AMCIL Limited (AMH) Earnings Call Transcript & Summary

Well, good morning. Good morning, ladies and gentlemen, and welcome to the 29th Annual General Meeting of AMCIL Limited. Thank you for those of you who have journeyed here to the Western hotel to be in the room with us this morning. This is perhaps more intimate than commodious or more intimate than cabanas. But anyway, I hope you're all very comfortable. I'm told we did have a room swap because there's some drilling going on outside the room that we were to have been in. But nevertheless, you all look very comfortable and I hope you are. And welcome to those of you joining online. If you see me looking in that direction, that's addressing the online shareholders that are joining us. As always, of course, we welcome your feedback on the venue and the logistics of this meeting. The Company Secretary has confirmed that there is a quorum present, and so I now formally open today's meeting. I'd like to begin by acknowledging the traditional owners and custodians of the land on which we're gathered today. The Boonwurrung and Wurrung people of the Kulin Nations, and I pay my respects to their Elders, past, present and emerging. My name is Rupert Myer, Chairman of your company. May I introduce the people on the stage with me. We have, to my left, your right, Managing Director, Mark Freeman.

Good morning, everyone.

And my fellow nonexecutive directors, actually, you're going to have to look, in this direction now, Roger Brown.

Good morning.

Paula Dwyer.

Good morning.

And now this way, Mike Hirst.

Good morning.

Jon Webster.

Good morning.

Jodie Auster is attending the meeting, but virtually, she's not able to be with us personally this morning. We also have our company Secretary, Matthew Rowe to my right.

Good morning.

Our Chief Financial Officer, Andrew Porter, to my left.

Good morning.

And our General Manager of Business Development and Investor Relations, Geoff Driver, to my right.

Good morning.

So you've done all your calisthenics this morning. In due course, we'll be hearing from Mark Freeman, and investment analyst, Jaye Guy; and Gilbert Batistella who will join us from the podium. We're also joined by other members of the investment team in the front row of the audience here, and I think a number of them will be known to you. I will take the opportunity to introduce Kate Logan, partner of the company's auditors, PricewaterhouseCoopers. Kate is very happy to answer questions on the audit and the preparation and content of the auditor's report at the end of the presentation that's about to be made. Today's meeting, as I just mentioned briefly, is being held as a hybrid meeting, and today's presentation has, in fact, just been released to the ASX and is available on the company's website. I remind all shareholders using the online platform, that whilst questions can be submitted at any time, I will not address them until the relevant time in the meeting. [Operator Instructions] Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. To cast your vote, simply select one of the options. There's no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification to your screen. I now declare the online voting open on all items of business. I will give you a warning before I move to close voting. Moving on to the business of the meeting. I'll take the notice of meeting as read. With regards to the minutes of the 28th Annual General Meeting, they have been signed as a correct record and are available to shareholders for inspection today. The first agenda item is the consideration of the financial statements and reports for the year ended 30th of June 2024. We will do this via a presentation after which I will ask shareholders to comment or to raise any questions either about the presentation or the auditors if they have any questions about the audit. Before passing to Mark and his team for the presentation, I should like to comment on our retiring Director, Dr. Jodie Auster. As notified to the ASX in August, Jodie has decided to retire from the Board at the end of this Annual General Meeting. Her deep experience and insights of high-performing international business models and companies and of the digital economy have been a particular value to the Board and to your company. We wish her well with her very busy workload, and we will miss her contributions at the Board meeting -- at the Board meetings, I should say. On behalf of the Board, I wish to record our thanks to Jodie for her valued service to shareholders and wish her very well for the future. I'll now pass you to our Managing Director, Mark Freeman, to start today's presentation. Thank you, Mark. Would you join me in welcoming him?

Okay. Thanks, Rupert, and welcome, everyone here today. We just start with a disclaimer to say we're here to talk about the company. No, we're not here to give any advice as such. So just the agenda. I'll give a bit of a background on the purpose and approach that we're taking in AMCIL. I'll pass over to our CFO, Andrew Porter, who will give some summary on the financial results. And then myself, Jaye and Gilbert will go through the portfolio, some comments on the overall market and then some outlook comments from there. So if we just move to the first slide, just to go through our approach in AMCIL. So we are a focused portfolio. We want to invest in quality companies, and we don't want the size of the holdings to be determined by the index as such. And that's one thing that makes AMCIL different from other funds in the market. It is a comparatively low management cost. There are no performance fees and there is strong equity ownership from staff and directors. So we are aligned with the shareholders in the performance of AMCIL. But we also want to be tax effective. We want to be relatively low turnover. And therefore, we are driven by taking a long-term approach to investing, which once again pushes us towards being in quality companies. So if we move to the next slide, if we think about, well, what are some of the characteristics we think about when investing in a quality company. So we're looking for companies that have unique assets that are hard to replicate. In particular, businesses that are starting to move to a leadership position. We want companies that have a sustainable competitive advantage. We're aware of companies where external factors can impact on the business. Balance sheet is always important. Debt is still a key factor that gets companies into trouble. We prefer businesses that have a more consistent earnings stream. And importantly, what I was told on day 1 when I started in this business, it's all about the people. So we're looking for businesses that are run by effective, passionate management teams with ownership alignment. And that often means that we are a large holding what we call owner driver or founder-led businesses. So those characteristics when you add those up together, these produce sustainable competitive advantage, which leads to higher return on capital. So we like companies that can reinvest in that business and make high returns. This allows the opportunity for further reinvestment to drive growth, capture market share and enhance their leadership position. All of these elements come together to deliver strong shareholder returns. And we seek to buy these companies when we see long-term value. We will reduce our exit holdings if companies no longer fit these characteristics, and we will trend positions when we see valuations being excessive. Now the couple of elements to think about with this framework, it's important to be early to a story. So applying these, what I would call, a set of characteristics. So investing is all about identifying characteristics in a business that our experience tells us will lead to success. We can't predict the future, but we can identify characteristics in companies, and that's what we're doing at AMCIL. We want to be early to the story and buy when we see the opportunities present. We can only make good return for investors by owning companies, watching companies, does nothing for you as shareholders. So we want to identify great companies and make sure we own them. We're happy to keep buying companies, good stocks on the way up. And for more established businesses, we're looking for what we would call price dislocations. So opportunities when a large company goes out of favor. We're happy to buy those as well for the portfolio. So it's a bit of a background on our approach. And I'll pass over to our CFO, Andrew Porter, to talk about the results.

Thank you, Mark, and good morning, ladies and gentlemen. And AMCIL won't be picking up the damage that's been caused by that. So profit for the year last year, $7.5 million, slightly down from $7.6 million the year before. The dividends that the company received were down slightly 1.4%. But considering the ASX 200 dividends were down 5%, and that was a pretty good result in terms of stock allocation and dividends. So the -- as shareholders will be aware, the dividend was $0.04 for the year. That includes the $0.01 interim dividend. The special dividend slightly reduced from the previous year to $0.05 or $0.05. Special dividends can be paid depending on the level of reserves and the level of franking credits that the company has. It's important to note that in 2024, the company had brought forward capital losses. Those had to be recouped capital gains tax could be paid and franking credits generated on realized gains. So that was one of the reasons for a reduced franking credit. That and the Board also need to take into account what the outlook is and what is a sustainable level of dividends. The question is often asked, at the end of June after the payment of the final and special dividend, AMCIL had franking credit sufficient to generate $0.04 worth of dividend income. So just over a year's worth of normal dividend. That's fairly common amongst LICs. We'd consider that to be comfortable. The portfolio returned 20.5% against the market of 13.5%. There'll be some updated performance figures later on. So we'll look more at performance later on in the presentation. And the management expense ratio, of 0.56%. So that's $0.56 for every $100 invested. That is down from last year. Those of you with longer memories will recall that we did point out at last year's AGM that the MER would likely reduce because the previous year's underperformance was reflected in a reduced level of AICS costs during 2024. We think that $0.56 for every $100 invested with no outperformance fees is a pretty good level for this sort of investment vehicle. If I move on to the next slide, which is the share price relative to the net tangible asset figure, you'll see that the discount to or the share price of the NTA remains stubborn. I should point out that AMCIL is not unique in this. Other LICs are also particularly suffering from this at the moment. So we may go into more detail on this later on, but shareholders should be aware of steps that the Board have taken in this regard. We are now producing weekly NTAs to point out to the market that you can essentially buy $1 worth of assets for $0.90 or less. There is a buyback in place, which has been utilized and there are increased marketing efforts going on. Of course, one of the other context that many of us have seen, particularly in terms of asset allocation is with increased interest rates, there has been a move into term deposits. We suspect that, that has been impacting on LICs as well. So with that, I will pass back to Mark. Thank you.

Okay. Thanks, Andrew. Just on to the current market conditions, what we're seeing. So economic growth continues to be solid, reducing the risk of recession, but there are signs of softness across the broader economy with some slowing in consumer spending, although employment conditions remain reasonable, and we're seeing this particularly in the U.S. where, again, employment continues to be quite strong. Obviously, central banks have shifted towards more of a mutual or an easing bias, and we've seen rate cuts in the U.S.. China has just announced some significant easing measures to try and stabilize their economy. However, we do view equity markets as fully valued at this point, and we'll move to a couple of slides just to point this out. So there's a couple of slides on the Australian market. So the chart on the left is price to sales. And you can see this goes back over 20 years. And you can see where -- we are at a relatively high level. And the right-hand side is price to book, again, at a high level. So this makes us somewhat cautious. You could argue that perhaps earnings are going to pick up from here. Maybe the market is too cautious on earnings. So maybe the market's not as overpriced what it seems. But we're certainly taking a more cautious view at this point, and we have built up a little bit of cash in the portfolio. Then looking at the U.S. market on the next 2 slides. Again, if you look at the price to sales incredibly high at the moment and price to book, you could argue, though, that the nature of the U.S. market has changed over time. There's a lot more tech stocks now. They trade at much higher price to sales and price to book. So there's always arguments as to why you might see these elevated valuations. But for us, it just means we are a lot more cautious on where we're seeing at this point. Just moving on to the performance. We look at our performance on a grossed up basis, so we add the franking credits back. We also add the franking credits back to the index because we're trying to get a like-for-like comparison. And you can see over 1, 5 and 15 years, the portfolios ahead. 10 years, it's about in line, but noting though that our performance is after cost, the index hasn't got costs taken out. And also, we have only included franking to the extent we've paid it out. We actually haven't paid out all of our franking. If we were to do that, the performance would lift. And if we added costs into the index, the performance of that would lower. So if you were to adjust for those on a 1, 5, 10 and 15 AMCIL would be ahead on all measures. Just looking at some of the activity in the portfolio. We have exited CBA, and I'll come back to that shortly with a chart, which picks up Westpac as well where we've reduced. We've exited PEXA, Domino's. Domino's has been a tough one for us, but we just want to see them overcome their balance sheet issues. As I've noted earlier, weak balance sheet gets companies into trouble. If we were to see that improve and the business picked up, we could always look at it again. And we've used share price strength in a couple of stocks like Goodman Group Technology One to take a bit off the top, and we just strategically slightly reduced our CSL and SEEK. Wesfarmers, I will come back to that shortly as well. We've added to a couple of stocks. I mentioned one of the things we try and do is add to great stories that we think there's still a long runway of growth ahead. And we put ARB and WiseTech in that category. We think ARB has got a lot of opportunity in the U.S. and WiseTech continues to go from strength to strength. So we added to those. Over the most recent period, we've seen some weakness in the resource stocks. So we added to BHP. Redox after their result fell away a bit. So we've added to that. Metal Resources also had been weak. When the market was getting very concerned about the lithium price, we used that weakness to add and we also added to some block. The other stocks, Auckland, Region, Sigma and Life360, we will come to shortly. So we'll jump into that. And I think Jaye is going to start.

Thanks, Mark. My name is Jaye Guy, and I work in the investment team and also work closely with Mark on AMCIL. So I'll just touch on two companies that we established a new position in and added to during the period. So Region Group, you may not recognize the name, but there's a very good chance that you would have walked into one of their shopping centers. So they manage a portfolio of neighborhood and regional shopping centers often have an anchor tenant in Coles or Woolworths and they have a very defensive tenant profile with a high weighting to grocery sales. We saw an opportunity to add to this position where the market had been a little bit too negative on the earnings outlook. They have a solid balance sheet, but they do have a bit of gearing, and that meant that interest costs were going up. We think that's now largely played through in the P&L. So we do see a fairly attractive earnings growth profile. It won't shoot the lights out, but we think that there's quite a consistent profile there. And the business also pays a very attractive dividend yield of 6%. So we can see a really clear pathway to 10%-plus type of returns from this investment. And the management have done a really good job in kind of conservatively growing this business since the IPO in 2013. So this is a new position for the portfolio there. We also added to our holding in Auckland International Airport. So this company owns the international airport in Auckland and also the Queenstown Airport in New Zealand. These quality infrastructure companies are becoming rarer on the stock exchange. A lot of them are being privatized. We were very sad when Sydney Airport was taken over and taken private. We thought that was a great asset. Auckland Airport is also a little bit differentiated in that they own the land that the airport is located on. So it's not a leasehold that at some point they may have to hand back. We think that gives them a lot of optionality to -- over time, as domestic passenger growth comes through, they can expand the terminals, but they also have a fairly large commercial property holding that we think they can develop to and add value over time. We also think that management doing a really good job. We saw an opportunity where they raised some capital recently at an attractive discount. So we took the opportunity to top up our holding, and we think that management should generate an attractive return from there. I think on the next slide, I'll pass on to Gilbert to talk about Life360 and Sigma Healthcare. Thank you.

Thanks, Jaye. My name is Gilbert. I'm an analyst. I work with Mark, Jaye and the team on AMCIL. 360 is a location sharing app primarily used by parents to track kids. They've got over 70 million users globally. This business historically, it struggled with monetizing the user base. So it's an app that parents love and there's growing virally, but 360 have struggled to actually get the users to pay for that. So the penetration in terms of the number of those patents actually pay for it, it's only around 10%. And then 90% of those users, used it for free. So we took a position on the turning point where their strategy around monetizing this business improved. So that was advertising. So they're rollout advertising now and they're in discussions with ad partners, which is an opportunity to then monetize that 90% of the user base. They're not being paid for currently. And then at the same time, that back book of subscribers they have, they've been able to reprice that up quite materially, which has really improved the earnings profile of this business. It is founder-led, given the early stage, we have just taken a smaller position in this business. The next one, Sigma Healthcare. So Sigma Healthcare, proposed acquisition of Chemist Warehouse. In effect, that's a backdoor listing of Chemist Warehouse. So that consolidated entity, about 90% of that will be Chemist Warehouse earnings. So we've bought this for that look-through exposure to Chemist warehouse, which we view as one of the best retail franchise models in Australia. So the stores and excellent store economics. There's a long-term store role opportunity and within a very attractive retail category in pharmacy with like defensive structural growth there. There is uncertainty on this one related to the ACCC process. So we and we don't have any particular insights there. So with that awareness at that risk, we have made it a smaller position, but we just view the valuation as attractive with that understanding of that risk in the context of that longer-term opportunity for this high-quality business.

Thanks. Yes. So it's interesting that both those stocks fit into the category I talked about when we see companies with certain characteristics. So on Life360, I think they've got about 60 million users worldwide. So it is a global business. They've got no debt, they've got opportunities to start to produce profit. So it lined up. And so we took a position, and it's been good for us so far. And as Gilbert pointed out, Sigma in a similar position where if you wait for the ACCC ruling and it comes out in their favor, it will almost be too late because we've seen already the stock run very hard over the last few weeks, the market is thinking that this deal is going to get up. There's still a lot to occur -- a lot to happen for that to occur, but we got in an attractive price at this point. And I think the market will be very keen to own the Chemist Warehouse if the deal actually happens. So just moving on to a slide, just to go back to some of the trimming and selling we did as to why. These two charts show the PE ratio with the price earnings ratio of Wesfarmers and CBA, once again, going back around 20 years. You can see the PEs, these stocks are trading on are extremely high by historical standards. And this probably reflects the broader market and why we're cautious on the broader market. You can see Wesfarmers at a PE of 28x. We've been reducing. It's a great company. We love it. We still got it. But we did feel like we needed to take some out. And CBA, we've exited completely. Again, this is a standout business. It's a great company. We'd love to own it again, but we're out at this point. And we've also been reducing our Westpac quite considerably. So certainly, CBA would be a great stock to own again at some point in time. But we just think the valuations -- I've never seen valuations like this on the Australian banks. And once again, perhaps there's reasons why they're trading higher than what they used to. They do have stronger balance sheets they used to have -- than they used to have. Maybe there's an argument, they're not taking the same risk they used to do, but we still think these valuations are very full and find it hard to see good returns stacking up over the long term. Just looking at some of the other features, the AMCIL portfolio. We talk about being a long-term investor, so we thought we'd put down the top 20 stocks here and how long we've owned them. And we just wanted to demonstrate that we're not here to trade share prices. We want to be an investor in companies. The power compounding is considerable. When I think about over my time in the market, the key thing about great companies in the market continually underestimates the potential to grow earnings sustainably over a very long period of time. That's why I always think there's hidden value in quality stocks because the market will do a valuation out for 10 years and then have the earnings trailing off. Great businesses can have great earnings growth for 20, even 30 years. So you can see we have been long-term investors in many of our companies in the top 20. And just moving to the next slide. This is actually the entire portfolio. We've sort of grouped them into three buckets, I guess. Growth companies, stalwarts and income companies. I would point out, though, within the growth part of the market, there are a number of founder-led or owner driver companies, and I'll point some of those out. If you look across the top there Goodman Group, Macquarie Technology, Mainfreight, ARBs, Netwealth, ResMed's second generation, objective, WiseTech, Block, Life360 and Redox Mineral Resources, Temple & Webster, Chemist Warehouse within Sigma, PWR. And then there are a number of companies that were originally founder led such as Seek, Tech One. And there are a couple of other businesses where you've got CEOs that certainly behave like that in Gentrack and Reval. So it is something that makes, I think, AMCIL special. It's finding these companies that have great management team with businesses that have great long-term prospects and then owning them within the portfolio. There's only a couple of stocks that we've kind of missed that are on our watch list. Pro Medicus and JB Hi-Fi. They're probably my biggest regrets since running AMCIL. I sometimes get questioned, what stocks haven't worked for you? The normal answer could be to look at something that's in the portfolio, and say, what hasn't worked? I think over my years, the biggest issue you can have is it's actually not what you are, and it's what you don't own that is way more important. And capturing winners is a critical part of driving performance. We have missed a couple, which I regret. But fortunately, we've had big positions in many of the other companies that have done well to make up for most of that performance. And it probably goes back to the point, make sure you identify great companies and make sure you own them. So just to some outlook comments. Earnings growth is becoming a little bit more challenging with the market trading at all-time highs and valuations do appear a bit full. There has been a shift in Central Bank policy settings to neutral and even easing. But the portfolio we think is well positioned to weather any portfolio volatility. We think across the portfolio, there are great management teams. These businesses have the opportunity to grow earnings regardless of what goes on the economy, and we are companies that have strong, resilient balance sheets. So with that, I will pass back to Rupert.

Well, thank you, Mark, and thanks, Andrew and Jaye and Gilbert for that presentation. We'll now deal with any questions on the financial statements and reports for the year ended the 30th of June 2024. Just before doing so, I'd like to comment that even with the 2024 financial year, having seen some good investment performance and the Board being satisfied with our approach to investing in quality companies, the shares have traded at a discount which, at times, has exceeded 13%. Despite that persistent discount over the year, the share price return over the financial year, including franking was 17.5% following on the strong portfolio return. And to the end of September, this figure is 24.1%. The discount is not something that your Board can control in the short term, and indeed, speaking with some shareholders, if they don't mind a discount if they're on the buying side, of course. But we're very conscious of the discount nevertheless. More recently, as Andrew mentioned in his remarks, the company has uplifted its communication with brokers and financial partners, move to weekly disclosure of our portfolio NTA and begun to buy back shares in an orderly fashion when the opportunity arises to do so. But the Board remains very focused on investing in quality companies that outperform the market over an extended period of time. This will ultimately drive our share price more than the shorter-term vagaries of the market. So I just wanted to mention those comments upfront. I'd now like to invite questions from shareholders.

For those in the room, we have microphones available. It's nice, we can all see each other in this space. And if shareholders could please state their name when addressing the meeting and ask all questions through the Chair that would be greatly appreciated. And of course, the questions coming online as directed before. Maybe I might start with online questions just to bring them into the room. Geoff, do we have any online questions?

We have a question from the same shareholder about the discount to NTA and buying back shares. So I think you addressed those. But the other question is, what other options does the Board have to narrow the discount to NTA?

Well, look, I'm happy if, Mark, if you wanted to make some comments on this, too. I have attempted to address that in the remarks that I've made. The move to weekly NTA is actually very significant. I said it very quickly. But as shareholders would know, until we did that, there was only a monthly NTA that came to the market with the pretax and post-tax performance of the stock. The intention of going weekly had been to keep the market better informed about what the movements in the NTA being between the monthly formal reportings. And indeed, the feedback that we've received has been very positive on that as a way of seeing in which direction the NTA is moving. That's obviously designed to have shareholders really well informed about what the NTA is at any time. I did make the comment perhaps a little bit too flippantly that not all shareholders want to see that gap close. Clearly, for those wishing to acquire stock, the ability as it was made in the remarks to buy dollars worth of assets at less than $0.90 is not unattractive. And of course, when the shares trade at a premium, then others may choose to act in those circumstances. So this is a movable piece. And for those of you who've followed the stock over a long period of time and indeed followed the way LICs have moved generally, that's been a pattern of moving in and out of discount and premium. Mark, did you have any...

Just the other thing we've been doing is we've been trying to lift our marketing efforts. So I mean, the market, it's really informing the market going around to brokers, financial planners, talking a lot more about AMCIL. And what makes it different. And I think I've been through some of those characteristics in the slide. It is quite a unique portfolio focused on these great niche businesses. So I think just it's another thing we'll be looking to do is just to keep up our presentations to brokers. So it sort of gets more to the front of mind when they're recommending opportunities to their shareholders -- sorry, to their clients.

I see Sue and Katherine poised with microphones. Are there any questions in the room, please? Just a moment. Thank you.

Firstly, I'd like to congratulate the Board on turning the performance around and particularly Mark Freeman, I think he's done a fantastic job in taking it on. As to the portfolio, I'm suggesting for the purposes of debate that the shareholding in CSL is still too high. I noticed that you've now characterized it as a stalwart rather than a great stock. It's got an earnings yield of about 3%. That translates to a p of about 35x and a dividend yield of about 1.3% and it's underperformed the index according to CommSec chart over the last 4 years. And so I'm suggesting it's an opportunity cost in holding it at the high level of 8% of the portfolio, it's costing you money because there's opportunities that have done better than that. That's the first thing about the portfolio. The second one, I think the banks have 15%. I think the risks are more downside than upside there. They're expensive. And I think that's something that's got to be watched. I think that the banks will go off from this point. We've seen that you've sold down CBA, which is a good thing. We want to watch the other ones. Next one is Transurban is a bit like CSL. It's gone sideways for about 4 years. Very expensive on a price to sales basis. That's probably enough. But another one is Woolworths. I think Woolworths are going sideways. I was on the ABC Radio there the other day I telling RAF that Woolworths and Coles or whipping boys of politicians for generations in both sides of the political spectrum. And in fact, they're the best supermarkets in the world, I think, I have seen a lot of super markets, they are the best, but Woolworths is losing market share to Coles, but particularly ALDI is the one that's getting market share. I think Woolworths won't be doing much for some time.

Okay. Thank you. A couple of questions here. Thanks. I'm going to ask Mark if he would make some comments on the stock specifically.

So just starting on CECL. I don't disagree with you, actually. I think we've got an bit too much. However, I think it's the wrong time to reduce it now. I did trim a little bit probably about a couple of months ago. I think it ran up to about [ 320 ]. We took a little bit out. But we think the earnings profile actually after several years of, I think, of subdued growth, I think the company is now positioned to start to do double-digit growth, probably for a number of years. And so we think this is the wrong time to actually be reducing. I think now, is the time you want to be owning it. And when you put in double-digit growth over several years, the valuation doesn't look too bad to us. So it is one that into some share price strength we would reduce. But we think -- I think it's a time to actually own it now rather than owning less. On banks, we've actually got about 4.5% in the major banks now. And that's not including Macquarie. But we've got Macquarie Group is probably 5.5%, something like that, but we wouldn't regard that as a typical bank. So we just got the NAB and the Westpac at this point. Transurban, yes. Look, it probably hasn't done a lot over more recent times, but we still get a pretty good yield close to 5%. If they can do sort of 4% or 5% distribution growth. We think it looks sound. And in an expensive market. I'm probably more of a holder at this point. But if we got some more attractive buying opportunities elsewhere, it may be one that we could use to fund it. But I think it's we're probably comfortable holding that in an expensive market. And probably likewise, Woolworths, as you would probably remember, we took a large amount out of Woolworths at around $37, $38. And then when it got sold off with all the bad news we started to add a bit. And it goes back to my point earlier, when you're looking at more established businesses, if you can buy them in price dislocations or when there's a period of bad news, we can get good returns out of buying these businesses, but you just don't want to chase them. And I would say where it sits at the moment, it's probably -- there's still probably a bit of negative news in Coles and Woolies. I think we're concerned about many of our large companies coming under more regulation and focus. We don't think that's a good thing for the Australian economy and also for the share market. And it doesn't make us want to look elsewhere to allocate capital if there's going to be more and more regulation put on these sort of sectors and businesses, maybe offshore, maybe I don't know. But as it stands, I still think Woolies has got a great footprint. And over the years, you do see periods where Coles gains a bit of market share, Woolies gains a bit, Coles gains a bit, ALDI gains a bit better. But I still think over the long term, Woolies got a really good footprint if they run their business well. And at this point, I still think there's probably the news is quite negative, which means it's probably reasonably valued at this point, but we're not adding a lot to it. But we're happy to hold it.

Thank you.

I'm Roger Flyn. My question is, Chairman, is the board prepared to consider pausing the DRP and similar in future occasions, if the shares are still trading at a significant discount, as you've highlighted a couple of times, as it seems to make a little sense to me to be issuing shares under DRP and then buying them back at a bit of a premium to that immediately after.

Yes. Look, it's a very good question, Mr. Flynn. And indeed, at every just Board discussion around dividend, both the interim and the final dividend, we make a separate decision about whether going to offer a DRP and a DSSP to shareholders to participate. So it's an active decision actively made each time. The view that we've taken so far is that we will continue to offer it depending on the particular circumstances. And of course, the uptake in both of the share purchase plans has varied over time. Sometimes as high as about 1/3. Other times below 20%. So it's not a huge participation by all shareholders. There have been occasions in the past where the DRP before the DSSP was introduced was offered at a discount. We've obviously not done that for a very long period of time. But look, it is subject to active discussion, both at the Audit Committee as well as around the board. And the next time we'll be having that discussion will be in January. But your point is noted, and it certainly feeds into the nature of the discussion that we have.

Roger, the other thing too is when you cross -- look across all four of our LICs, there's been periods where the stock has been at a premium and periods when it's at a discount, and we tend to find, there's a large portion of people that just go in it rather than a lot of people going in and out. So it fundamentally there's a large group that just stay in it. There's periods where they're getting stock at a premium, which is not fair for them. But there's periods where they get it at a discount and it tends to balance out over time. Now I get the point at the moment, it's a big discount. But we hope that closes over time, but it can still be an ongoing discussion. But that was the fundamental background to the way we think about it over the longer term.

Thanks, Mark.

But my understanding is that if you pause it...

If you pause it, that doesn't cancel their registration of participation. So if you can reactivate it, that would still be in it.

Yes. I think we just got to be careful -- I guess my point was just to be careful that if keep pausing it, I'm not saying this what you're saying whenever we're at a discount, then when you're at those times you are at a premium, people are going to go, well, I'm not going in it because the only time you run it is at a premium. Therefore, there's no point going in it. So that's the offset.

I'll just ask Geoff, are there any other questions online?

Yes, they are. So what's the current cash holdings and what -- how does this percentage compared with the average cash holdings over time?