at the end of the day and dividends, and that's what we're obviously working on. So there's a question here about Objective Corporation. Are you expecting Objective to grow revenue and earnings in financial year '24 after reporting steady results in financial year '23, i.e., the increased earnings, excluding any benefit arising of objecting change in the accounting treatment of research and development?

Yes. So they are starting to capitalize some of their R&D, probably more aligned with the rest of the market really, so we take that into consideration. In terms of earnings growth, look, Objective is really a business. You do take a true long-term view. You've always seen this before when -- and with Objective where you can have periods of investment and there are periods where your profits may not move much. But when the business kicks in and you start winning some new customers and growth kicks in, then you can have periods of very strong growth. So we're not in it for what they're going to do over the next year. What we see this business has all the characteristics that our experience tells us will lead to a long -- a good long-term investment, but it may not happen in the next year, but we're confident that over the long-term, this business will be a good investment for us.

Thanks, Mark. So again, just encourage participants to ask any questions via the box at the bottom of the screen. Question here about, do we have a transfer of securities from the trading portfolio to the investment portfolio?

That's a very interesting question. In AMCIL, it's rare, it's not unknown. But in order and I can go into as much detail that people would like on it. But in order to maintain purity of accounting and tax, we actually sell stock once we think -- once the team have identified a stock that they think is going to be a trade, it's undervalued and they want to sell it for a quick profit. If after time, they say, actually, this does fit the AMCIL model for the longer term, we will actually do a sale from the trading portfolio to the investment portfolio as if it had been on market, but that's in order that we don't tarnish the investment portfolio or indeed the trading portfolio. I hope that's clear.

A question here about, can we give an indication of the acquisition costs of IPD and also of Objective and the size of the current holdings?

Yes. So these sort of companies we generally -- we're certainly -- they're probably positioned. They're certainly less than 1%, probably closer to more like 0.5%. But we still think we want to have a position in these businesses because we -- as they succeed and get better, you can get share price appreciation, but often will add to positions over time, the more we get comfortable with the business. In terms of the price, we don't talk about the exact price, but I did mention in IPD, we brought in through a capital raising. So the outcome from that is we've done very well out of it so far. And then we've talked about Objective being a new position to the portfolio, so that would suggest that somewhere around the current share price, I guess, without bringing a number on it.

Thanks, Mark. Our views on a Woolworths going forward, particularly with the government inquires that are being undertaken and also a view on gold companies in the likelihood of AMCIL investing in those companies.

Yes. As you can see, we still think Woolworths is a quality operator. There's no question about that, but we did scratch our head a little bit on some of the multiples. I'm very happy to hold on to our positions in companies that we have no issues around our criteria, even if they get a bit expensive. If the prospect is still [ sound ], we're happy to hold. But Woolworths given it's more of a stalwart lower growth, they're the businesses that we're more inclined to trim a bit if they get repriced, but we still think they're a quality business, so it's still in the portfolio. Just in relation to some of the more recent activities, I guess, clearly, we want our business to be focused on running the business, running the company well. We'll be catching up with the company soon. So I guess there are some of the questions I'm keen to talk to management about to make sure that they're really focused on the company and making sure the operational business is strong and that's where we'd like to see the focus of the company.

Thanks, Mark. I think we got a couple of more questions here. So I encourage participants to ask questions if they have them before we end the presentation. So what are you thinking about the banking sector at the moment? You've touched on the holdings we have, but the share prices have obviously gone up a reasonable amount, so what are you thinking there?

Yes. Well, look, we think the banks are in better shape than perhaps where they were, say, 5 years ago. The capital positions are really strong. A lot of them have exited what you call noncore businesses. We've seen an improvement in ROE. Return on equity is really important. We want to be in companies that generate a good return on equity. So certainly, net cap, certainly CBA hitting the mark and now NAB are. That's why we've been keen to own those 2. I think what's underestimated in the banks is the value of the franking credit. So when you take the dividends, add the franking credits, they don't have to grow a lot for them to be a good sound investment. And this is a case where some of our more stalwart companies or sometimes our growth companies, where we can sell call options against our position to bring further income to that and certainly the banks would sit in that group. Yes, CBA is -- looks pretty fully priced to us, but it's still they produce good quality results and everyone has been talking about -- or certainly market for a long time that they're just too expensive, but they keep performing. We've built up NAB and as I said, Westpac, it's really a valuation story that keeps us there. But financially, just very strong. And in fact, the payout ratios are very manageable at the moment, so we don't see a lot of risk in terms of the dividends. Population growth in Australia is still strong. I guess the only headwind that we see is that we're just not expecting a lot of earnings growth. But for example, if you look at Westpac, the yield is about 6% fully franked. If you gross that for franking credits, you're getting sort of nearly 8.5%. If they can just grow at a couple of percent a year, it's a good sound investment. So it's not going to be a sector that we would have an index-type weighting, but the value of the frank credits and the opportunity to sell call options when they run means that we should get a pretty good return out of them.

Thanks, Mark. So got question here about the views on insurance companies and insuring broking businesses within the market.

Yes. Well, look, insurance companies take you on a roller-coaster ride. I actually thought about a year ago, IAG was looking like there was some good value there, but we didn't invest, it's gone up, but it's just hard to comfort around it. QBE has been in favor more recently, but it's had a pretty good run now. So again, I did look at that one a while ago because there was potentially some value there, but I didn't buy it. But from where these stocks are now, it's just hard to get the confidence about the future and what -- and in terms of the criteria what that we're looking for, there might be opportunities in the future to take more of a trading view, but both IAG and QBE have had pretty good runs where you could really see deep value. And I think that point has passed so probably more on the watch list, but acknowledge that certainly QBE, the management team is looking much better and the business is looking much better than it was. And insurance brokers, look, they're quite good businesses and Austbrokers has done incredibly well. The market was pretty cautious on the acquisition they made in the U.K., but it's been a huge success. But they do produce pretty good returns. And so their businesses, we do look at. But once again, they've also had pretty good runs in the market, so probably not high on the watch list as it stands.

Does AMCIL have any shares, still have shares. We've never had any shares in Starpharma, so.

I think we may have at one point a while ago but no, I think we haven't had Starpharma for a while now.

So a question about the performance. You have enjoyed a period of -- underperformances have recently turned around. Have you made a slight change in your decision making to achieve this? And if so, are you confident the underperformance is a thing of the past?

Well, we hope so. I mean we've got a pretty disciplined approach that hopefully, you're hearing that consistent messaging through these briefings if you've listened to the last couple that I've done. So we're doing a bit of a deep dive. I guess the performance looks okay for the last 12 months, but we need to keep focusing on looking at what's worked and what hasn't and where we keep landing on is consistency against our process is the answer if we're producing those results. We've looked back at all the opportunities that perhaps were there for us with our approach, sticking with the better quality companies, making sure we capture value when they present and weeding out the lower quality stocks is another avenue to do that. So from the long-term perspective, I think the frameworks are sound. We're just going to keep executing on it and not stray from this approach moving into lower quality stocks at any point or shying away from what our frameworks are telling us. That's where you can get issues. So to the extent you can have confidence, I can't say what's going to happen in the next 12 months. But I can say when we look through our portfolio, these are good companies. There's always going to be some that don't work, but we think we've done a good job of actually managing down the risk in those ones where problems did come about or actually exit some stock. So we just got to stick with the approach and let the performance as it turns out over the long term. Just back what we've done for a long time, stick with the quality.