AUB Group Limited (AUB) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm David Clarke, and I'm the Chair of the Board of AUB Group Limited. So welcome to our 2022 Annual General Meeting. Could I initially just request that you just set your phones on silent? So thank you for that. It's now 10 a.m. There's a quorum of shareholders present. And I declare this Annual General Meeting of AUB Group Limited properly constituted and open. As we begin the meeting, I'd like to acknowledge the First Nations and Torres Strait Island people, on whose land we conduct our business around Australia, and give my respect for their communities, culture, elders past, present and emerging. So following the lift of -- the lifting of government mandated restrictions arising from COVID-19, and in response to investor feedback, we've returned to the practice of a physical meeting. Your directors are pleased to be able to meet you and meet shareholders face to face. We're also broadcasting this meeting as well. This morning, I'll provide a brief overview of our business and achievements during the financial year '22. Our CEO and Managing Director, Mike Emmett, will then provide an update on our business and key results as well as provide an outlook for the financial year '23. We'll then move to the formal business of the meeting and the resolutions set out in the Notice of Meeting. Before we do that, I'd like to introduce the directors of the company who are on my right, your left, starting with Paul Lahiff, who is the Chair of our Remuneration and People Committee, Paul; obviously, Mike Emmett, our Managing Director and CEO; we've got Richard Bell, our company Secretary there; Peter Harmer is there; and Cath Rogers. On the screen, we have Robin Low, who chairs our Board, Audit and Risk Committee. Robin had an unavoidable timing conflict so she's not able to be physically present with us today, but she is on the screen. So good morning, Robin.

Good morning, David.

Robin, we'll turn your screen off now, and you'll join us later for Resolution 2, which deals with your reelection. Thank you. Also with us today are our Company Secretaries. I've mentioned Richard Bell, who's our Corporate Counsel and Company Secretary. But in addition, Elizabeth McGregor, on the front here, is the Secretary as well. And we've got representatives of our auditors, Ernst & Young, led by Mike Wright here in the front row. And we've also got representatives of our share registry in Link Market Services. And then seated in the audience, we have a number of senior executives of the company as well. In addition to the financial statements and reports, there are a number of items of business, and I'll just run through those quickly. And it's all in the Notice of Meeting. So there's the adoption of the remuneration report. And there's a reelection of Robin Low as Director. There's a reelection of myself, hopefully a reelection of myself. I'll ask Paul Lahiff to chair this section of the meeting. It's not appropriate that I would chair that. We've got -- we're seeking approval to increase the director fee cap. We've got a placement capacity to refresh the issue of shares to institutions that we had back in May as part of the Tysers acquisition. And then we've got a second placement capacity to refresh for the agreement to issue shares to the Tysers vendors. And finally, we've got an approval for the financial assistance that was created by some of the subsidiaries -- us purchasing some of the subsidiaries at Tysers in Australia. I'll explain a little bit more about that, explain as best we could. It's quite complex in the Notice of Meeting, but I will also do my best to explain when we get to the resolution. As we announced to the ASX on the 19th of October, Resolution 5 for the issue of performance shares to Mike Wright -- Mike Emmett has been withdrawn. Following the earlier-than-expected completion of the acquisition of Tysers on the 30th of September, we were planning for that to be much closer to the end of the calendar year. And the recent external shareholder feedback, the Board is reviewing the structure of our long-term incentive scheme with consideration of the capital we raised, the broader business profile that we have now, and of course, to ensure that it properly incentivizes executive performance. And we look forward to coming back to shareholders with more specific details around that at a future date. We are anticipating an extraordinary general meeting early in the new year to seek approval for the CEO and Managing Directors Long Term Incentive scheme following that review by the Board. So if I can now just return to the resolutions. There will be an opportunity for questions on each resolution. Also, during the general discussion, an opportunity for questions, and that will follow the formal business of the meeting. At our meeting today, Mike and I will report on our group's performance and the outlook for the year ahead. This is my seventh year as Chair of this company, and a year of continued success and change with an execution focused and aligned to our strategic agenda, and an excellent financial result for our group's shareholders. In financial year '22, we saw further uncertainty and challenge, an external environment clouded by geopolitical tensions, obviously, increasing inflation expectations and pressures around the world, supply chain constraints and financial volatility. All of that combined with the catastrophic floods across large parts of Australia. This has resulted generally in a relatively uncertain outlook, specifically for insurance underwriters, with increased premiums to improve returns and profitability. And against this backdrop, AUB Group brokers have understood the vital role that they play in supporting our clients and managing their risk. The role that insurance plays has been clearly demonstrated, particularly along the eastern -- Australian eastern seaboard as the weather events create havoc and heartbreaking loss. Pleasingly, our execution of our strategic agenda has been -- has again allowed us to deliver a very resilient financial result, and it's driven by strong organic growth fundamentals. In financial year '22, AUB Group delivered above our original guidance with another strong result of underlying net profit after tax, which increased by just over 13% to $74 million. Throughout that period, importantly, we maintained a strong balance sheet and capital position. And post the $350 million capital raising, which we undertook in May of '22, we used a portion of those proceeds to repay our debt obligations, and we canceled our existing debt facilities. Our new debt facility was then introduced -- entered into, which assisted with working capital and to fund the Tysers acquisition. The group is cash-generative. So that means our profits were fully converted into cash as at the 2022 financial year-end. Additionally, at 31 October, that is post the completion of the Tysers acquisition, we have access to $100 million worth of cash and additional debt funding and what's called a leverage ratio of 2.67x. So we consider that to be absolutely acceptable. It gives us confidence about the business. So as a result of that financial position and our capital position, as at 30 June, the directors declared a final fully franked dividend of $0.38 per share. It was paid in October. Together with the interim dividend, which was $0.17 a share, results in a full year dividend of obviously $0.55, which was in line with the previous year, financial year '21. And that translates into a payout ratio, that's a ratio of dividends paid with relation to the underlying net profit of business, of 64 -- just over 64%, and the Board believes that, that's appropriate, given that later in the financial year, there was a very large issue, obviously, of shares to fund the Tysers acquisition. And those shares were eligible for the dividend. So it's a strong business results as well as disciplined M&A growth that led to a stark underlying earnings per share increase of just over 12% compared to the previous year. So we continued to stay focused on our strategic agenda and annual priorities, which delivered successfully and resulted in the strong financial performance that I just talked about. The key highlights of the year include strategically important acquisitions, so -- of iaAnyware. 360 Underwriting acquired Anchorage Marine, and Finsura acquired Vaughan & Monaghan. There were many other acquisitions that we could talk about, but those were the larger and more significant ones. In the absence, we'll talk about Tysers in particular in a moment. And so we also continue to focus on optimizing our network to create scale, efficiency and market leadership by a number of consolidations of businesses, portfolio restructures as well as equity step-ups, increasing our equity in existing businesses to capture further growth. Our focus on agencies delivered outperformance, primarily as a result of our acquisition of 360 Underwriting and the restructure of our agency portfolio in financial year '21, increasing the scale and the Austbrokers business with our Agencies division. I'll now turn to the Tysers acquisition briefly. In May '22, we announced the acquisition of Tysers. It's the leading London and Lloyd's broker with access to specialist underwriting expertise and global distribution capabilities. The acquisition is highly strategic for our existing business and will result in market-leading capacity access and offerings for our brokers. The transaction completed earlier than anticipated, as I mentioned previously, on the 30th of September this year. It's not only strategically aligned and financially compelling, but strengthens our operational platform and delivers material scale to the business. So we look forward to optimizing Tysers' contribution as part of the AUB group, and Mike Emmett will obviously discuss Tysers further in his address. Looking ahead, the FY '23 strategic focus will be primarily a continuation of what we've been doing in financial year '22, a particular focus on the New Zealand business performance, technology delivery and, of course, successful integration and delivery of the synergies associated with the Tysers acquisition. I now want to turn just to the Board. And as part of the Board's succession planning, I'm pleased to announce the appointment of Richard Deutsch as a Nonexecutive Director, effective from the conclusion of this meeting. Richard is with us in the audience today. He is the former CEO of Deloitte Australia and brings considerable experience in financial -- in finance and domestic and international insurance auditing to the Board. He's a Nonexecutive Director of Bendigo & Adelaide Bank, a Chair of the Movember Foundation. You can find him because he's got a burgeoning mustache. And Chair of the Stephenson Mansell Group. I'd just say -- you might say why am I announcing him here when he's appointed after the meeting. We were unable to finalize Richard's appointment prior to the publication of our Annual General Meeting notice. So therefore, in accordance with the company's constitution, Richard will stand for election by shareholders at our next AGM, next year's AGM. We're also currently undertaking a search for the appointment of a new Chair to the Tysers Board. And ideally, this individual will have strong knowledge and experience, expertise and relationships in the London wholesale insurance market. It's our plan that the successful candidate for that role would also be appointed to the AUB Group Board to add further depth and experience to our group. The -- if I can now just turn to environmental, social and governance matters. So robust ESG practices remain an area of focus for us, for the Board and the management, while our clients, colleagues and shareholders are becoming increasingly interested in how we manage sustainability within our business. And in the past year, we're pleased by the progress we've made towards establishing a much more integrated approach to ESG matters, which will increase -- with increased transparency, accountability and reporting against objectives. So we're committed to ensuring the business acts responsibly in how we engage with our partners, clients and suppliers and how we support our colleagues, how we manage the impact on the environment, and how we contribute, in particular, to the communities in which we operate. As a result, we've implemented policies, training, recruitment and recognition policy practices that deliver an increasingly diverse and inclusive workplace. Being a service-based business, our starting point has been to focus on issues on which we have the most impact on, namely that's our people practices and our governance arrangements. The group has met the challenges of the pandemic and the resultant public health orders to redesign our approach to the workplace. We've undertaken a variety of market-leading initiatives designed to materially uplift employee welfare, including remote working, home-office allowances, mandatory workplace ergonomic checks, access to health and wellbeing programs, as well as vaccine incentivization to support the push by the health authorities. The initiatives have required financial and both financial and nonfinancial investment, which we deem essential for the long-term welfare of our employee and -- employees and the business. Our recent focus on the group's ESG practices has resulted in a number of key initiatives, and I'll just run through a few of those now. So the highlights have been, we were classified as a great place to work, recognizing our ongoing focus to enhance the workplace experience. We launched a program called Do Good Be Better, which allows employees to support their causes, impact causes, picking the causes that they wish to support and we make a financial donation. But also, our employees have a day of paid volunteer leave to participate in the community activities on which they feel passionate about. We've increased by 1/3, 31%, the training that goes into employees across the network. And you might say, well, why is that? It makes people feel more confident. They get a greater ability to actually expand their knowledge and grow their career through that training. And we continue the success of our 4-to-1 work-from-home flexible model. That means it's 1 day a week in the office for the various teams. People could be in the office when they like. However, it's only mandatory for them to attend 1 day. And look, we're working very hard to improve our key gender diversity metrics. In conclusion, I'd like to thank all of our employees and partners for their contribution during the year. Strong financial result in '22 reflects their efforts, their discipline, their ongoing commitment to the group's success and demonstrates a business that is built on strong foundations by a focused and very committed team. I'd also like to acknowledge the ongoing support of our clients and shareholders, who continue to place their trust in our business. I'd now like to hand over to Mike to give you an update on our business and key results as well as the outlook for the financial year 2023. And thank you very much.

Thank you, David, and good morning, everyone. This has been another eventful year and another good year of performance from businesses across our diverse group. It would be remiss of me not to recognize the continued challenges our clients and our teams face, having moved very rapidly from a period of COVID lockdown to a period of rising inflation, supply chain challenges and clients faced with catastrophic climate-related events. Despite these challenges and the broader economic environment, our teams continued to deliver excellent results. A track record of growth. At the beginning of financial year '20, we set out a plan to transform AUB Group to deliver sustained profit growth to shareholders. Fundamental to this plan was our ability to grow revenue and expand margins by focusing on our core insurance broking capabilities and directly related businesses such as the underwriting agencies. Over the past 3 years, we've refocused the business and reignited AUB's growth. Since financial year '19, the group has consistently translated premium and revenue growth into accelerated profit and earnings per share growth for shareholders. Our ability to grow broking organically and through strategic acquisitions, including broadening the spectrum of clients we serve by expanding in the mid-market and corporate as well as micro SME segments, together with the deployment of technology to support brokers and service our clients, has provided the bedrock for profit growth. With a few exceptions, our broking businesses in Australia and New Zealand are performing outstandingly, consistently growing premium, revenue and margin above market rates, while the expansion of our underwriting agencies to support our brokers and clients has delivered robust scale and profit improvement over the past 18 months. Utilization of these agencies and products by AUB Group brokers continues to increase. It is, however, a challenging environment for our clients. Significant insurance rate rises and other cost pressures faced by our clients mean that brokers are working harder than ever to assist clients to manage the cost of insurable risks in their businesses. This, combined with increased insurer risk aversion, means placing specific risk categories has become more complex. Whilst we understand the challenge faced by insurers in the light of significant increases in the frequency and severity of climate related losses, our priority remains to assist our clients. We are, therefore, seeing an unprecedented rise in the need to place risks on behalf of our clients in the international market. Completion of the Tysers acquisition enhances our ability of our brokers and agencies across the AUB Group to access capabilities and facilities in the Lloyd's and international markets, which place these global risks for the benefit of our clients. Financial year '22 financial highlights. For a number of years, we've delivered a strong track record of growth and performance, and this continued in financial year '22. We grew underlying revenue by 12.2% in the prior year to $689.5 million and expanded the underlying margin by 240 basis points to 34%. The underlying net profit after tax of $74 million grew by 22.2% on the prior year on a continuing operations basis and was at the very top of the outlook range we provided earlier in the year. This represents an underlying earnings per share of $0.967, an increase of 21.1% on financial year '21 on a TERP adjusted and continuing operations basis. The Board declared a final dividend of $0.38 per share, giving a full year dividend of $0.55 per share, flat on the prior year, representing a dividend payout ratio of 64.5% of underlying net profit after tax. Divisional performance in financial year '22. The overall performance of AUB Group was underpinned by continued momentum in Australian broking and growth and profitability in BizCover. The AUB agencies enjoyed an exceptional year. We made good progress towards our goal to achieve significant scale in this area. New Zealand Broking also performed well, enabling the considerable investment we continue to make for Project Lola, the implementation of a market-leading broking and insurance platform in New Zealand. Good progress has been made with the transformation of BWRS, our largest brokerage in New Zealand, with a new team of branch managers and many new brokers and team members now on board with a focus on business growth. Strategic priorities for FY '23. Every year, we define and describe execution priorities for the year ahead. For FY '23, we highlighted the following: to improve and enhance New Zealand performance; to leverage Tysers; to optimize our network; to execute on strategic aligned acquisitions; and to enhance our partner proposition. Whilst I won't go through each of these, I would like to highlight the key role that Project Lola in New Zealand will play in transforming our proposition to members of our broking network and our engagement with insurers. In addition, the acquisition of Tysers provides a number of significant transformational opportunities to the group, most notably to enhance our offering to clients and our network of brokers and agencies to enable them to access the Lloyd's insurance market and to substantially increase our ability to leverage benefits of scale and to capture value. The AUB Group business model. Slide 10 in the pack reflects the AUB Group capabilities and offerings on a page including our assessment of the level of maturity and scale in each major geography in which we operate. Excitingly, we envisage significant opportunities to leverage capabilities in one geography for growth and success in another. For example, our strength in platforms in Australia can be deployed to the U.K., whilst Tysers' strength in wholesale in the U.K. and international can be utilized to strengthen wholesale offerings in Australia and New Zealand. Tysers update. On Slide 11, we describe Tysers' mix of revenue split between marine, nonmarine, reinsurance, MGAs and retail. For wholesale, we provide a further split of income based on the underlying client geographies. Overall Tysers' revenue for the 9 months ended September 2022 grew by 9% compared with the prior calendar period. We estimate that approximately 5% of this growth is attributable to advantageous movements in exchange rates. Most parts of Tysers have experienced strong revenue growth, with weaker performance in some areas, including in specialty, particularly in management risk and bloodstock, and international P&C, mainly due to the withdrawal from jurisdictions like Colombia and Ecuador and the result of sanctions towards Russia. In summary, Tysers is performing well, with stronger revenue growth than expected, partly offset by the inflationary impact on costs. Tysers synergies. As highlighted in May, AUB Group has identified net annual synergy benefits of $25 million, and anticipates that these will be achieved on a run rate basis by the end of financial year '24. These synergy benefits largely arise from the ability of AUB to place approximately $200 million of risks on behalf of our clients with Tysers, including the placement of agency binders, whilst also being able to reduce costs in AUB and in Tysers as a result of increases in scale and operational efficiency. The outlook and progress in FY '23. We've experienced an excellent first quarter, strongly ahead of our original expectations. As a result, we are increasing the guidance range for financial year '23 underlying net profit after tax for the AUB Group, excluding Tysers, to $90 million to $92 million, an increase from the range provided in August of $86.5 million to $91 million. In addition, the completion of the Tysers' acquisition for 1 October means that we are now able to include profit guidance for Tysers. Factoring in the increased guidance for AUB Group ex Tysers, and incorporating a range of underlying net profit after tax from Tysers together with increased corporate interest, AUB Group anticipates an underlying net profit after tax for FY '23 to be in the range of $107.5 million to $115 million, representing growth on financial year '22 of 45.2% to 55.4%. This implies growth in underlying earnings per share of 12.1% to 19.9%. On Slide 13, we have also included summary information about the group's debt. The new facility is a 5-year, $675 million facility with an additional accordion feature to fund the Tysers earn-out. At 31 October, the leverage was 2.67x, well under the leverage ratio covenant of 5.25x. On the same date, available cash and debt totaled $100 million. In closing, I'd like to acknowledge and thank our broking and agency partners and all other members of the AUB Group businesses in Australia and New Zealand. The pace and success with which we are progressing AUB Group's strategic priorities is a consequence of their professionalism, passion, capability and a focus on putting the client first. I'd also like to welcome our new teams in Tysers based in the U.K. and elsewhere in the world. We're delighted to have you as part of our family. Specifically, I'd like to acknowledge the Tysers CEO, Clive Buesnel, who is in attendance at the AGM this morning. AUB Group is performing very pleasingly, and early signs are that Tysers is an excellent asset that will more than deliver the strategic and financial benefits anticipated at the time of acquisition. I look forward to updating you on our progress during the year. Thank you, and I'll now hand it back to David.

Thank you, Mike. I will now turn to the formal business of the meeting. So the Notice of Meeting was provided to shareholders on the 30th of September. And then copies of the Notice of Meeting on the table at the side of the room, and then I will table the Notice of Meeting and propose they be taken as read. Before moving to the various resolutions to be considered today, I'll now briefly outline procedures for today's meeting. You were given an attendance card when you registered on arrival today. If you have a yellow card, then you are a voting shareholder, proxy holder or corporate representative and have chosen to vote using a paper voting card. You're also entitled to speak at this meeting. If you have a blue card, you're a nonvoting shareholder. While you are entitled to ask questions and make comments, you are not entitled to vote at this meeting. If you have a red card, you're a visitor and you're not entitled to speak or vote at this meeting. If you've not received an attendance card, please see a representative, perhaps just outside the door, be from Link Market Services at the registration desk. There will be an opportunity to ask questions on each resolution. And questions not related to the resolutions should be held until the end of the formal business, when I'll open the floor for general questions and discussion. Before you ask a question, could I please ask that you raise your attendance card and please state your name. A poll will be conducted on all resolutions. So votes will be excluded in accordance with the Corporations Act and the ASX listing rules. The proxy votes received prior to the meeting will be shown on the screen after discussion of each individual resolution. As Chair, I'll be voting all of the undirected proxies in favor of the resolution, as indicated in the Notice of Meeting. Please complete your voting card by ticking the for, against or abstain box in respect of each resolution. And at the conclusion of the meeting, please hand your voting card to the Link Market Services staff. To ensure that all shareholders and proxy orders have an opportunity to vote, I now open the poll. Link Market Services is the returning officer of the meeting. The results of the poll will be announced to the ASX as soon as they are available after the meeting. With that out of the way, I'll now turn to the formal business of the meeting. The first item of formal business is to receive the annual financial report and reports of the directors and auditor for the financial year to June 2022. There are copies of the annual report on the table [ inside ] of revenue. No resolution on this item is required, but I now invite shareholders and their proxies to comment or ask questions on the reports. The questions may also be asked of the auditor in relation to the conduct of the audit, content of the audit report, accounting practices adopted by the company and, of course, the independence of the auditor carrying out the audit. Are there any questions or comments on this item? Any questions or comments on the annual or financial earnings? Yes?

I'll try to speak loudly. My name is [ Fatima ]. I'm here as proxy representing a shareholder. But before I get to my question, I also have another question from a proxy who can't be here because he can't attend the AGM online or via telephone. So his name is Coedie McAvoy, and he's provided a voice recording. And I'll play it for you all now.

My name is Coedie McAvoy. I'm a Jagalingou Cultural Custodian. I've been occupying a ceremonial site across the road from the Adani Carmichael mine now for 434 days today. Adani does not have our free, prior and informed consent to continue on with this mine. I'm asking this question not only as a traditional owner but as an assigned proxy for an AUB Group shareholder. My question is, now that Adani's destructive Carmichael project is happening without free, prior and informed consent, will AUB do any further work helping the Carmichael mine, Carmichael rail network, common rail company or [indiscernible] entity source insurance?

Should I repeat the question for the benefit of the room?

Did everyone hear the question?

Yes.

Okay. Thank you. It's not really a question to do with the financial matters. Are you okay if I leave that to the general discussion at the end?

I would still like you to comment if that's...

I said I will comment on it, but comment on it as a general item at the -- once we've gone through the resolutions, if you are okay with it.

I will stand up again and remind you of that.

You do not need to do that. But if I miss it, please do that. You also had another question, I think, as well.

Yes, I do. Yes. Given that 130 companies have ruled out working for Adani Carmichael, including 45 insurance companies, what is Austbroker's position on providing support for the coal mining industry in general and also for the Adani Carmichael project specifically?

Sure. Okay. Can I address that again at the same time as I address the former question? So thank you for asking it and happy to answer the question, but I'll do that at the -- once we've done the formal resolutions for the meeting, in the general discussion. And as again, if I, for whatever reason, don't address it, please advise me to, again, answer the question. Okay. All right. Thank you. I think there was another question as well.

Thank you. My name is [ Stella Cossi ] and I'm also a proxy for Dr. [ Susan Minet Bennett ]. So my question -- sorry, I'll take this off. My question is about SRS Broking. According to our annual report, Austbrokers purchased SRS Broking effective 1st of July this year. Could you tell us about SRS' business and Austbrokers' rationale for spending tens of millions of dollars on this acquisition? And specifically, what proportion of SRS Broking's business is in call?

Sure. Again, that is a -- I think it's more appropriate to deal with that question under the general heading of discussions. So I'm not seeking to avoid the question, but the period now is specifically about our financial accounts.

Sorry, I do see it as related because it's an acquisition.

It is an acquisition, but it's one of many acquisitions we make in the course of the year. As I say, I am not looking to avoid the question, and I'm very happy to answer it, but again, it falls into broadly the same category as the previous 2 questions. And so I think it might be better if we just handle those together. Again, it's -- I'm not looking to avoid the question. So thank you for asking it and go through. I will answer it in part and then I'll seek to get also the Chief Executive to contribute to the answer as well. Are there any further questions on the financial results? Okay. If there are no further questions, we'll move on then to resolution 1. And resolution 1 is the adoption of the remuneration report for the financial year ended 30 June 2022. So under the Corporations Act, the company is required to present to the shareholders a remuneration report, which forms part of the directors' report. And the vote on this resolution is advisory only, as I'm sure you're all aware, doesn't bind the directors of the company. However, the Board will take the outcome of the vote into consideration to future reviews of remuneration policy with the key management personnel. Are there any questions in respect of this resolution? If there are no questions, I'll now put the resolution to the meeting. The proxy votes are displayed on the screen. Okay. Thank you. Just to remind everyone that this has all been conducted by poll. So there's not the usual showing of hands and cards. We'll now move to resolution 2 and 3, which concern the election of directors. And I'll ask Robin Low to join us on the screen again. Hi, Robin, welcome back. Can you hear us all right?

I can, David. Can you hear me?

Yes, I can. Thank you. Resolution 2 is the reelection of Robin Low as a Director of the company. Robin is retiring by rotation and standing for reelection in accordance with the company's constitution. Robin's details are set out in the Notice of Meeting. And the Board, with Robin abstaining, of course, supports the reelection of Robin Low as a Nonexecutive Director. I'll now invite Robin to speak briefly in relation to her reelection.

Thank you, David, and good morning, everyone. I am indeed delighted to be standing for reelection to the AUB Group Board. And I am sorry that I can't be there in person. With all the COVID restrictions, I'm afraid there's just been an enormous pent-up demand for travel and I'm in Silicon Valley this week. I joined the AUB Group in 2014, and during the time, AUB has grown in Australia and established in New Zealand. Also, under Mike Emmett's leadership, we are now established globally through the U.K. Tysers acquisition and have excellent technology. As the Chair of the Audit and Risk Committee, the risk landscape continues to require great scrutiny, whether the cyber, market conduct, financial or people risks. Risk has increased as well with the Tysers acquisition, and I want to let you know that we are very focused on how this new set of risks should be managed as we continue to challenge and lift our approach to risk management. Within this context, my experience includes 28 years with PwC, where I was an audit and risk partner specializing in financial services, particularly insurance. Earlier in my career, I spent 4 years in London auditing mainly insurance companies in the London market, including London market, marine and reinsurance companies. Finally, I would like to thank shareholders for their support over my time on the Board and to thank my fellow Board members for what has been a wonderful experience, with a special mention to David as our Chair. I look forward to continuing to serve on the Board, but acknowledge that this is probably my last time for reelection to the Board of this wonderful company. Thank you.

Thank you, Robin. Are there any questions on this resolution? If there are no questions, I'll put the resolution to the meeting, and the proxy votes are displayed on the screen. Thank you, Robin. We'll now turn off your screen. As resolution 3 concerns my reelection as a director, I'll now ask Paul Lahiff to chair this part of the meeting. Paul?

Thank you, David, and good morning, everyone. Resolution 3 is the reelection of David Clarke as a Director of the company. David is retiring by rotation and standing for reelection in accordance with the company's constitution. David's details are set out in the Notice of Meeting. The Board, with David abstaining, supports the reelection of David Clarke as a Nonexecutive Director of AUB. I would ask David now to speak briefly to his reelection.

Thanks, Paul. Good morning, again, everyone. And I'm pleased to put myself forward for reelection to this Board. My time on the Board has seen the company grow and develop. We most recently took a very bold step to raise capital and acquire a London wholesale broker. In addition to being a director, I also obviously kind of chair the Board and have been fortunate enough to have a supportive and well qualified group of colleagues on the Board during my time as Chair. My executive career was spent in financial services, where I was the CEO of several organizations. And I've transitioned into Board roles over the last 8 years and believe I bring valuable experience to the AUB Group Board. The role of the Chair is to work with the CEO and Board members to have a well-ordered, thoughtful governance structure that matches the financial and human capital of our business with the risk appetite in that business. I believe building on my career experience as both an executive and as a director, I've been able to successfully lead the Board and hopefully have your support to be reelected today. If reelected to the Board today, it's my intention, barring unforeseen circumstances, that this will be my last term as a Director of this company. So thank you very much, and I look forward to hopefully having been reelected.

Thanks, David. The resolution is up on the screen for you. Are there any questions on this resolution? If there are no questions, I now put the resolution to the meeting. The proxies are displayed on the screen. I'll now stand down and hand the chair of the meeting back to David.

Thank you, Paul. I'll now move to resolution 4, which concerns an increase in the fee cap for nonexecutive directors. So this is an increase of the maximum annual fee cap for nonexecutive directors from $1.1 million to $1.5 million. The Board is seeking approval to increase the maximum fee cap for a number of reasons, including succession planning, workload, the expansion of responsibilities. As I mentioned earlier, we are seeking a new chair of Tysers, who will also be appointed as a nonexecutive director to the AUB Group Board. I want to emphasize that the maximum limit of the fee cap does not necessarily indicate that, that's the fees that -- the fees will be increased to that limit. Are there any questions on this resolution? Okay. Thank you. I'll now put the resolution to the meeting. Proxy votes are displayed on the screen. Thank you. As I mentioned earlier, resolution 5 has been withdrawn. So I'll now move to resolution 6 and 7, which concern the refreshing of our share placement capacity. We're happy to answer any questions about this, obviously, when it comes to just the go through the resolution. It's for approval of a prior issue of institutional placement shares. And as part of the capital raise for the acquisition of Tysers, we issued outside the rights issue or placement of the 3,629,668 shares on 18 May '22. The shares we issued, as I said, to institutional shareholders and the resolution 6 shareholder approval of that share issue in order to refresh the company's placement capacity under the ASX listing rules. Are there any questions in respect of this resolution? If there are no questions, I'll put the resolution to the meeting. And as previously, the proxy votes are displayed on the screen. Resolution 7 is for the approval of the agreement to issue shares to the vendors of Tysers. So these are the people we want business from. They -- as a result of the transaction that we struck, they wanted to take part of the proceeds that they earned and invest them in shares in the AUB Group. So on the 9th of May, we agreed to a placement with them of 9,018,974 shares to the vendors of Tysers as part of the consideration of buying that business. The shares weren't issued until the completion of the deal, which occurred on the 30th of September. And the shares are subject to a 24-month escrow period from the day of issue, which means they've got to hold them for 24 months after we've issued them to them. The resolution 6 for shareholder approval of the agreement to issue shares to the Tysers vendors in order to refresh the company's placement capacity under the ASX listing rules. Are there any questions in respect of the resolution? Thank you. If there are no questions, I'll put the resolution to the meeting. And the proxies are advised, they're shown on the screen. I'll now move to resolution 8, which concerns the approval of financial assistance. This is a special resolution to approve financial assistance from the Australian subsidiaries of Tysers. There was an explanation in the Notice of Meeting. The resolution is quite complex. And as I said, it's set out in full in the Notice of Meeting, but I'll provide a summary. So as part of the Tysers acquisition, the Australian subsidiaries of Tysers were expected to give financial assistance for a share acquisition. So the share acquisition involved 2 wholly-owned subsidiaries of AUB Group acquiring all the shares in a holding company of Tysers called Integro Insurance Brokers. When the acquisition of Tysers completed on the 30th of September, AUB Group became the ultimate owner and holding company of the Australian subsidiaries of Tysers. And so we booked the business, including the Australian subsidiaries. For this reason, and that's the reason why we must obtain shareholder approval for the proposed financial assistance, because the financial assistance is part and parcel of the debt facility that we raised. So financial assistance comes in the form that those Australian subsidiaries of Tysers agreed to the facility agreement as guarantors. So arguably, the company that we're acquiring helped us get the debt be through guaranteeing part of the debt on behalf of our business. So that's my best layman's explanation of the resolution. But are there any questions? Yes?

Perhaps you could put a quantum on the financial assistance?

The quantum is minimal, I know that. I think it's less than 1% of the security pool.

Contribution to the [ average test ].

Yes. So the debt facility was $575 million. Their contribution in terms of security value is less than 1% of that debt facility value. Looking at the executives who are nodding.

It was at $5.75 million.

Yes, and I think -- what did I say, is less than.

Less than $5.75 million.

Are there any further questions in respect to this resolution? The proxy votes are displayed on the screen. So that's the formal business of the resolutions.

And now -- we now get to the part of the meeting which is -- deals with any general questions that shareholders might have. And as we heard earlier, we've got 3 questions that were asked, and it's now, I think, an appropriate time to deal with the answer -- answering those questions. And look, there was a specific question about a subsidiary Board report, but really, the number of the question, I believe, was around coal mining, or mining in general.

Yes. And -- well, that's right, but also specifically about SRS, their business.

Their business. Okay. What I might do is answer the first 2 questions first, and then I might seek to get Mike Emmett to specifically talk about the SRS business, if that's okay. So thank you for asking the questions. The -- and for the background of other shareholders, there is a business, a broking business, SRS, which is referred to in the third question, which does have a number of clients who are in the mining industry. And specifically, I mean it's not particularly appropriate to talk about one client. However, you have raised the issue of Adani. So let me address that in the best way, if I can. So we have some business, some working business, and we placed some business on behalf of the client that you have mentioned. We're not their primary -- it's my understanding, it's not -- we're not their primary broker. If I start at a high level and then drop down, revenue income from that is less than 1% of our overall revenue in the business. So the -- much of the work we do, I think, is in the question -- I can't remember the gentleman's name. I'm sorry.

Coedie McAvoy.

McAvoy. Mr. McAvoy, I think, referred to rolling stock, coal loaders and...

Train. The rail line.

The rail line. Yes. Which I will point out is actually leased by the company from, I think, instead of the coal loaders, leased by the -- from the Queensland government. And so they are the actual owners of it. Look, we -- anything that is clearly as sensitive as that sort of activity is subject to a full review by our Board. So I'd like you to understand that it is not something that is entered into lightly. It is contemplated and considered at length, recognizing that there are some groups, people, communities that don't agree with that particular project or mining perhaps -- coal mining perhaps in general. We looked at it. We think that we took a responsible approach to it. I would accept that, clearly by the nature of your question, you're not going to agree with that. But we look at how our economy, the world in general, needs to enter into a transition phase. We cannot, in our view, flip a switch to get to where I think many people would like us -- where we'd all like to get to. So we see it as part of being responsible to insure those risks, and at the same time, make sure that the people that we are dealing are also, we believe, on an appropriate path to a renewable future. So that's -- I appreciate from your point of view, that's a general answer. The -- but that is the view that we came to as part of considering the issue. We understand it's controversial, but at the same time, we believe that engaging is [indiscernible] something that has gone through process, we consider it not inappropriate for our business.

But if it's 1%, surely, that seems like a tiny fraction of what you have in your book. So is it possible to sort of commit to sort of letting go of this particular business transaction, given that is such a small percentage?

No, our business is made up of a lot of 1 percents. The -- we believe we can provide good value there. As I say, we've made a decision that we believe that we can conduct this business in a responsible way. We look at the fact that the assets that we are primarily arranging the insurance for, we're not providing the insurance, we're helping find insurance for us. So that's an important point. We're an adviser in a sense rather than a product provider. We look at those assets and look at the ownership by the state government and feel as though it is part of the environment of Australia, and therefore, we see it as being something that is a legitimate business for us.

So in light of what you've just said, I'm wondering, has the Board considered the impact on Austbrokers' business if our brand becomes associated with the coal industry, now that everyone sees that floods, bushfires and heat waves are continuing to get worse and we know that these are fueled by coal, above all levels.

No, we don't know that.

Please. Thank you. Look, again, in that process, we do look at -- absolutely, we look at reputations. And we -- our partners, our brokers are absolutely at the forefront of flood risks, fire. So they are on the front line when businesses are impacted by exactly those things. There is no question in our mind that the climate is changing. And we personally are committed to understand that carbon and carbon in the atmosphere is creating changes. So I'm not standing here suggesting -- I'm not denying it. The -- it's something that is reviewed. I think that -- and I would sort of share with you the thinking process. So we're not digging it out of the ground. We're not providing a product, we're providing a service. The question becomes, where do you draw the line? So there's a lot of people employed in [indiscernible] the rolling stock, coal loaders, those sorts of things. And so does it translate into the ships that carry coal? We have to make our judgment balanced by our business. Because while your point of view is very legitimate and takes a certain amount of courage to hold those views and articulate those views, and I commend you on those, it's not a view held by everyone. And so we have a broad group of our shareholders, institutional shareholders who we primarily owe responsibility to consider the business opportunities we have and navigate through them in what we think is a reasonable way. And so that's the conclusion we've come to. And again, I appreciate it's not [ comforting you ]. And part of the reason for having these meetings is to hear people's views and not to dismiss them, but to understand how people feel strongly and passionately about various things.

So just to sort of elaborate on that a bit more. How would you say then, instead of making your assessments based on all the possible points of view that are available, and given that Mr. McAvoy has clearly stated that the mine and the services associated with it, the port and the train lines and so on, do not have their free, prior and informed consent, so how do you sort of navigate that very particular objection surrounding consent of traditional owners with how you manage your reputation and how you tell your shareholders?

How are we going to navigate it. The first basis for making a decision is to be fully informed about all the issues first. And again, you try to do that and the you balance up the matters. I think the fact that one group says it's not a legitimate development vis-à-vis another group, i.e., the state government saying it is a legitimate development and they're going ahead. So we weigh all those things up. And just -- and I don't want to belittle Mr. McAvoy's point at all, but just because one group says it's not viable, I mean -- I'm sorry, not legitimate, it doesn't necessarily mean that, that's like a feature on the whole thing. And again, [indiscernible] discussion that we might have. I'm not sure I can actually say anything more. Perhaps if you're -- what I'd like to do is get Mike Emmett to perhaps talk about SRS specifically, which I suspect will cross over some of the issues that you've been questioning.

Because I think underlining this whole thing, there's 2 main issues in that. We have a lot of coal projects that are already ongoing. So the question is about providing services to a new coal mine which SRS might be providing services for, and also the adjacent and very connected issue of the consent of traditional owners, not just on the Carmichael side, but also around the country.

Sure. Before I ask Michael, the one thing I would say is that I think in the last 12 months, these globally have changed, I believe, around how long it's going to do and how we've actually transitioned. And whether we like it or not, coal and gas have actually come to the -- are actually being used in that transition phase. So we look in the U.S. where they've actually started up fracking in new -- given the approval at a federal level anyway, for fracking in new fracking fields, which is an unusual one and something that's clearly not done in South Wales and Victoria. I'm not sure. So -- and in the U.K., coal mines are being regenerated as well as an effort to transition to a renewable future. But Mike, SRS.

Yes. So in context, SRS, the small bolt-on acquisition that we made into our corporate broking business, in total -- so firstly, it has a range of clients. As you correctly point out, a couple of those clients are related to the coal mining industry, but the majority of their clients are noncoal mining-related across a broad spectrum of large corporate clients, retail, et cetera, et cetera. It is bolt-on into our corporate business. In terms of revenue, it represents 0.5% of our revenue. So in terms of the bolt-on, it's a very, very small acquisition. And that's the first point I'll make. The second point I'd make is that in terms of the -- we have just short of 1 million clients across the group. And to David's point about where you draw the line, so I guess the challenge is we talk about -- we do -- on the larger end, we have rolling stock clients. We have clients that are ports and harbors. And they include a range of exports, a range of products that they transport. We are risk advisers, right? So although we talk about insurance broking, we are risk advisers, giving clients advice about the way in which they manage, mitigate and transition their risks. And in an energy context, includes the recommendations around how they transition to newer forms of energy, the timing of that, the pace, the way in which that they should consider accelerating renewable versus traditional forms of mines, energy, et cetera. So to David's point, firstly, directly related to the coal mining industry, probably 0.2% or 0.3% of our revenue. Secondly, in terms of where do you draw the line, so we don't believe it's appropriate to challenge and say to our clients, right, we'll only cover the part of your ports that doesn't do any export. So there's a level around which is advice to rolling stock, do we get to the point where we get -- a lot of our SME clients are in various trades, do we get to where we say to a particular set of trades operating in a particular area that if any of your part of your business has anything to do with one of these mining companies, where we can't provide advice, et cetera. So I think the question is really around, we believe that we can help assist our clients and match that against this transition to new forms of energy by giving them advice about the way in which they manage their transition, et cetera. So for us, it's very, very immaterial part of our business in terms of size. However, it's an important principle for us, which is that we deal with clients that are reputable organizations, that meet strong health and safety levels, et cetera. In some cases, they are cornerstones of the Australian economy. But our role is to help advise them about the way in which they can identify, manage, mitigate and transition their risk profiles. And so that's the way in which we approach this. And as David pointed out, every acquisition and every client that we have questions about gets debated. We have a screening and a review process.

Thank you, Mike. I'm not sure there's much more we can add to the answer. So thank you for the question. I'd like to move off and on from that topic. Are there any other general questions that any shareholder has? Okay. And might I just say if there's any particular points that you feel you'd like to make to me crisply, I'll be here after the meeting.

Yes, I'd like to continue a conversation around how you screen, what the process is behind screening businesses that you deal with, if that's all right.

Sure. I think there's no further questions. So I'm about to close the meeting. But before I do so, I would remind shareholders and proxy holders to complete their voting cards now and to hand the cards to Link Market Services. So it just goes off here. And the results will be announced to the ASX as soon as they are available. Is there anyone who's having some difficulty completing their cards? Okay. I think I'll just wait formally for everyone to finish voting. Thank you. I think we're all done. I will close the poll and thank shareholders for their participation today and your ongoing support for the group. You're invited to stay and have coffee, which will be served outside the meeting room, just in case you need [indiscernible], and the directors and executive team [indiscernible]. Thank you all very much. Meeting is now closed.